The last few years have been tough on global foodservice. Lets take a look at keys to future foodservice growth.
Rapid growth in Brazil
A relatively stable economy and rising purchasing power among lower-level economic groups has led to a steady flow of new demand in Brazil, making the market one of the fastest-growing in the world. Brazil’s foodservice industry has also benefited from increased investment from private equity firms and national operators, especially by those looking to increase penetration before the 2016 Olympics.
The continuing evolution of fast food
Amidst fierce competition, fast food brands have been forced to differentiate themselves with broader menus, better food and higher-end outlet designs. In developed markets this has led to the popularity of the fast casual segment, but in emerging markets (most of which show a strong preference for full-service dining) it has helped fast food gain traction as a modern, lower-cost alternative to more traditional foodservice formats.
The universal appeal of multi-tiered pricing
Global fast food strategy has become contingent on the operators’ ability to simultaneously target two key demographics: those looking for a better, premium experience and those who still see price as a barrier to their entry into the foodservice market. As a result, a multi-tiered pricing strategy has proved equally effective in both developed and emerging markets. Many consumers in developed markets, for example, have emerged from the downturn with a taste for healthier, higher-quality fast food, while others remain price-sensitive due to the recession’s lingering effects.
The rise of the specialty beverage
In a related trend, specialty beverages have become key growth drivers in fast food by driving traffic steadily throughout the day and appealing to both high-income consumers (as an add-on to meal items) and low-income consumers (as a standalone treat). Milkshakes, smoothies, espresso-based coffee beverages and other frozen drinks give consumers a reason to visit foodservice outlets even when they’re not looking for a full meal, and the high margins inherent in beverage items have helped operators increase profitability even where overall value growth has slowed.
The growing popularity of travel and retail locations
Semi-captive locations like travel and retail centres offer major expansion opportunities in developed and emerging markets alike. In developed markets these locations keep costs low by requiring smaller footprints and less extensive build-outs. In addition, they offer chains a broader range of potential locations, especially for those that are nearing penetration in standalone venues. In emerging markets these locations hold a different set of benefits, offering clean, secure, high-traffic environments that can serve consumers from a large surrounding area.
Small but mighty Southeast Asian markets
Often overshadowed by China and India, many smaller markets in Southeast Asia nonetheless offer significant growth opportunities and should not be ignored. Indonesia, Vietnam, Thailand, Malaysia and Singapore together generated almost US$100 billion in foodservice value in 2011. They also feature many of the same characteristics that make China and India so conducive to future growth, including well-developed dining-out cultures, high per-capita spending on foodservice and large populations dominated by young people. Moving forward, these five markets together will contribute nearly US$18 billion in new value, more than many other higher-profile markets, including India and Mexico.