McDonald's was reported to have been kicked out of the tourist-packed shopping arcade, the Galleria Vittorio Emanuele II, where the American fast food chain had rented the space for 20 years. It will be replaced by a second Prada store.

Similarly, at a department store in Wuhan, in Hubei province, in order to enhance the store’s ambiance, their McDonald’s outlet, which previously enjoyed street frontage was removed from the building. Meanwhile, a KFC outlet in the basement of the same building was removed as well.

With the development of Chinese consumption habits, foreign fast foods are losing their charms.

When foreign fast food chains such as McDonald's and KFC first came to the Chinese market, consumers felt they were fresh, high-end merchants, expected to have long-term popularity. As a result, they often chose to rent in good locations (ground floor, frontage, large surface with foreground logo) with contract periods that were long, up to decades.

However, Chinese merchants now prefer to bring in well-known luxury brands to enhance their status.

"Department stores and shopping malls need to cater to the upgraded demands from consumers," said Li Gang, an expert in retail industry.

"Many luxury brands are not willing to be neighbors with fast food restaurants such as McDonald's and KFC," said Liu Hui, chief consultant at Uni-retail consulting.

Data from McDonald's quarterly report reveals that its sales in the third quarter of 2012 decreased to $7.15 billion from $7.17 billion in the same period of last year and profitability decreased by 3 percent year-on-year.

Coincidently, Yum! Brands, parent company of KFC announced in July that its profit in the second quarter of 2012 decreased by 4.1 percent as well.

However, McDonald's and KFC both said they will continue outlet expansion in China, though increasingly picky consumption habits in China may be a challenge for them.