China, India Rising in Global Food War
The following guest commentary was written by the staff of the YieldPig investing blog.
"An army travels on its stomach."
-- Napoleon Bonaparte
If anyone could tap into the direct correlation between cuisine and global conquest it would be the French, the only people in history that could eat, smoke and drink like that with some of the lowest recorded per capita rates of cancer and heart disease. Granted, the days of "French" and "global conquest" being said or written in the same sentence are the equivalent of the words "Tiger Woods" and "model husband" being used together, but a lot can be said about the strength of a nation's empirical potential and how good the food is. The short version: Take heed. China and India rising.
According to the magazine
Chinese Restaurant News
, there are nearly 41,000 Chinese restaurants in the United States, three times the number of
McDonald's
(MCD) - Get Report
.
Reuters
says McDonald's had opened 1,135 stores in mainland China as of the end of 2009. That's quite a long march in comparison for Ronald and Grimace in a country of a billion plus, many who have yet to be served.
Although Mickie D's invented the formula for fast food chain standardization, the American Chinese restaurant is the real business model. Uniforms and fancy in-store marketing that create bloated overhead? Nope. Branded cups and wrappers? No, unless you count those waxy paper boxes with the wire handle and red pagoda line drawing that miraculously keep the shrimp and snow peas hot until you get home. Finally, I don't know about you, but I've never found a slip of paper in a hot apple pie that told me I was going to live to 100 and be obscenely wealthy.
The Chinese buffet is yet another harbinger. A price of $7.95 for unlimited egg rolls, fried rice and General Tso's chicken is a value few American businesses can duplicate. The proprietor typically keeps the product hot and fresh, constantly flowing from the kitchen in silver bowls. He or she, like a good tavern keep, also knows when to cut the diner who overdoes it off. I've found anecdotal evidence of a zaftig diner being told by a buffet owner that he wasn't allowed to come back because he ate too much. Not exactly politically correct, but business is war, so sayeth Sun Tzu. Incidentally, 62% of all American Chinese buffets have "No. 1" in the name while 38% have "Super" somewhere on the sign. About 57% of the total use both "Super" and "No. 1". Every now and then, they'll throw in "Happy."
Data on Indian restaurants in the U.S. isn't quite as accessible. However, the model is very similar to the Chinese restaurant model only even more streamlined. The names are simple using "Delhi", "palace", "cuisine", and "India" somewhere in the name. The product is even more exotic. The Chinese buffet will have name cards over each item. So does the Indian buffet but that doesn't mean that we'll be able to pronounce the items correctly. Again, the food is good and plentiful and, often, value is added with non-stop Bollywood looped on the TV on a stick in the corner. The McDonald's in my neighborhood has
Fox News
on all of the time. Seriously.
How has McDonald's translated in Hindi? Apparently, not as well. To date, the company has opened about 200 units and product adaptation is a challenge in a land where eating beef is against
everyone's
religion. The Chicken Maharaja Mac is kind of a tough sell.
As far as acceptance goes, most people can agree on Chinese food usually and, if it's available, Indian at least every now and then. In the 1970s and 1980s, we were taught to fear the Russians militarily and the Japanese economically. Sushi is typically something chosen on date night to show your wife you're still adventurous. It's been in the States for quite awhile but, although you can find sushi on the Super No. 1 Chinese Buffet in the strip mall around the corner from the office, I've never seen an all-you-can-eat sushi bar. And if there was one, honestly, would you really go to there?
Gastronomically, the Russians are a non-player, save for vodka. My apologies if you're really into cold beet soup and boiled beef.
Now, at first look, you might throw Mexico into the mix. Mexican usually isn't a buffet type of food, but in many American suburbs Mexican restaurants outnumber
Walgreen's
(WAG)
and
Applebee's
. However, you've probably come to realize that just about all Mexican food is made from the same components. It's just rearranged on the plate. I'm not knocking it. Some of my favorite restaurants are Mexican.
The bottom line of the global food battle is how much money are you making? My unscientific, 79-cent research shows that the average McDonald's value meal costs somewhere around $5. The Chinese buffet at lunch is $7.95 plus a buck tip. That's 79% more money and about 1,000% more food. As a nation, America needs to take a hard look at the food culture we export. We can't keep covering it up with special sauce. If we want to keep up in the food war, we need to be more than the home of the brave and the super-sized quarter pound value meal.
