The reported acquisition of Pizza Express for £900m by Hony Capital is one of those deals that makes perfect sense. The restaurant chain is widely considered to have introduced pizza to the UK – now as much a part of the national diet as fish and chips. It is a well established retail brand and delivers a consistently good food and leisure experience. That’s why it has 436 outlets with a great business model that appears to largely recession proof. China currently has just 22 outlets. However, to put that into context, KFC now has 4,563 outlets across the country and The Colonel is seen on most high streets in most major cities. I even came across him peeping round a corner of Inner Mongolian city Bayan Nur earlier this year!
I have enjoyed Pizza Express in cities across the UK for many years and now that I spend most of my life travelling around China, it will be a nice option to enjoy from time to time in the future. Indeed I have already ‘enjoyed’ a classic pizza from Pizza Hut in Beijing and can confirm the fact that it was a good meal at a high quality. However, as would be expected, there was a Chinese spin on the meal with options for sharing and extras such as rice and pickled vegetables to add local flavour to the otherwise European style.
An interesting aspect of such Western food chains is that they are broadly seen as ‘exotic’ and ‘exciting’ options for the emerging middle class with spare cash to spend on their leisure activities. I suspect Pizza Express will open in Shanghai and Beijing to start with before they move slowly into the 2nd tier cities such as Chengdu with its large number of Western brand factories and special economic status attracting overseas business and workers. The emerging middle class of China will no doubt see it as another menu option to show ‘face’ to their friends and to demonstrate their sophistication and Western style and knowledge. I suspect too that the rise of Pizza Express on China will happen as a certain group of Western brands capitalise on the gap created by the rising disposable income of the middle classes and the shrinkage of excessive spending on luxury goods. This gap of ‘affordable quality’ is something others too could exploit as China continues to develop and open its arms to a more plural and expanded mid wealth audience.