Why The French Love American Fast Food

American

fast

food

is taking over France. From newcomers like Popeyes and Krispy Kreme. We appreciate American

fast

food

more than Americans themselves. To established favorites. Kfc, of course, because I

love

chicken. It's like the commotion. It's the trend now. I think it's addictive and brings a lot of happiness to people. Between 2019 and 2023, more than 1,300 fast food establishments opened in France, generating €19 billion in profits in 2023 alone. Despite its gastronomic reputation, the French palate is changing. France is McDonald's and Burger King's second largest market outside the United States. Many brands want to come to France because France is an Eldorado.

You make 2 or 3 times more sales than the other country. It's a country that has a high propensity to eat, eat American brands, and it also has the right demographics, so restaurants have been successful there. So how did American fast food companies manage to win over the gastronomy-conscious, fine-dining, Michelin-star-loving French public? CNBC visited Paris to find out. It's lunch time in the Lille neighborhood of Paris. I'm taking this menu today because I

love

fries and, uh, I love nuggets. Between 2013 and 2023, fast food sales increased by a whopping 61% in France. McDonald's and Burger King are the biggest players.

Their combined sales totaled €8.3 billion in 2023. Burgers play an important role. Quick-service restaurants serving hamburgers accounted for about half of the country's sales that year. The hamburger has been gaining an increasing market share over the last 30 years and has become an essential item on the menu of any restaurant. But it's not just about burgers. American fast food companies, aided by clever marketing, built their brands behind iconic products. People in France went to discover other tastes. And when you explain that with a good story with an iconic burger, you get it. For Popeyes it's a chicken sandwich. For McDonald's it's a Big Mac, for Burger King it's a Whopper.

We are the country of Michelin, of Michelin restaurants. It's like gastronomy, with very high standards. And yet, QSR fast food is very trendy. What that shows is that while we appreciate food, we still understand that we love to treat ourselves. In a span of five years, the country's largest fast-food chains, excluding Subway, opened nearly 500 stores across France. Total category profits increased about 10% during that time. In the last decade, the fashion has really heated up due to other newer, faster and more casual concepts, which have moved to France. I think American concepts have done a great job of making their offerings an affordable pleasure.

France's potential is enormous considering customer appetite, both for pizza and American brands. So you think you have a great combination. France is a world leader in culinary excellence and has more Michelin-starred restaurants than any other country. It is home to prestigious culinary institutions such as the Cordon Bleu, which produces some of the best chefs in the world. In 2022, the country had 157,000 restaurants. More than half were traditional full-service restaurants. Because of this, the former American quick service restaurants, or QSRs, took a specialized approach when entering the French market. But what I can say about the French is that we don't feed ourselves, we eat and, in fact, we treat food with emotion.

So as long as you bring an American brand, you can't just bring an American brand. You need to generate excitement with your product. You need to bring connection. Considering the cliché that France is a fancier place to eat, the concepts have really put their best foot forward, really focusing on modernized images, higher quality, higher price and more innovative offerings. That includes sourcing most or all of its ingredients from French farmers, such as the potatoes used for McDonald's fries and the chicken in Popeyes sandwiches. It is very important to build this relationship. They have a strong association with farmers.

That's why QSRs, American brands, have triumphed. American QSRs have been adapted to European Union food standards and, as a result, those products are healthier and less processed than those offered in the United States. These brands also cater to French palates by modifying menu items or creating new products. But if we're talking specifically about pizzas, you know what it takes is to be French-friendly when it comes to the product you offer. The only campaign we've run every year for the last six years is raclette and people love it. Our most successful campaign each year was raclette. And it has been worth it.

Many consumers now consider the chains to be as French as they are American. It feels like it's a part of us now. It's based in the United States, but we don't really see the difference. There are KFC McDonald's everywhere. McDonald's has the strongest position, in part because of its first-mover advantage. McDonald's was the first quick service concept to come to France and saw tremendous success there. And I think as a result of that, you've seen that a lot of people have wanted to replicate that success. Burger King, on the other hand, re-entered after a 15-year hiatus in 2012.

