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A NEW ERA OF GROWTH AND COMPETITION: GLOBAL CONSUMER FOODSERVICE IN 2015 AND BEYONDAugust 2015
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INTRODUCTION
GLOBAL PERFORMANCE
THE WAY FORWARD
COMPETITIVE LANDSCAPE
REGIONAL HIGHLIGHTS
CASE STUDIES
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Euromonitor International PASSPORT 3CONSUMER FOODSERVICE: A NEW ERA OF GROWTH AND COMPETITION - GLOBAL
CONSUMER FOODSERVICE IN 2015 AND BEYOND
Disclaimer
Much of the information in this
briefing is of a statistical nature and,
while every attempt has been made
to ensure accuracy and reliability,
Euromonitor International cannot be
held responsible for omissions or
errors.
Figures in tables and analyses are
calculated from unrounded data and
may not sum. Analyses found in the
briefings may not totally reflect the
companies opinions, reader discretion is advised.
Global consumer foodservice
in 2015 can be characterised by
strong growth at the global
level, with significant
competitive challenges in major
markets. Operators struggled
with changing consumer
preferences, macroeconomic
pressures, and the constant
threat of new and mounting
competition, particularly from
local operators. Nonetheless,
2015 was also a year of new
opportunitiesnew long-term growth markets, new growth
categories, and new demand
drivers in key markets.
Scope
INTRODUCTION
This report covers new product development and new concepts in all categories of global foodservice.
All values are in US dollars, at fixed 2014 exchange rates, unless otherwise specified.
Historical value data are expressed in current terms; forecast data are expressed in constant terms.
Consumer Foodservice by Type
100% Home
Delivery/ Takeaway
Cafs/ Bars
Full-Service Restaurants
Fast Food
Self-Service
Cafeterias
Street Stalls/ Kiosks
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Euromonitor International PASSPORT 4CONSUMER FOODSERVICE: A NEW ERA OF GROWTH AND COMPETITION - GLOBAL
CONSUMER FOODSERVICE IN 2015 AND BEYOND
Key finding Insights
Steady growth,
with local
turbulence
Global growth at the highest level is steady, showing an improvement over previous years.
However, these figures camouflage very real challenges facing operators in nearly every
major market, from the fast-casual shift in the US to the rise of powerful local competitorsand demand for local cuisinein key emerging markets.
Long-term
prospects have
shifted
Global growth prospects have changed along with competitive conditions. China offers very
real opportunities, but they are strongest in local cuisines rather than in formerly dominant
growth categories like chicken and burger fast food. Operators are now re-evaluating their
long-term strategies, focusing on a broader range of long-term targets in Latin America,
Asia Pacific, and the Middle Eastern Gulf States.
High value is
paramount
One strategy that has become somewhat universal across regional barriers is the need to
offer high-value in every category and at every price-point. The pursuit of value is now a
key demand driver in emerging and developed markets alike, as consumers limited by
price-sensitivity, macroeconomic pressures, or low disposable incomes seek to make the
most of each of their dining purchases.
Local cuisine is
up next in
chains
Demand is growing for chained versions of local cuisines, creating powerful long-term
opportunities in some of the most important markets. This has created a challenge for
leading multinational operators which have built their positioning on international appeal.
Online, mobile,
delivery for all
Global consumers are also universally looking for more convenience and more simplicity
when it comes to dining out. Online ordering, mobile payments, and delivery service are
coming to play integral roles in the dining experience, a trend that will only accelerate.
Key insights in 2015 consumer foodservice
INTRODUCTION
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INTRODUCTION
GLOBAL PERFORMANCE
THE WAY FORWARD
COMPETITIVE LANDSCAPE
REGIONAL HIGHLIGHTS
CASE STUDIES
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Euromonitor International PASSPORT 6CONSUMER FOODSERVICE: A NEW ERA OF GROWTH AND COMPETITION - GLOBAL
CONSUMER FOODSERVICE IN 2015 AND BEYOND
The global consumer foodservice industry grew to over US$2.7 trillion in annual sales in
2014, recording its most successful year of
growth in recent history. 2014 saw real terms
growth increase to over 2%, with a further rise
projected for 2015.
This strong top-line growth camouflages some more interesting shifts in growth happening
beneath the surface. While China is still very
important in regards to the global foodservice
landscape, current terms growth in the market
continues to slow, remaining in the single-
digits in 2014, at just under 9%.
As operators have looked beyond the largest markets in Asia Pacific, much stronger growth
ha been seen in Latin America and the Middle
East and Africa, based on more stable local
economies and international investment. After
learning their lesson in China, operators are
seeking out more diverse international
expansion opportunities, particularly in
markets that are in the earlier stages of
chained foodservice development.
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Global Consumer Foodservice Sales and Growth 2009-2015
Foodservice Value % Growth Year-on-year
Global growth gains momentum through 2015
GLOBAL PERFORMANCE
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Euromonitor International PASSPORT 7CONSUMER FOODSERVICE: A NEW ERA OF GROWTH AND COMPETITION - GLOBAL
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While traffic growth has been strong in emerging markets, ongoing stagnation in
developed markets has conspired to keep
value sales growth in check in recent years.
Value growth did accelerate in 2014, to just
over 2% in constant terms (5% in current
terms); however, growth in sales is still slower
than growth in outlets and transactions by a
significant degree.
The decline in sales per transaction has been driven by a number of trends, both in higher
and lower income markets. As more and more
lower income consumers in emerging markets
begin eating out on a regular basis, average
transaction value has moved steadily
downward. At the same time, the median
global consumer has steadily become younger,
with a lower average income and an eagerness
to try new concepts within the constraints of
affordability.
As a result, the quest for value has become a global imperative, with nearly every consumer
looking to save at a range of price points.
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Global Consumer Foodservice Growth 2009-2014
Transactions Outlets Value
Value growth strengthens but still lags behind outlets and traffic
GLOBAL PERFORMANCE
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Euromonitor International PASSPORT 8CONSUMER FOODSERVICE: A NEW ERA OF GROWTH AND COMPETITION - GLOBAL
CONSUMER FOODSERVICE IN 2015 AND BEYOND
Asia Pacific remains the epicentre of the global foodservice industry, contributing 41% of total spending and double that of the next largest region. Asia Pacific is home to more than half of the global population,
and while income levels remain modest on average, dining out is a very important part of the social
landscape. This is particularly true in China, where a wide variety of affordable dining options can be found,
even in relatively small villages. As a result, per capita traffic levels are quite high compared to other
markets with similar levels of income.
That said, the fastest growth opportunities have moved elsewhere. Latin America and the Middle East both saw double-digit value growth in 2014, albeit from much smaller bases. Both have become important long-
term growth targets for multinational chains, which are looking to diversify their holdings. The lack of well-
developed traditional informal eating-out cultures in both regions (as opposed to fine dining) has provided
scope for rapid expansion in many markets, as international chains flock to satisfy rising demand.
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Consumer Foodservice Value Sales and Growth by Region in 2014
Foodservice Value in 2014 % Growth 2013/2014
Asia Pacific leads in size, while Latin America dominates growth
GLOBAL PERFORMANCE
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Euromonitor International PASSPORT 9CONSUMER FOODSERVICE: A NEW ERA OF GROWTH AND COMPETITION - GLOBAL
CONSUMER FOODSERVICE IN 2015 AND BEYOND
0 2 4 6 8 10 12 14 16
India
Peru
Sweden
New Zealand
Brazil
UAE
China
South Africa
Vietnam
Venezuela
% y-on-y growth
Fastest Growing Major Markets in Constant Terms 2013/2014
As chained operators attention moves toward emerging markets for strategic reasons, the balance of global growth is shifting in terms of share as well. China is not only the largest foodservice market, but it is
growing its share significantly each year, despite any slowing in its growth rate. Meanwhile, every
developed market among the top 10 is losing ground nearly as quickly.
