As U.S.-China relations continue to worsen, Chinese food and beverage (F&B) brands are moving aggressively into the United States. Companies struggling to survive amid a domestic economic slowdown and cutthroat competition appear to be turning their attention to the relatively competitive U.S. market.
According to the New York Times (NYT) on the 1st (local time), Chinese-style milk tea shops are rapidly increasing in major U.S. cities such as New York and Los Angeles (LA). HEYTEA, a black sugar and fruit tea brand based in Jiangmen in southern China, has opened more than 30 stores across the United States since 2023, and its flagship store in New York's Times Square sees lines form every day, drawing heavy crowds.
Competitors Chagee and Naisnow also opened their first U.S. stores this year and are pushing into the market, and Luckin Coffee, which has more stores in China than Starbucks, is also adding locations across Manhattan.
Fast-food chains are mounting a strong offensive as well. Wallace, a leading Chinese fast-food brand with more than 20,000 stores, opened its first location in Walnut, California, in November last year, and Haidilao, China's largest hot pot (Chinese-style shabu-shabu) chain, is kicking off an expansion strategy roughly a decade after entering the United States.
A decisive factor behind these companies' push into the United States appears to be China's structural downturn. China is currently facing a dual challenge of a real estate slump and weak consumer sentiment, and the F&B industry is suffering from a supply glut and destructive competition.
In fact, the number of dining establishments per capita in China is three times that of the United States, and half of newly opened restaurants are said to close within a year. In particular, milk tea shops number 420,000 across China, and some stores are reportedly pricing a cup at $1 (about 1,460 won) or less to survive.
That said, clearing the U.S. market's entry barriers is no easy task. A notable example is Haidilao's weak performance when it entered the United States in 2013 due to ▲ a lack of English menus ▲ high prices ▲ and Chinese-style "excessive service." In response, as it recently pursued U.S. expansion, Haidilao fully rolled out localization strategies such as ▲ stronger English guidance ▲ introducing adjustable spice levels for broths ▲ and expanding beef options.
Other companies are also striving to win over U.S. consumers. For example, Wallace simplified its menu at U.S. stores to focus on chicken burgers and uses pickles to serve food with a strong salinity. Ricky Chen, head of Wallace USA, emphasized, "Price competitiveness is the biggest weapon of Chinese brands," and Wallace is indeed maintaining lower prices than rivals, selling three chicken burgers for $10.
Efforts are also underway to shed a so-called "Chinese" vibe. For instance, the milk tea brand Chagee features store names inspired by ancient Chinese myths and a logo of a female character with traditional hair ornaments, reflecting Chinese elements, but says it is positioning itself as an "ABC (American-born Chinese) brand" to lower psychological barriers in the U.S. market.
Bob Ching, chief executive officer (CEO) of Tomato Capital, said, "The U.S. Embassy invited representatives of China's dining industry to major American cities this year," and noted, "In this field at least, the two countries are keeping their doors open to each other."
By contrast, U.S. F&B companies in China are struggling. Recently, Starbucks transferred equity in its China business to Chinese investment firm Boyu Capital, and Burger King's China business was also sold to a Chinese private equity fund.