EATING AMERICAN: U.S. FAST FOOD IN KAZAKHSTAN
By: Hillhouse Analytics
Tags: Market Research Reports, Fast Food, Sentiment Analysis, USA, McDonalds

EATING AMERICAN: U.S. FAST FOOD IN KAZAKHSTAN

American businesses looking to enter the fast food market in Kazakhstan can profit from existing positive sentiment, but should be wary of limited brand loyalty. Hillhouse Analytics Follow Mar 4 · 6 min read

By Elizabeth Lewis, Analyst

It would be a challenge today to walk through the center of Nur Sultan or Almaty, Kazakhstan without seeing the familiar sight of golden arches, a whopper, or the colonel. McDonald’s, Burger King, and KFC have been mainstays in Kazakhstan’s fast food market for the last thirteen years. KFC arrived in Kazakhstan in 2007, followed by Burger King in 2012, and later McDonalds in 2016. In May of 2016, Timur Isatayev, chair of JSC Verny Capital’s management board, a private investment firm in Kazakhstan, estimated that the annual revenue of Kazakhstan’s fast food industry was between $150–200 million, explaining the breadth of his estimate as the result of inability to accurately quantify the success of local restaurants that do not belong to a larger chain. As of 2018 approximately 85.6 percent of Kazakh adolescents, those aged 15–18, were consuming fast food on a weekly basis.

How can American fast food brands ensure success and avoid potential pitfalls when entering the Kazakh market?

This article looks at media sentiment to examine how Kazakh attitudes toward American fast food restaurants have fluctuated with their subsequent announcements of market entry. By exploring how and why Kazakh attitudes towards fast food have changed, we can gain useful insight into the success and potential pitfalls that American brands may encounter when entering the Kazakh market.

Arrival of McDonald’s Renews Interest in Fast Food

McDonald’s, Burger King, and KFC all saw increased mentions following the arrival of McDonald’s in Kazakhstan in 2016 (Figure 1).[1] Markedly Burger King saw a greater number of mentions than McDonald’s and KFC over the course of 2016 especially in the month of March. This extra media coverage of Burger King is largely the result of numerous articles that were written about Burger King’s plan to compete with McDonalds, as both fast food restaurants are well known for their flagship burgers the Whopper and the Big Mac, respectively. The entry of McDonald’s almost ten years after the arrival of KFC in Kazakhstan marked a symbolic turning point for Kazakhstan. In other countries that were members of the Soviet Union, the arrival of McDonald’s acted as a recognition that they had become a fully fledged member of the global economy.

“American” first, individual fast food restaurants second

Although mentions of each American fast food chain exhibited relatively similar ups and downs, the sentiment toward each brand tends to be more individualistic. This is exhibited by the following three examples.

Looking at 2013 coverage of KFC and McDonald’s, both chains see a sharp decline and fall about a half of a point in 2013 as a result of less enthusiastic sentiment. Media sources when discussing KFC and McDonald’s mention them in conjunction with the bird flu that broke out in China. Kazakhstan also reported cases of avian born bird flu. In the following year, McDonald’s and Yum Food, the parent company of KFC, ceased using their shared chicken supplier Shanghai Fusi, Food Co. under allegations of selling expired and unsafe meat. One could speculate that the drop in sentiment towards KFC and McDonald’s in Kazakhstan is a result of either the disruption in their supply chain or the Kazakh public associating the potentially infected chickens with KFC and McDonald’s, thus perceiving them as more dangerous fast food options compared to Burger King, which is treated as a predominately beef selling restaurant.

The individuality of the sentiment trends of American fast food restaurants is seen again in 2015 when McDonald’s sentiment dips, while KFC and Burger King maintain their upward sentiment ascent. The drop in positive sentiment toward McDonald’s in 2015 is likely due to the announcement that McDonald’s chose to push back the date of their grand opening in Kazakhstan to March 2016. From this data, we can conclude that Kazakhstan is very enthusiastic about American fast food, and that the delayed opening resulted in widespread disappointment in Kazakhstan.

Throughout the period of 2012 to 2019, KFC experienced a wider range of sentiment than McDonald’s and Burger King. It is possible that this breadth in sentiment is the result of KFC being the first U.S. fast food restaurant to arrive in Kazakhstan and thus it has the most locations of the three U.S. restaurants. Having been around longer, people have had time to develop their own personal opinions toward KFC that are more deeply entrenched, which can result in stronger positive and negative attitudes toward KFC.

All three brands experienced a simultaneous dip in positive sentiment in 2017 as a byproduct of associating these brands with the United States, not local changes in Kazakhstan.

The decrease in positive sentiment toward all three American fast food restaurants in 2017 is an outlier as all three restaurants experience a simultaneous dip in positive sentiment. This is not, however, the result of local changes in Kazakhstan. Rather this is the byproduct of associating these brands with the United States. During 2017 news sources published articles about two current events in the United States and tied them to these American fast food restaurants. The first was the legalization of recreational marijuana use, which resulted in an uptick in popularity of fast food restaurants in America. It is likely that the discussion of American fast food and marijuana use in the same article resulted in more negative sentiment toward these restaurants. The second was the suicide of a man who had previously held four hostages in a Burger King. The connection of the fast food giant to both the crime and suicide did not bode well for the public perception of Burger King in Kazakhstan.

Implications

The negative sentiment reviewed in this research toward the American fast food restaurants of McDonald’s, KFC, and Burger King seem to be less dependent on the individuality of each fast food restaurant and more dependent upon the fact that these three restaurants are American. Conversely, the positive sentiment reviewed in this research toward the aforementioned American fast food restaurants is more individualistic, with sentiments towards individual restaurants rising independently of others.

This research shows that sentiment toward American fast food restaurants in Kazakhstan is not tied as closely to individual brands as it is to the idea that these restaurants are themselves American. For American fast food restaurants this suggests that the Kazakh fast food market potentially does not offer the brand loyalty that they are familiar with in the US. An American fast food restaurant looking to enter the market in Kazakhstan can, however, capitalize on the generally positive sentiment that exists for American fast food restaurants.

Endnotes

[1] Using our Altai Sentiment Analysis tool, we analyzed news articles from four leading Kazakh news sources between 2012 and 2019 to assess how sentiment trends towards American fast food restaurants have evolved. The news sources reviewed in this research include three privately-owned business newspapers from Kazakhstan, Forbes Kazakhstan, Kapital, and InBusiness, in addition to the official government-owned newspaper of Kazakhstan, Kazinform.