It follows that the fastest growing major markets heavily favour emerging regions, each of which offers opportunities for global chains.
The balance of growth shifts even further toward emerging markets
GLOBAL PERFORMANCE
Largest Foodservice Markets by Value in 2014
Market Value % Share Change
China 560,431 20.7 0.7
USA 506,217 18.7 (0.4)
Japan 204,073 7.5 (0.3)
Brazil 144,606 5.3 0.3
India 102,773 3.8 0.2
Spain 99,755 3.7 (0.2)
Italy 98,239 3.6 (0.3)
UK 93,080 3.4 (0.2)
South Korea 72,618 2.7 -
France 63,672 2.3 (0.2)
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Euromonitor International PASSPORT 10CONSUMER FOODSERVICE: A NEW ERA OF GROWTH AND COMPETITION - GLOBAL
CONSUMER FOODSERVICE IN 2015 AND BEYOND
Category growth in 2014 told a complex story, highlighting shifting growth patterns in some of the
largest global markets. While street stalls/kiosks
and fast food quick, affordable, informal and
typically inexpensive options were still among the
fastest growing categories, full-service restaurants
outperformed fast food for the first time since 2010.
As with nearly all things global foodservice, this shift can be traced back to China. In 2014, full-
service restaurants grew faster than in 2013, by
9%, while fast food faltered, due to a number of
high-profile food safety and public relations
scandals. While these scandals had particularly
strong consequences for the largest chains, they
also undermined public trust in chained fast food
as a whole.
Outside China, fast food continued to outperform full-service. Along with very high growth rates in
street stalls/kiosks, these figures serve to reinforce
the idea that consumers all over the world, both in
higher and lower income areas, are being drawn to
lower price points, a high value positioning and
more flexible formats.
0 2 4 6 8 10
Cafs/Bars
100 % HomeDelivery/Takeaway
Self-ServiceCafeterias
Fast Food
Full-ServiceRestaurants
Street Stalls/Kiosks
% y-on-y growth
Global Foodservice Value Growth by Category 2013/2014
Global Excluding China
Category growth highlights quick and affordable in most marketsGLOBAL PERFORMANCE
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Euromonitor International PASSPORT 11CONSUMER FOODSERVICE: A NEW ERA OF GROWTH AND COMPETITION - GLOBAL
CONSUMER FOODSERVICE IN 2015 AND BEYOND
Standalone outlets continue to be the dominant presence in global foodservice, at 76% of 2014 value. However, the global share of non-traditional locations is growing, increasing from less than 21% to 24%
over the last decade. This growth has been led by retail locations, which are popular both in developed and
emerging markets. In the former, such locations keep costs low by requiring less extensive build-outs and
often smaller footprints. They also allow chains additional expansion opportunities in markets nearing
saturation. In developing countries, retail locations are in high demand as developments like shopping malls
offer higher security, clean conditions, in some cases air conditioning, and a social, high-traffic
environment. These locations also allow operators to reach a large pool of potential consumers, as they
often serve as gathering spaces patronized by customers from a large surrounding radius.
In 2014, value through retail locations grew by 8%, with their strongest growth in Latin America, and the Middle East and Africa. Travel locations followed with 7% growth, while standalone lagged at 5%. Leisure
locations were the only non-traditional outlet type to trail behind standalone outlets in value growth, at 5% in
2014.
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Asia Pacific
Australasia
Eastern Europe
Latin America
Middle East and Africa
North America
Western Europe
Foodservice Value by Region and Location Type 2014
Standalone Leisure Retail Lodging Travel
Growth by location shows favour for non-traditional outlets
GLOBAL PERFORMANCE
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Euromonitor International PASSPORT 12CONSUMER FOODSERVICE: A NEW ERA OF GROWTH AND COMPETITION - GLOBAL
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Non-traditional service channels have been growing in popularity, as consumers seek out ways to maximise convenience and save time in
their busy schedules. The home delivery, takeaway and drive-through
channels all grew faster than dine-in in 2014 value terms, with home
delivery leading the group with 11% sales growth worldwide.
Delivery, in particular, has become a major source of focus and momentum in higher income foodservice markets, as technology has
brought unprecedented levels of access for both consumers and
restaurant operators.
This has been due in part to more widely available order-receiving technology, especially through sites like GrubHub and JustEat, but also
through access to internet-connected devices. In the highest demand
markets, such as the US, this has even led to the development of an
entirely new industry of third-party delivery businesses. These include
services like PostMates, DoorDash and UberEats, which pick up food
from restaurants and deliver it to consumers for a fee, as well as
virtual restaurants, which deliver meals without any real bricks-and-
mortar presence, and services like Blue Apron and Hello Fresh which
deliver ingredients for a home-cooked meal.
While many of these services benefit smaller operators which do not have the resources to fund their own delivery fleets, it has also helped
bring delivery to chains in unlikely categories. PostMates will begin a
delivery partnership with Starbucks in the US in late 2015.
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Germany
Brazil
Mexico
India
Japan
UK
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USA
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Top 10 Home Delivery Markets by Value 2014
Demand for delivery service is increasing exponentially
GLOBAL PERFORMANCE
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Euromonitor International PASSPORT 13CONSUMER FOODSERVICE: A NEW ERA OF GROWTH AND COMPETITION - GLOBAL
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While every global market has its own unique conditions, there have been steadily increasing similarities between what higher income, urban consumers all over the world are looking for from their dining
experiences. This has been driven by two main factors, the first being greater awareness of global trends
through the spread of internet connectivity, entertainment and social media culture that celebrates the
sharing and discussing of restaurant experiences. The second is greater access to those experiences,
through the spread of chained foodservice and rising incomes, that make purchasing them possible.
As a result, the kinds of experiences being sought out by consumers in New York and London are now closely mirrored by those in Mexico City, Tokyo, Shanghai and So Paulo. These consumers want distinct,
high-quality dining experiences that are worth talking about with friends and on social media. They want to
feel good about the value they are getting for their money. They are interested in freshness, variety of
cuisines, simplicity in preparations and flexibility in formats. Finally, they are interested in convenience and
affordable luxury, in whatever forms those two benefits may take.
While these wealthier, urban consumers are not the mass consumers in most markets, they nonetheless represent a particularly lucrative and vocal group that indicate where mass-market trends may be headed
over the long term.
New Experiences
High Quality and Value
FreshnessSimplicity
and FlexibilityConvenience
Affordable Luxury
Consumer preferences have become surprisingly universal
GLOBAL PERFORMANCE
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Euromonitor International PASSPORT 14CONSUMER FOODSERVICE: A NEW ERA OF GROWTH AND COMPETITION - GLOBAL
CONSUMER FOODSERVICE IN 2015 AND BEYOND
Global growth was very strong in 2014, reaching a high of 5% with
even stronger rates expected in
2015. That said, growth for many
individual operators especially
leading fast food chains has
been challenging, as the global
growth story has been shifting
rapidly and decisively beneath
their feet. While China and the
US still offer very real
opportunities, the majority of
global growth has moved
elsewhere to Latin America,
the Middle East and Southeast
Asia. At the same time demand
has also shifted in the most
developed markets, as higher
income consumers change their
habits and seek out more
innovative options.
Steady global growth with
shifting dynamics
Other consumer preferences are shifting as well,
necessitating an evolution in
global strategies even for the
largest chains. With the need
for high value has come a
need for improvement in every
part of the dining experience.
Consumers are constantly
seeking out newer, more
interesting and more exciting
foodservice experiences, and
they want those experiences
to live up to their expectations
on every level. Ingredient
quality is as important to
consumers in China as it is in
the US and in Brazil, and
consumers extend that level of
care to evaluating every part
of the dining experience.
