Motley Fool Money: Asian Food Chains Moving Stateside

Episode Date: September 30, 2025
Host: Emily Flippen
Guests: Analysts Jason Hall and Samit Deo

Episode Overview

This episode explores the growing trend of Asian food chains expanding into the United States and what this means for investors. The analysts cover several chains—including Jollibee, Luckin Coffee, Kura Sushi, and Haidilao Hot Pot—discussing the unit economics, business models (franchise vs. company-owned), brand potential, and the challenges/opportunities of cultural transition. The team debates whether these concepts offer lucrative investment opportunities or face obstacles in the American market.

Key Discussion Points & Insights

1. Jollibee: The Philippine Fried Chicken Giant

• Overview:
  • Philippine-based fast food chain known for fried chicken and "jolly spaghetti" (spaghetti in banana ketchup meat sauce).
  • Over 1300 locations in the Philippines, ~500 more internationally, ~100+ in North America.
  • Owns 10,000+ stores across all brands.
• Growth Strategy:
  • Current focus on expanding North American presence from ~100 to 250 stores (mainly franchised).
  • Impressive average unit volume (AUV) of $4.2 million for company-owned US locations.
  • Despite a strong Filipino customer base, 60% of US customers are non-Filipino, signaling broader appeal.

    "Filipinos are the third largest Asian origin group in the United States, but 60% of their customers...are non Filipinos." – Samit Deo [02:28]

• Investment Nuances:
  • Thinly traded in the US (OTC: JBFCF), $6B enterprise value.
  • Highly diversified: owns US chains like Coffee Bean & Tea Leaf, Smashburger.
  • Controlled by founding family, with concentrated ownership.
• Critique:
  • Extremely low marketing spend (<2.5% of COGS in the US), raising concerns about US brand awareness.

    "If you're spending less than two and a half percent of your total cost of goods on advertising as a franchise-based restaurant chain...that is...a way to just ensure that your average unit volumes fall." – Emily Flippen [06:08]

  • Potential risk of being "too diverse," diluting focus from the core brand.

2. Luckin Coffee: Fraud, Recovery, and an Aggressive Comeback

• Background:
  • Chinese chain pioneering low-cost, tech-driven quick-service coffee.
  • Notorious for its 2020 fraud scandal; shares now on OTC (LKNCY), but continuing dramatic expansion.
• Current Performance:
  • Over 26,000 stores globally, with a handful in the US.
  • Opening ~2000 locations per quarter; revenue up 47% last quarter, comps up double digits.

    "The store count surpassed 26,000 last quarter...revenue growth 47% last quarter, comps up by double digits too." – Jason Hall [10:15]

• Strategy Contrasts:
  • Purposefully positioned as the "cheap" coffee brand, differing sharply from Starbucks’ premium "third place" model.

    "You're not walking around Luckin Coffee to look premium and expensive...they offered you four free coffees when you purchased your one coffee." – Emily Flippen [11:32]

  • US stores use digital-only ordering, small footprints.
• Skepticism:
  • Lingering distrust due to the past fraud; two co-founders still on board.

    "There was always a...good core business. You just had some leaders that were cooking the books." – Jason Hall [09:23]

  • Franchise model poses risks, but profitability and consumer resonance stronger than before.

    "Their franchise expansion model is incredibly risky, to be very clear with that. But the business is driving much higher profits, expanding store count..." – Emily Flippen [13:24]

3. Kura Sushi (KRUS): Dinner, a Show—and Cleanliness

• Overview:
  • Conveyor belt sushi chain, US division of a Japanese parent.
  • Company-owned model—more deliberate growth, about 75–80 US locations.
  • Gamified dining experience (robots, touchscreens); strong food quality.

    "You know you get the touchscreen ordering, grab sushi off the conveyor belt, robots serving drinks..." – Samit Deo [16:25]

• Economics and Challenges:
  • 17–18% restaurant-level margins, $4.2M in AUVs, but not yet profitable: high build-out costs and aggressive unit growth (~20%).
  • Analysts question scalability and customer frequency—likely viewed as a "special occasion" destination.

    "It's not a one and done experience but I don't see it being a very often experience. I think more of like maybe a Benihana for special, special occasions." – Samit Deo [17:14]

• Competitive Moat:
  • Brand recognition still forming; many similar concepts exist in metro areas.

    "I have probably a half dozen conveyor belt sushi places...is there anything that's unique or special that would cause somebody to say, hey, I have to go to Kura..." – Emily Flippen [17:44]

4. Haidilao Hot Pot: High-End, High Risk

• Overview:
  • Premium Chinese hot pot chain, over 1400 locations worldwide, a dozen+ in the US (OTC: HDALF).
  • Known for service, quality, and price—more niche/occasional than mass-market.

    "Hot pot is a little more specialty as well, and again, you talk about the price point, it can get pretty expensive before you know it." – Jason Hall [20:04]

• Economics:
  • Parent company operating margins just 3%—emphasizing the critical role of operational efficiency.

    "In the restaurant business, the fundamentals...are so important...super high...operating margins in the first half of the year were 3%." – Jason Hall [20:46]

• Model vs. Others:
  • Expansion primarily company-owned, not franchised—meaning slower/neater growth but owners take on all operating risk.
  • Narrow audience, limited margin of error in market selection; not likely to become a mainstream US staple.

Memorable Quotes & Moments

• On Jollibee's international strategy:

  "Is this business too diverse to succeed? Are they just trying to grab any growth and losing focus on that core Jollibee brand in the process?" – Emily Flippen [06:31]

• On Luckin's business turnaround:

  "If we look past it, I think we can probably trust its numbers better than any other coffee...Comps are up by double digits too." – Jason Hall [10:35]

• On Kura's US strategy:

  "I'm not sold yet on, on how much it'll gain traction." – Samit Deo [17:28]

• On hot pot's niche:

  "You're starting to move into these more specialty restaurants where they're just not going to have the mass market appeal...you just don't have the margin of safety you do with a coffee shop or a fast food joint." – Jason Hall [20:03]

Lightning Round: "Where Would You Invest?" [21:44–24:48]

Emily Flippen:

• Picks Jollibee, citing international scale, untapped brand value, and profitable, replicable model.

Samit Deo:

• Also chooses Jollibee:

  "I'll put my bet on Jollibee...Betting on chicken is always a good thing. There can't be enough chicken places." [22:55]

Jason Hall:

• Agrees with Jollibee, emphasizing the importance of scale, low cost structure, and margin of safety:

  "As much as we quibble about they're not spending enough to market, they can ramp that up. They already have things to give them lower costs...scale really matters a lot." [24:11]

Conclusion & Takeaways

• Asian food chains are making significant inroads in the US, but each faces distinct challenges in scale, brand building, and model adaptation.
• Jollibee stands out among the analyzed chains due to its scale, diversified brand portfolio, relative affordability, franchising experience, and untapped marketing potential.
• Luckin Coffee impresses with its rapid recovery and growth but carries a trust overhang.
• Kura Sushi and Haidilao offer unique "experiential" dining but are challenged by niche positioning and delicate unit economics.
• The panel agrees that Jollibee may offer the best long-term investment profile out of the group, while recognizing continued risks and execution hurdles.
• Opportunities remain for investors willing to look beyond the better-known US fast casual giants.

Important Segment Timestamps

• Jollibee deep dive: [00:05–07:31]
• Luckin Coffee assessment: [08:31–13:24]
• Kura Sushi analysis: [15:32–18:43]
• Haidilao Hot Pot review: [18:56–21:44]
• Lightning Round: Investment Picks: [21:44–24:48]

End of Summary