Private equity's appetite for Japan's fast-food industry is continuously growing.

U.S. private equity (PE) giants are investing hundreds of millions of dollars to bet on Japan’s American hamburger and fried chicken market. Carlyle Group Inc. and Goldman Sachs have recently, one after the other, acquired the Japanese businesses of KFC and Burger King. Shifting demographics and inflationary pressures are driving growth in Japan’s fast-food sales. Hamburgers and fried chicken are regarded as an “affordable little luxury,” and private equity firms believe they can capitalize on this trend to achieve substantial returns. The new owners of KFC and Burger King plan to expand their presence in Japan by adding more menu options, optimizing operations, and leveraging data analytics to understand consumer preferences—also aiming to increase the number of stores and sales in the coming years.