Better, healthier, more
modern, more convenient
Consumers all over the world are demonstrating a decisive change
in preferences. Those in higher
income, more developed regions,
such as North America and
Western Europe, have emerged
from years of macroeconomic
struggles with a new baseline
price sensitivity that demands
maximum value for all of their
foodservice purchases. In
emerging markets, a high-value
positioning is also very
appealing, as many consumers
still view chained foodservice as
an occasional indulgence rather
than a practical everyday
purchase. As a result, lower
priced, higher value categories
are gaining global share albeit
at a range of actual price points.
Opportunities are moving to the
value end of the spectrum
Key takeaways for current strategy
GLOBAL PERFORMANCE
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INTRODUCTION
GLOBAL PERFORMANCE
THE WAY FORWARD
COMPETITIVE LANDSCAPE
REGIONAL HIGHLIGHTS
CASE STUDIES
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Euromonitor International PASSPORT 16CONSUMER FOODSERVICE: A NEW ERA OF GROWTH AND COMPETITION - GLOBAL
CONSUMER FOODSERVICE IN 2015 AND BEYOND
2014 was a strong year for global foodservice overall, but that is not necessarily indicative of
growing momentum. Rather, foodservice growth is
expected to continue at a moderate pace as key
emerging markets mature.
While value growth will continue at a rate of about 2-3% in constant terms, outlet growth and
transactions growth are both expected to slow.
This will be due in part to slowing growth in Asia
Pacific, where the double-digit growth seen over
the last decade is nearing its limits. In China, in
particular, the already vast outlet base means that
large-scale net outlet gains over the forecast period
are unlikely.
That said, this steady, stay-the-course growth and short-term improvement camouflages significant
internal upheaval in many key markets. Chained
foodservice continues to make share gains based
on advantages in marketing, site selection and
outlet design, and modern, convenient, highly
versatile categories like fast food continue to
outperform more traditional categories, like cafs
and bars/pubs.
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Consumer Foodservice Growth Forecast 2014-2019
Transactions Value Outlets
Long-term growth will be steady, with no booming recovery
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Euromonitor International PASSPORT 17CONSUMER FOODSERVICE: A NEW ERA OF GROWTH AND COMPETITION - GLOBAL
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Asia Pacific will contribute the majority of global growth over 2014-2019, with 56% of absolute foodservice value growth. China will be a major driver of that growth, despite the countrys more difficult recent market
conditions. Many other markets, including India, Vietnam, South Korea and Indonesia, will see absolute
value growth of over US$5 billion between 2009 and 2014.
Latin America will continue to be a strong source of growth as well, though the Middle East and Africa will offer the highest rate of increase, at an annual average of over 4% in constant terms. This will be driven in
large part by international operators investing heavily in key markets in the Middle Eastern Gulf states, as
well as ramped-up investment in early growth-stage markets in Sub-Saharan Africa by operators looking to
maximise their long-term growth opportunities.
Notably, a mild recovery in Western Europe will see the region bouncing back from many years of declining sales, though on the individual market level, competition for that growth will still be fierce.
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Absolute value growth 2014/2019 % CAGR 2014-2019
Growth opportunities are still a regional game
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Euromonitor International PASSPORT 18CONSUMER FOODSERVICE: A NEW ERA OF GROWTH AND COMPETITION - GLOBAL
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A look at projected growth in transactions per capita suggests room to grow in some key markets. For example, while China is already
the largest foodservice market in sales terms, transactions per capita
are expected to increase by a margin of 16 transactions by 2019.
While the markets largest cities are becoming quite saturated with
options, and top-line growth has slowed, there are still hundreds of
millions of lower income consumers in China who will soon be seeing
foodservice become more readily available. Growth in the country will
undoubtedly continue over the long term, though not at the sky-high
rates it once experienced. This growth will extend to other countries
in Asia Pacific as well, including Vietnam, which will show the largest
transactions per capita increase in the world over 2014-2019.
The pace of expansion in some Latin America markets is expected to be similarly impressive. Transactions in Chile and Peru will expand
by more than 20 per capita over 2014-2019. While much of this
demand will be served by very low-priced local players, such growth
suggests opportunities for chained players, which need to begin
building a presence now in order to invest in long-term growth.
Spain will also see a sizable increase over the forecast period, as economic recovery finally comes to the downtrodden market.
Consumers are beginning to feel more comfortable spending on non-
essential purchases, and are making much more frequent trips to
restaurants, in accordance with traditional Spanish culture.
0 50 100 150 200 250
Thailand
Ireland
South Korea
South Africa
Bulgaria
Portugal
China
UAE
Spain
Peru
Chile
Vietnam
Biggest Gains in Foodservice Transactions
Per Capita 2014/2019
2019 2014
Transactions per capita offer a clear view of untapped demand
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Euromonitor International PASSPORT 19CONSUMER FOODSERVICE: A NEW ERA OF GROWTH AND COMPETITION - GLOBAL
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Global value will continue flowing toward fast food, with the category expected to see US$107 billion in new value over 2014-2019. This is being driven by consumer preferences shifting toward the more flexible, more
informal and more value-driven dining, resulting in strong growth in low-priced, limited-service categories in
developed and emerging markets alike.
That said, full-service categories are also gaining some momentum, based on rising demand in key markets in Asia Pacific and Latin America. Higher income consumers in China, Brazil and Mexico, among
others, are also seeking out chained full-service experiences that offer a cosier and more social alternative
to fast food. In particular, this trend is benefiting premium casual dining chains, such as the Cheesecake
Factory, Outback Steakhouse and PF Changs. It should be noted that more than half of the full-service
growth expected will come from China alone; however, the trend is apparent in many emerging markets.
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Full-Service Restaurants Fast Food Cafs/Bars Street Stalls/Kiosks 100% Home Delivery/Takeaway Self-Service Cafeterias
Growth continues in quick and casual, but full-service is on the rise
THE WAY FORWARD
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Euromonitor International PASSPORT 20CONSUMER FOODSERVICE: A NEW ERA OF GROWTH AND COMPETITION - GLOBAL
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Largest Regional Opportunities by Absolute Value Growth
Region CategoryGrowth 2014-2019
(US$ mn)
Asia PacificAsian Full-Service
Restaurants132,683
Asia Pacific Asian Fast Food 24,310
North America Burger Fast Food 12,640
Latin AmericaOther Full-Service
Restaurants9,007
Latin America Bars/Pubs 8,251
North AmericaBakery Products Fast
Food7,757
North AmericaOther Full-Service
Restaurants7,050
Asia Pacific Chicken Fast Food 6,104
Asia Pacific Street Stalls/Kiosks 5,847
North AmericaNorth American Full-
Service Restaurants5,656
Local specialities will drive growth over the forecast period, particularly in Asia
Pacific, where growth in Asian concepts
will dwarf absolute value increases in all
other categories.
This represents a challenge for international operators. While there is still
plenty of room to grow in categories like
burgers and fried chicken, the potential
opportunity in serving local demand for
local cuisine is substantially greater, and
localisation of foreign brands can only go
so far.
At the same time, the quality and appeal of local chains in key markets continues
to grow, and local franchise partners are
increasingly experimenting with their own
local brands. What this means is that the
era of un-challenged growth for
international chains based heavily on
the appeal of global brands and premium
outlets is likely to be over.