It now has the second-largest number of American QSR franchises in the country. Pizza Hut arrived in 1987, KFC in 1991, Subway in 2001 and Domino's in 2006. But their rapid expansions have come mostly in the last decade. Popeyes and Krispy Kreme opened their first French stores in February 2023 and February 2024. It's a new brand in France and it's very, very fantastic for the French. Changes in French society, such as digitalization, have allowed the fast food industry to flourish. Takeaway, drive thru, click and collect delivery. All QSR restaurants can do that. It's a perfect match for current needs, with the hybridization of concepts accelerating even further in the wake of Covid.

For example, we now have a very small portion of our customers coming to the counter to place orders. I mean, less than 10% of our orders, 60% are online. 1 in 5 meals in France is eaten away from home. Experts predict that number will increase. It's a young population, a high immigration population, as well as the fact that a country with a high GDP per capita leads to strong unit economics across the industry. The influence of American pop culture is another powerful tool. Young people grew up watching series or movies and in the United States they ate fast food. So I think now, when we saw the arrival of fast food in France, all the young people were very excited about it.

Larger portions and modest presentations appeal to even the most delicate palate. High inflation and shorter lunch breaks have contributed to the need for convenience. American food is tasty and great. You know you'll be... Lunch time today is about 42 minutes. This prevents people from returning home and therefore encourages consumption outside the home. American QSR brands respond perfectly to this problem with the development of digital tools to improve the quality of life of consumers. I really like good food, but you need a budget for that. So when I want to enjoy a really good French meal, I take my time.

It's usually on weekends. During my work time I prefer to go to fast food. But the restaurant industry is volatile and highly susceptible to national and global changes. In 2024, McDonald's and Starbucks executives said boycotts related to the war in Gaza caused fourth-quarter 2023 sales to fall in countries with high Muslim populations. That includes France, which has the largest Muslim population in Europe. After all, France accounts for 7% of the fast food chain's total revenue. McDonald's also attributed its weak overall performance to the price reaction, acknowledging a drop in sales in the United States but without commenting on international markets.

Something I don't like is the inflation of the strings. They reduced the size of the burger and raised the price. Subway has closed more than 100 of its French stores since 2015. I think the closest risk will be more macro-oriented, that France appears to be the first European market that is really succumbing to restaurant industry traffic and traffic softness of the restaurant industry. . Staying competitive in the new digital age can be difficult even with decades of experience. We come from a world where before 2016, the only people who delivered were pizzas and sushi. For one, I compete with pizzas, so I need to be the best in class in that universe.

But I also need to be best in class in the delivery business because again, in front of me, I have players like McDonald's and BK that are 7 to 12 times bigger than me. Not everyone has welcomed the expansions. A neighborhood group in the 20th arrondissement of Paris protested against a new Burger King in 2023 for, quote, obsolete environmental practices. France implemented new laws that same year targeting fast food companies for waste. Qsrs must now offer reusable cutlery and reduce the use of single-use packaging. We have created dishes especially for the brand's restaurants and their sustainability seems better than the others.

The QSR market in France still has a lot of room for growth. Chipotle, for example, so far only has six locations. Taco Bell hasn't come in at all. The burger, steak, chicken and maybe tacos in the future. Steak n shake now has 37 locations. Carl's Jr is playing catch-up after breaking ground on its first location in France in 2023. Wendy's is reportedly planning to move. The next push will be more focused on chicken, which we know has a higher margin in the United States and is more focused on younger consumers. One of the missions was always to make our product widely available.

That will be in the next five years. We already have nearly 500 stores. There is great potential, but there are other ways to distribute our products. And that is where we are also looking for alternatives. We have the pizza distributor. The industry is expected to be worth around €21.5 billion by 2028. And so far, the French palate seems ready for it. The taste is really different from the other restaurants. I think they have a special touch and that changes everything.