Retail News Update

SHANGHAI, China — Down an alley from a KFC, McDonald’s and Pizza Hut here, Li Hong sat inside a dingy little storefront that serves full-course dinners for a dollar.

Her tray was filled with cabbage, carrots, potatoes, a chicken leg and rice, plus soup. A Western fast-food meal would have cost three times that much, said the young woman, who works as a sales clerk. “Why should I go there?” she said.

In the U.S., fast-food chains often thrive in tough times. But not so in China, where Western quick-service food isn’t the cheapest stuff in town and, in target markets like Shanghai, there’s too much competition. Plus, a growing number of consumers see it as unhealthful.

“Western fast food is still not cheap enough,” said Yee Mei Chan, a group-account director at Millward Brown’s office in Beijing.

In a recent survey, the marketing research company found that 78 percent of Chinese consumers were feeling some effect from the global financial crisis. About half said they were likely to cut down on eating at Western fast-food restaurants.

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