Growth opportunities by size highlight a challenge for multinationals
THE WAY FORWARD
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Euromonitor International PASSPORT 21CONSUMER FOODSERVICE: A NEW ERA OF GROWTH AND COMPETITION - GLOBAL
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Largest Regional Opportunities by CAGR
Region Category% CAGR
2014-2019
Australasia Juice/Smoothie Bars 12.7
Latin America Juice/Smoothie Bars 11.6
Asia PacificPizza Full-Service
Restaurants11.5
Middle East and Africa Burger Fast Food 9.5
Middle East and AfricaPizza 100% Home
Delivery/Takeaway9.2
Australasia Latin American Fast Food 7.5
Eastern EuropeConvenience Stores Fast
Food7.0
Middle East and Africa Ice Cream Fast Food 7.0
Middle East and Africa Bars/Pubs 6.6
Asia Pacific Other Fast Food 6.2
Middle East and Africa Specialist Coffee Shops 6.2
A look at the fastest growing categories paints a more nuanced
picture, highlighting changes in
consumer behaviour and preferences.
From this view, it is clear that limited-
service categories are still rapidly
gaining momentum as global
consumers continue seeking out more
casual, flexible dining experiences,
and new cuisines to try.
Even more so than any particular category, though, the Middle East and
Africa stands out as the most
significant opportunity, showing high
growth rates in multiple formats and
cuisine types. This will be driven in
part by seemingly unquenchable
demand for premium international
brands, thriving dining-out cultures in
key markets like the UAE, and eager
investment from global operators
looking to diversify their presence
beyond China and Latin America.
While opportunities by rate show strength in modern formats
THE WAY FORWARD
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Euromonitor International PASSPORT 22CONSUMER FOODSERVICE: A NEW ERA OF GROWTH AND COMPETITION - GLOBAL
CONSUMER FOODSERVICE IN 2015 AND BEYOND
0% 50% 100%
Asia Pacific
Australasia
Eastern Europe
Latin America
Middle East and Africa
North America
Western Europe
Standalone vs Non-Traditional: Share of Sales Growth by Region 2014-2019
Standalone Non-Traditional
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Non-traditional locations will continue to edge their way toward a larger share of global growth. While the transition is gradual, the share of standalone locations is predicted to decline from 76% of global
foodservice sales in 2014 to 75% in 2019.
The shift will be most noticeable in Western Europe, Eastern Europe, and the Middle East and Africa, where non-traditional locations will be responsible for more than 50% of value growth. In Western Europe,
this will be the result of operators looking to retail and travel locations as new expansion targets in overly
saturated markets. In Eastern Europe and the Middle East and Africa, such locations represent a converse
opportunity: in markets where the local foodservice industry is earlier in its development, shopping malls
and transportation hubs offer secure, high-traffic, high-prestige locations with access to higher income
consumers. Such developments are now perceived to be valuable launching pads for new concepts, with
maximum visibility for the most lucrative segments of a new markets population.
Retail and travel locations will continue to claim share
THE WAY FORWARD
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Euromonitor International PASSPORT 23CONSUMER FOODSERVICE: A NEW ERA OF GROWTH AND COMPETITION - GLOBAL
CONSUMER FOODSERVICE IN 2015 AND BEYOND
Demand for online and mobile ordering and payments, as well as for increasingly convenient and accessible options for delivery, will continue to grow. In the most developed markets, operators are
experimenting with new ways technology can play a role in the dining experience for takeaway, delivery
and even dine-in customers. Some are experimenting with redefining the dining-in experience entirely,
replacing traditional servers with interactive touchscreens in full-service, or using kiosks and mobile phones
to replace counter ordering in fast food. Fast-casual dining chain Panera Bread so far offers the best
example, in which the chain is experimenting with Panera 2.0 outlets, designed to better serve modern
consumers. Customers can order online before they arrive, from touchscreen kiosks at the counter, from
traditional cashiers, or even from mobile phones while sitting at a table in the dining room.
On the customer side, this has meant that consumers are loosening up their expectations for what the experience should look like when they go to a restaurant, not just at a wider range of formats but also for a
wider range of occasions. This opens the door for operators to experiment even further with what it means
to be a restaurant, including going to such extremes as meal delivery services and even virtual restaurants,
which serve only delivery occasions and have no outlet at all. While this extreme is still very much a niche
trend, confined to major cities in higher income markets, the key takeaway is that technologys role in
foodservice is growing, and it will continue to become even more central to the experience by 2019.
Online and Mobile
Ordering
Online Ordering
Hubs
In-store Technology
Third-Party Delivery Services
Virtual Restaurants
Online, mobile and delivery demand will affect the entire industry
THE WAY FORWARD
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Euromonitor International PASSPORT 24CONSUMER FOODSERVICE: A NEW ERA OF GROWTH AND COMPETITION - GLOBAL
CONSUMER FOODSERVICE IN 2015 AND BEYOND
The changes in global growth prospects may appear limiting,
but in reality they have simply
diversified. Rather than all of the
long-term opportunities being
concentrated in a handful of
markets, there are now very real
opportunities to be had in a range
of markets, categories and price
points. Latin America is still
seeing rapid growth, and the
Middle East has become a centre
for expansion for premium
international chains. Asia Pacific
offers plenty of opportunities
beyond China, including in higher
income markets like South Korea.
Meanwhile, China still offers very
real opportunities, including some
of the largest in the world in
absolute value terms.
The growth story has changed,
but opportunities still abound
Demand for online and mobile ordering, mobile payment and
convenience-based services like
delivery are coming to play a
larger role in the foodservice
landscape all over the world.
Technology has changed the
accessibility of such
programmes, making them as
much a possibility in early-stage
emerging markets as in mature
ones, and it has also changed
consumer expectations when it
comes to what they are looking
for from a dining experience.
Operators now have greater
demands on them when it
comes to such services, but
they also have greater creative
leeway when it comes to finding
new ways to implement them.
Online, mobile and delivery is
the universal future
One of the largest long-term growth opportunities in global
foodservice is in local cuisines
in emerging markets. While
there is still plenty of demand for
burgers and fries in Asia Pacific
and Latin America, consumers
who are seeing their incomes
rise and gaining more frequent
access to chained foodservice
are also driving demand for
chained foodservice versions of
their own local favourites. Asian
fast food and Asian full-service,
in particular, will offer a
combined US$167 billion in new
foodservice growth over 2014-
2019. Multinational chains are
scrambling to capture this
demand, but so far it remains
largely untapped.
Consumers want chained local
experiences too
Key takeaways for long-term growth
THE WAY FORWARD
-
INTRODUCTION
GLOBAL PERFORMANCE
THE WAY FORWARD
COMPETITIVE ENVIRONMENT
REGIONAL OPPORTUNITIES
CASE STUDIES
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Euromonitor International PASSPORT 26CONSUMER FOODSERVICE: A NEW ERA OF GROWTH AND COMPETITION - GLOBAL
CONSUMER FOODSERVICE IN 2015 AND BEYOND
Chained consumer foodservice value is growing faster than independent with two very notable, and seemingly opposing,
exceptions: Asia Pacific and North America. In both of these
regions, the independent segment outpaced chains in 2014, albeit
for very different reasons.
In Asia Pacific, strong growth in Chinas dominant independent segment was enough to boost growth at the regional level, while
continued difficulties for leading chained concepts similarly
dragged down chained rates. It is notable that both segments in
China have seen slowing growth in recent years, but independents
saw a small growth improvement in 2014 that put them ahead.
In North America, the independent segment outperformed chains for the first time in over a decade, due to an unusually strong year.
Many factors contributed to this, including steadily building
momentum since the economic recovery, which has finally trickled
down to smaller and medium sized businesses. In addition,
interest among consumers in higher quality, more authentic dining
experiences has favoured independent outlets and boutique
chains (those with fewer than 10 outlets, which are counted
among the independent segment). Finally, especially strong
headwinds facing the largest chained players have dampened
growth in the chained category as a whole, significantly narrowing
the performance gap that has been widening for years.
-5 0 5 10 15 20 25
Western Europe
North America
Middle Eastand Africa
Latin America
Eastern Europe
Australasia
Asia Pacific
% growth
Chained vs Independent Consumer Foodservice Value
Growth in 2014
Independent Chained
The independent segment outperforms chains in two key regions
COMPETITIVE ENVIRONMENT
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Euromonitor International PASSPORT 27CONSUMER FOODSERVICE: A NEW ERA OF GROWTH AND COMPETITION - GLOBAL
CONSUMER FOODSERVICE IN 2015 AND BEYOND
But growth by category highlights room to grow in fast food
COMPETITIVE ENVIRONMENT
A look at chained and independent growth in value terms shows a clearer picture of where the opportunities still lie. Despite its slowdown, fast food saw by far the largest value increase in sales for
chains 2014, at more than US$20 billion. Asia Pacific, Latin America and North America each contributed
around US$5 billion to that figure, though Latin Americas contribution was by far the most meaningful in
strategy terms. Chained fast food in the region grew by 22% in 2014, the result of strong investment by
international players looking to balance their global presence, and rapid expansion by local giants like Alsea
and FEMSA, which are fighting to get ahead of external competitors.
Chained street stalls and kiosks had the strongest performance among chained categories in rate terms, increasing by US$1.2 billion at an annual rate of 12%. 90% of this increase came from Asia Pacific and
Latin America, where chained street stalls have become a powerful way to reconcile the high appeal of
branded concepts with the lower prices and more accessible format desired by lower income consumers.
0 10 20 30 40 50 60 70 80
100% Home Delivery/Takeaway
Cafs/Bars
Full-Service
Fast Food
Self-Service Cafeterias
Street Stalls/Kiosks
US$ billion
Global Absolute Value Growth by Category 2013/2014
Chains Independents
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Euromonitor International PASSPORT 28CONSUMER FOODSERVICE: A NEW ERA OF GROWTH AND COMPETITION - GLOBAL
CONSUMER FOODSERVICE IN 2015 AND BEYOND
Growth was moderate to strong among the top 10 companies in 2014, led by 7-Eleven parent Seven & I Holdings at 10%. More notable than the strongest performance was the weakest. McDonalds Corp saw
just 3% value growth, alongside similar growth in outlets, citing declining guest counts, overly complicated
menus, operational inefficiencies and difficulties with declining public brand perception.
Top 10 Global Foodservice Companies by Value
CompanyValue (US$
mn)Outlets
Sales Growth
2013/2014 (%)
Outlet Growth
2013/2014 (%)
McDonalds Corp 91,605 41,767 2.8 3.4
Yum! Brands 45,811 42,463 4.8 3.6
Restaurant Brands International 24,994 18,555 6.6 3.0
Seven & I Holdings Co Ltd 21,415 55,138 10.3 5.3
Doctors Associates Inc 20,691 43,027 7.6 4.8
Starbucks Corp 19,097 21,371 9.2 7.5
Wendys Co, The 10,618 6,672 4.3 1.0
Dunkin Brands Group Inc 9,557 18,694 3.5 2.6
Dominos Pizza Inc 8,995 12,660 9.1 8.4
Darden Restaurants Inc 8,574 2,221 2.4 1.8
Moderate growth for leading chains, with one exception
COMPETITIVE ENVIRONMENT
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Euromonitor International PASSPORT 29CONSUMER FOODSERVICE: A NEW ERA OF GROWTH AND COMPETITION - GLOBAL
CONSUMER FOODSERVICE IN 2015 AND BEYOND
The fastest growing global chains are concentrated in Asia Pacific, and overwhelmingly favour low-priced, limited-service concepts. Four of the top 10 concepts are convenience stores, and most are value players
which compete heavily on price. For example cnHLS is building its business based on the idea of offering
high-quality fast food from a Chinese company, at more competitive prices than Western chains.
Fastest Growing Global Chains in 2014 With Sales Over US$100 million
Brands Value (US$ mn)% Growth
2013/2014
Domestic
MarketPrimary Category
Ediya Espresso 372 40 South Korea Specialist Coffee Shops
CU 457 38 South Korea Convenience Stores Fast Food
GS25 646 37 South Korea Convenience Stores Fast Food
Grido 190 30 Argentina Ice Cream Fast Food
Coco 182 27 Taiwan Street Stalls/Kiosks
cnHLS 658 24 China Chicken Fast Food
Chay Si Ba Mee Kaew 149 22 Thailand Street Stalls/Kiosks
ampm 158 21 USA Convenience Stores Fast Food
Bobs 875 19 Brazil Burger Fast Food
Family Mart 4,418 17 Japan Convenience Stores Fast Food
The fastest growth chains are in Asia Pacific
COMPETITIVE ENVIRONMENT
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Euromonitor International PASSPORT 30CONSUMER FOODSERVICE: A NEW ERA OF GROWTH AND COMPETITION - GLOBAL
CONSUMER FOODSERVICE IN 2015 AND BEYOND
2014 and 2015 have been extremely challenging for both McDonalds and Yum! Brands, with the leading
two global operators battling serious problems in their
most important markets.
McDonalds continues to struggle with changing consumer preferences in the US, seeing same store
sales falling consistently every quarter as consumers
seek out more exciting, higher quality dining
experiences, particular in fast casual dining.
Even within traditional fast food, McDonalds appears to be losing customers to newer players like Five
Guys and Chick-Fil-A, both of which have been
expanding rapidly on a positioning of a better fast
food experience at a similarly low price.
These challenges also extend to China, where consumers continue to shy away from both chains
after a string of supplier and food safety scandals
undermined public trust.
Even high-growth stalwart Subway saw consistently declining growth rates throughout the review period,
as rapid outlet growth in key emerging markets
becomes less sustainable.
0
2
4
6
8
10
12
14
16
2009/2010 2010/2011 2011/2012 2012/2013 2013/2014
% v
alu
e g
row
th
Global Annual Value Growth Among Top Three Brands 2009-2014
McDonald's KFC Subway
Performance of top chains continues to stall
COMPETITIVE ENVIRONMENT
-
Euromonitor International PASSPORT 31CONSUMER FOODSERVICE: A NEW ERA OF GROWTH AND COMPETITION - GLOBAL
CONSUMER FOODSERVICE IN 2015 AND BEYOND
While some of these results can be attributed to a generally difficult environment, it is notable that many
other chains among the top 10 have fared better despite
facing similar headwinds. Starbucks continues to ride the
wave of the global coffee shop boom, posting
consistently strong comparable-store sales both in the
US and internationally. This is despite unrelenting
competition from up-and-coming local chains in India,
South Korea, Colombia and many other key markets,
and a growing swell of smaller, third wave coffee shops
fighting for share.
Burger King has also enjoyed steady expansion, particularly in Latin America, while 7-Eleven has soared
into the double-digits driven by rising demand for
extreme convenience and extreme value in fast food.
Taken together, it is clear that the industry has reached a turning point, in that consumers in the largest markets
are more discerning than ever, and the models which
worked during the global recession are seeing rapidly
diminishing returns. Those chains that have adapted
quickly and found new paths to growth are reaping the
rewards, while those resistant to change have fallen
behind.
More flexible brands have found a way through the storm
COMPETITIVE ENVIRONMENT
0
2
4
6
8
10
12
14
16
2009/2010 2010/2011 2011/2012 2012/2013 2013/2014
% v
alu
e g
row
th
Annual Value Growth Among Chains Ranked 4th-7th 2009-2014
7-Eleven Starbucks
Burger King Pizza Hut
-
Euromonitor International PASSPORT 32CONSUMER FOODSERVICE: A NEW ERA OF GROWTH AND COMPETITION - GLOBAL
CONSUMER FOODSERVICE IN 2015 AND BEYOND
North America and Asia Pacific were the only two regions to
show faster growth in the
independent segment in 2014.
In North America, this was due
to an unusually strong year for
independents, as a result of a
number of consumer-driven
trends, while in Asia Pacific this
was due to substantial growth in
Chinas very large and rapidly
expanding independent full-
service restaurants category.
The common thread in both of these regions was that leading
chains were also facing
significant hardships, with
McDonalds and Yum! Brands
being forced to make major
strategic changes.
Major regions proving
challenging for chains
The Asia Pacific region is home to many of the fastest growing
chains in 2014. The top three
chains came from South Korea,
including the locally-owned
Ediya Espresso, which opened
nearly 400 new outlets in 2014.
Convenience stores fast food also had a particularly strong
showing among growth leaders,
including chains from South
Korea and Japan. These chains
have found rising demand for
very low-priced, very convenient
foodservice options that can
serve as alternatives to other
limited-service categories. Retail
foodservice in general has seen
rapid growth, gaining share over
other location types.
The fastest growing chains are
in Asia Pacific
These struggles at the highest levels have opened up the
playing field somewhat and
provided an opportunity for
lower ranking chains. In burger
fast food, for example, Burger
King, Wendys and fast casual
chains like Shake Shack have
been able to navigate the
difficult consumer environment
in the US more successfully,
quickly adapting to new
preferences.
In Asia Pacific, a large number of modern, fast-growing and
well-funded local operators are
rising up to take on international
leaders. These chains are
finding immense opportunities
for long-term growth in Asia and
beyond.
Now is the time for middle-tier
players to take chances
Key competitive takeaways
COMPETITIVE ENVIRONMENT
-
INTRODUCTION
GLOBAL PERFORMANCE
THE WAY FORWARD
COMPETITIVE LANDSCAPE
REGIONAL HIGHLIGHTS
CASE STUDIES
-
Euromonitor International PASSPORT 34CONSUMER FOODSERVICE: A NEW ERA OF GROWTH AND COMPETITION - GLOBAL
CONSUMER FOODSERVICE IN 2015 AND BEYOND
Projected increases in Asia Pacific indicate steady, strong yet not booming growth across
the region. While China continues to lead, the
projected absolute growth in constant terms
over 2014-2019 is expected to be 21% less
then that seen from 2009-2014. This reflects
both a maturing Chinese market and real
headwinds facing the industry
While every Asian market is expected to continue growing, the days of dizzying, 20%
or more growth year after year appear to be in
the past. Newcomers should be prepared for
a sustained, years-long ramp up before
gaining significant scale. This is particularly
true in markets like Indonesia and Vietnam,
where small independents will lead growth for
the foreseeable future.
Notably, there are plenty of opportunities to be had beyond emerging markets. For
example, the more mature South Korean
market will still see US$3.7 billion in new
value in the chained segment, led by its
booming specialist coffee shops category.
Forecast Growth by Market in Asia Pacific 2014-2019
Market
Chained
Growth
2014/2019
(US$ mn)
Independent
Growth,
2014/2019
(US$ mn)
Total CFS
% CAGR,
2014/2019
China 20,836 121,622 4.6
India 845 16,546 3.2
Vietnam 627 6,677 6.9
South Korea 3,745 3,180 1.8
Indonesia 1,333 5,390 3.4
Thailand 2,281 1,056 2.8
Japan 4,905 2,474 0.2
Malaysia 1,466 347 3.2
Taiwan 621 908 1.5
Philippines 865 222 2.0
Hong Kong,
China360 361 1.1
Singapore 211 228 1.0
Major Asian markets will offer steady but moderate growth
REGIONAL HIGHLIGHTS
-
Euromonitor International PASSPORT 35CONSUMER FOODSERVICE: A NEW ERA OF GROWTH AND COMPETITION - GLOBAL
CONSUMER FOODSERVICE IN 2015 AND BEYOND
Category-level opportunities highlight a region-wide shift
REGIONAL HIGHLIGHTS
Slowing economic growth in many of Asias largest markets has led consumers across the region to cut back on luxuries including consumer foodservice. This is particularly true in China, where the high end of
the market has been hit particularly hard by a national anti-corruption drive, forcing many operators to pivot
aggressively towards the mass market. The push for value can also be seen in markets like South Korea,
Taiwan, India and long-suffering Japan, where a consumption tax rise in 2014 put an end to the mini-boom
seen in 2013. All told, decades of booming, export-led growth in many Asian markets have given way to a
more muted demand environment, led by value-conscious domestic consumers.
As with all discussions of Asia Pacific, this comes with the caveat that slowing growth does not mean no growth at all. Strong growth in fast food and other value-focused categories will offer opportunities, heavily
favouring those concepts that offer real value at an array of price points for a range of income levels.
0 20 40 60 80 100 120 140 160
Full-Service
Fast Food
Street Stalls/Kiosks
Self-Service Cafeterias
100% Home Delivery/Takeaway
Cafs/Bars
US$ billion
Projected Absolute Growth by Category, China vs Rest of Asia Pacific 2014-2019
China Rest of Asia Pacific
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Euromonitor International PASSPORT 36CONSUMER FOODSERVICE: A NEW ERA OF GROWTH AND COMPETITION - GLOBAL
CONSUMER FOODSERVICE IN 2015 AND BEYOND
While much of the talk of China has focused on the negative aspects of the market slowing growth,
consumer spending cut-backs, and anti-
extravagance sentiments that are stunting growth
in the premium segment it is important not to lose
sight of the long-term picture, and the larger role
China is still playing in terms of the global growth
story. Alongside this narrative of China losing some
of its significance as a growth target is the strong
indication that China still offers the largest long-
term potential value increase in global foodservice
over the forecast period.
Within the context of Chinas recent growth rates, opportunities there look less appealing; however,
relative to all other markets and freed from the
harsh comparison of its own historic successes
China is still a very real, and very lucrative long-
term opportunity.
While China may not be the opportunity it once was, it is still one of the primary engines driving
foodservice growth at the global level, and it
cannot, and should not, be ignored.
Those players looking to grow in China will not succeed without a change in strategy that reflects
current preferences. Chinese consumers are now
less concerned with iconic Western brands and
more concerned with quality in every part of the
experience. As a result, 2014 saw fast food losing
momentum to specialist coffee shops, cafes and
even full-service, as consumers sought out
healthier food and cosier environments.
Consumers also looked beyond Western cuisine and sought out other kinds of international dining
experiences, particularly Korean food. This has
also been driven by growing interest among young
people in Korean culture as a whole, including
music and other entertainment
Chinese consumers are eager for the same convenience- and experience-based services
growing all over the world, including online and
mobile ordering and payments, third-party delivery
services, and social media involvement within the
dining experience. This has led to opportunities in
all of these areas, especially for services that
combine these benefits in new ways.
China in 2015: What is the way forward for chains?
REGIONAL HIGHLIGHTS
-
Euromonitor International PASSPORT 37CONSUMER FOODSERVICE: A NEW ERA OF GROWTH AND COMPETITION - GLOBAL
CONSUMER FOODSERVICE IN 2015 AND BEYOND
Latin America is set to continue to be a primary long-term target
for international chains. 2014
was a year of new entrances, as
operators scrambled to gain a
foothold in all of the regions
major markets and some
minor ones, as well.
Brazil remains far and away the largest market and the most
important driver of growth, but
many other countries offer
opportunities for expansion as
well.
Soaring incomes and rapid poverty reduction in Peru,
Colombia, Venezuela and Brazil
have created growing demand
for more varied offerings, while
the number of consumers able
to afford regular eating out has
expanded by millions over the
last decade.
It is important to remember, however, that Latin America is a diverse region necessitating highly localised strategies. For example in
Argentina, high inflation in 2013 and 2014 affected consumer
confidence and dampened spending, while putting strain on
restaurant operators, which are struggling to remain profitable. At the
same time, Argentinean consumers are looking to make healthier
dining decisions and maximise the quality of their foodservice
purchases, all within the context of price sensitivity. This has
translated to momentum for chained bakery fast food concepts and
French bakery-caf chains that emphasise high quality and premium
experiences at relatively low cost.
0
2
4
6
8
10
12
0
5
10
15
20
25
30
35
Brazil Mexico Chile Peru Colombia Venezuela Argentina
% g
row
th
US
$ b
n
Foodservice Value Growth by Market 2014-2019
Absolute Value Growth 2014/2019 % CAGR 2014-2019
Latin America demand surges ahead, offering diverse opportunities
REGIONAL HIGHLIGHTS
-
Euromonitor International PASSPORT 38CONSUMER FOODSERVICE: A NEW ERA OF GROWTH AND COMPETITION - GLOBAL
CONSUMER FOODSERVICE IN 2015 AND BEYOND
Given how much expansion in Latin America has been concentrated on lower income consumers, it is no surprise that informal options are
expected to lead growth. Fast food will see the strongest growth
region-wide, at a 4% CAGR in constant terms, with self-service
cafeterias following closely behind. Self-service cafeterias growth can
be attributed entirely to Brazil, where kilo restaurants continue to
see strong growth as high-quality, affordable dining options. Such
outlets serve local cuisine at very low prices and by weight, and are
made up almost entirely of independent operators.
This leads to a broader insight about Latin America in general, in that growth in many markets may be strong, but much of it will continue to
be claimed by independent operators at the low end of the pricing
scale. Over 2014-2019, only 21% of the total value growth in
foodservice will go to chained players, with some markets, like Chile,
seeing a share as low as 10%.
This does not mean that chains cannot find growth; rather, competition will remain strong from local, informal options, such as
Brazils small bakeries or Mexicos network of street stalls. Instead of
displacing such options, chains will remain a complement to these
operators in the medium term. As a result, chains must recognise that
while there is clearly demand for indulgence, as well as variety and
more premium experiences, consumers also have plenty of readily
available options, and a balanced, high-value positioning is key.
0% 25% 50% 75% 100%
Brazil
Mexico
Chile
Peru
Colombia
Venezuela
Argentina
Absolute Value Growth Distribution in Major Latin
America Markets 2014-2019
Full-Service
Fast Food
Cafs/Bars
Street Stalls/Kiosks
Self-Service Cafeterias
100% Home Delivery/Takeaway
Yet again, growth favours value-focused concepts and formats
REGIONAL HIGHLIGHTS
-
Euromonitor International PASSPORT 39CONSUMER FOODSERVICE: A NEW ERA OF GROWTH AND COMPETITION - GLOBAL
CONSUMER FOODSERVICE IN 2015 AND BEYOND
Local concepts, local cuisines are the next chained frontier
REGIONAL HIGHLIGHTS
Amidst the competition from independents, there has also
been a clear pattern of
investment in locally-owned
chains and concepts featuring
local cuisine. In the most notable
example, Mexico saw two of its
largest operators investing in
such chains in 2013 and 2014.
Alsea acquired casual dining
chain VIPs, while FEMSA
purchased Latin American fast
food chain Gorditas Dona Tota.
Other local operators have also
developed their own concepts,
such as Grupo Gigantes full-
service Toks chain.
These moves reflect both the growing power of local players
and demand for chained
versions of local favourites, a
trend which is expected to
continue over the long term.
Largest Locally Owned Brands in Latin America 2014
Brand Global Brand Owner
2014
Value
(US$ mn)
Growth
2013/2014
OXXO FEMSA 883 14%
Bobs Brazil Fast Food Corp 875 19%
Habibs
Al Saraiva
Empreendimentos
Imobilirios e Participaes
Ltda
865 13%
Giraffas Restpar Alimentos Ltda 427 18%
Arturos PAICA Arturo's CA 403 70%
VIPs Alsea 386 4%
Norkys Grupo Norkys 294 15%
Spoleto Grupo Trigo 293 26%
Restaurante
SanbornsGigante SA de CV, Grupo 234 6%
Toks CPQ Brasil S/A 233 5%
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Euromonitor International PASSPORT 40CONSUMER FOODSERVICE: A NEW ERA OF GROWTH AND COMPETITION - GLOBAL
CONSUMER FOODSERVICE IN 2015 AND BEYOND
Despite the well-publicised struggles of leading operators much of which has been blamed on
generally difficult market conditions the long-
term prognosis for growth in North America is
strong. Consumer foodservice value in the
region is expected to grow at an average annual
rate of 2% over 2014-2019, more than three
times faster than the average rate of growth in
constant terms seen during the previous five
years. This is the result of the continued
recovery, which has sent average transactions
per capita soaring past pre-recession levels.
Within that recovery, dynamics at the market level have changed. Consumers have more
options than ever, and a residual concern for
value has left behind increasingly discriminating
preferences. The idea of an appealingly
utilitarian foodservice experience no longer
exists for the majority of higher income
consumers, and in its place is the constant need
for more, better and more highly varied at all
times. This means that opportunities abound,
but successful strategies have changed.
160
165
170
175
180
185
190
195
Tra
nsa
ctio
ns p
er
ca
pita
Foodservice Transactions per Capita in North America 2005-2019
0.0
0.5
1.0
1.5
2.0
2.5
3.0
2014/2015 2015/2016 2016/2017 2017/2018 2018/2019
% g
row
th
Foodservice Growth in North America 2014-2019
Value Transactions Outlets
North America growth will be surprisingly steady
REGIONAL HIGHLIGHTS
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Euromonitor International PASSPORT 41CONSUMER FOODSERVICE: A NEW ERA OF GROWTH AND COMPETITION - GLOBAL
CONSUMER FOODSERVICE IN 2015 AND BEYOND
Fast food accounts for six of the top 10 fastest growing categories in North America over 2014-2019, reflecting both ongoing consumer demand for value, and continued innovation and investment in the space.
Leading the way is fast-casual dining, which continues to be the focal point of growth in the US. The
premium yet value-focused category is expected to add US$9.9 billion in new value between 2014 and
2019, a full 32% of the total increase expected in fast food. To put the significance of this figure in context,
fast-casual dining claimed just 9% of fast food sales in North America in 2014.
Other fast-growing categories are expected to benefit from demand for both affordable luxury and simplicity in preparation methods, menus and formats. This includes both Asian and Latin American fast food, which
offer fresh yet adventurous takes on Mexican, Chinese, Japanese and Southeast Asian cuisines.
0
1
2
3
4
5
6
7
8
9
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
Fast-Casual ConvenienceStores Fast
Food
LatinAmericanFast Food
Asian FastFood
LatinAmerican
Full Service
Bars/Pubs SpecialistCoffeeShops
BakeryProducts
Fast Food
Asian Full-Service
Burger FastFood
% g
row
th
US
$ m
n
Fastest Projected Growth Categories in North America by Rate 2014-2019
Absolute Value Increase 2014/2019 % CAGR 2014-2019
Led by surging demand for fast-casual dining
REGIONAL HIGHLIGHTS
Note: Fast-casual is calculated separately from the breakdown of total fast food by cuisine type; all sales through fast casual are also attributed to other by type categories
-
Euromonitor International PASSPORT 42CONSUMER FOODSERVICE: A NEW ERA OF GROWTH AND COMPETITION - GLOBAL
CONSUMER FOODSERVICE IN 2015 AND BEYOND
Sub-Saharan Africa is one of the most important regions for very long-term foodservice growth, and
many chained players have tentatively started to
expand in the most promising markets beyond the
comparatively mature South Africa. Subway, for
example, now has multiple outlets in Kenya, while
Yum! Brands KFC has a presence in over a dozen
sub-Saharan markets.
That said, over 2014-2019, MENA markets will contribute the vast majority of sales in the region,
with the most significant contributions coming from
the wealthy states in the Gulf Cooperation Council
(GCC). The latter group alone is expected to reach
US$46 billion in annual foodservice sales by 2019,
nearly double the Sub-Saharan total.
Luckily for global chains, the GCC is also particularly conducive to international chained
growth, offering strong infrastructure, high incomes
and a wide array of potential local franchise
partners. However, along with these conditions
comes fierce competition, not just from local
operators but from every operator looking for the
next big thing in international growth.
0
10
20
30
40
50
60
70
80
90
100
2014 2015 2016 2017 2018 2019
US
$ b
illio
n
Foodservice Sales in MENA vs Sub-Saharan Africa 2014-2019
MENA Sub-Saharan Africa
Middle East and Africa growth is all about the Middle East for nowREGIONAL HIGHLIGHTS
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Euromonitor International PASSPORT 43CONSUMER FOODSERVICE: A NEW ERA OF GROWTH AND COMPETITION - GLOBAL
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Taken together, the Gulf states represent the 16th largest foodservice market in the world, with much
higher forecast value growth rates than any market
of similar size. This places the market comfortably
alongside Indonesia and Venezuela in terms of
size, with growth closer in speed to smaller
markets like Vietnam or Peru.
The GCC states also differ from other high growth markets in one very distinct and very important
area: disposable income. The GCC collectively has
much higher disposable income averages than
other key emerging markets, and much stronger
forecast growth rates than other wealthy markets.
While income inequality is significant in the region,
there is nonetheless enormous potential for growth
in the same modern chained concepts currently
enjoying brisk expansion in markets such as the
US and the UK. Adding to these benefits, some
key metropolitan areas like Dubai have particularly
strong demand for chained foodservice, due to
local social life revolving around high-end shopping
malls that double as dining districts and leisure
centres.
-1
0
1
2
3
4
5
6
0
10,000
20,000
30,000
40,000
50,000
60,000
% C
AG
R
US
$ m
n
Foodservice Value and Growth in the GCC and Similarly Sized Markets
2014-2019
Sales in 2014 Forecast CAGR 2014-2019
GCC markets are the ideal emerging developed growth targetsREGIONAL HIGHLIGHTS
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Euromonitor International PASSPORT 44CONSUMER FOODSERVICE: A NEW ERA OF GROWTH AND COMPETITION - GLOBAL
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Growth has slowed and the years of double-digit growth are over, most notably in China; however, opportunities still exist
Success will come from a lengthy, sustained effort Price-sensitive consumers mean value-oriented categories have the strongest prospects
Asia Pacific
Diverse conditions at the market level mean strategies must be highly localised As in Asia Pacific, value-focused categories are most conducive to long-term success Demand is strong for local cuisines, even in the chained segment, and many powerful
local operators are already investing in local chains
Latin America
Leading chains struggled in North America in 2014, most notably McDonalds However, beyond the headlines, North America had a strong performance Fast casual growth was very strong, demonstrating a long runway for growth for the right
concepts
North America
The Middle Eastern Gulf states are a major expansion target for all multinational operators The region offers a unique blend of significant growth opportunities, higher income
consumers, a strong dining-out culture and highly experienced local franchise partners
Middle Eastern and Africa
Key regional takeaways
REGIONAL HIGHLIGHTS
-
INTRODUCTION
GLOBAL PERFORMANCE
THE WAY FORWARD
COMPETITIVE LANDSCAPE
REGIONAL HIGHLIGHTS
CASE STUDIES
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Euromonitor International PASSPORT 46CONSUMER FOODSERVICE: A NEW ERA OF GROWTH AND COMPETITION - GLOBAL
CONSUMER FOODSERVICE IN 2015 AND BEYOND
Chained full-service in China
Modern bar-style hot pot marries traditional benefits with modern amenitiesXiabu Xiabu
Chained burger fast food in the US
Clever positioning finds national growth amidst fierce competition in a crowded category
Shake Shack
Online ordering and delivery hub in Egypt
Illustrates demand for delivery even in less developed markets along with the logistical challenges that can get in the way
Engezni
Third-party online restaurant delivery service in the US
Part of the new tier of companies growing in response to demand for even more convenient and accessible delivery options
PostMates
Asian fast food from Japan, expanding to Latin America
Capitalising on demand for Asian foodservice experiences at value pricesSukiya
Specialist coffee shops in South Korea
Finding opportunities for growth in more mature, higher income markets in Asia Pacific
Ediya Espresso
Six brands illustrating global trends and challenges
CASE STUDIES
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Euromonitor International PASSPORT 47CONSUMER FOODSERVICE: A NEW ERA OF GROWTH AND COMPETITION - GLOBAL
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Up-and-coming chain Xiabu Xiabu exemplifies the opportunity in China for locally owned but
thoroughly modernised concepts that serve
demand for traditional cuisine with a twist. The
chain competes in Asian full-service restaurants,
which offers one of the largest long-term growth
opportunities in the world in absolute value terms.
Hot pot is very popular in China, and it is a fiercely competitive segment populated by both
chained and independent concepts that compete
strongly, based on price.
Amidst this, Xiabu Xiabu has managed to offer something a little different, a bar-style hot pot
that offers individually customisable bowls of
broth, rather than the typical communal bowl.
This blend of the modern and traditional appeals
to Chinese consumers love of the social dining
experience, while still catering to young peoples
desire for greater control of their own dining
experience. It offers the social benefits of a full-
service concept with the customisability of fast
casual combining to create a very appealing
package.
Xiabu Xiabu also emphasises the quality of its ingredients, which is a powerful differentiator amidst a
landscape of discount competitors. With this
positioning, Xiabu Xiabu has experienced an explosive
growth trajectory, growing at an average annual rate
of 40% in value and 34% in outlets over 2009-2014. In
early 2015, the company filed for an initial public
offering (IPO), undoubtedly with plans to fund even
broader expansion across China and beyond.
Local Cuisine
Modern Format
Social Dining
Custom-isability
Ingredient Quality
Xiabu Xiabu finds chained full-service success in China
CASE STUDIES
Success
Factors
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Euromonitor International PASSPORT 48CONSUMER FOODSERVICE: A NEW ERA OF GROWTH AND COMPETITION - GLOBAL
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Shake Shack helps to answer the question of where all of the demand for traditional fast food could be going. Some of it is dispersing to other categories and cuisines entirely, especially Latin American and
Asian fast food, but much of it is staying right within the burger fast food category albeit with changing
allegiances. Shake Shack is yet another of the long line of better burger chains attempting to gain
international success, and it has taken some promising steps toward this goal.
Shake Shacks appeal to modern restaurant consumers does not stop at its service model. The chain has placed itself at the intersection of some of the strongest consumer trends in developed market foodservice.
Its positioning is not just fast casual, but fresh casual or fine casual, an emerging upper tier populated by
premium fast casual chains as Vapiano, Chipotles Pizzeria Locale and Lyfe Kitchen. In this tier, ingredients
are a major focus, food is prepared fresh in-house, and there are fewer limitations on pricing than would
typically be seen in limited-service formats. It also strikes a balance between wholesome and indulgent
burgers and frozen custard concretes are hardly low-calorie, but they are made fresh and do not include
hormones or artificial ingredients. This balance resonates well with consumers, allowing them to feel like
they are gaining an experience worthy of the cost of dining out, while still feeling good about their purchase.
Shake Shack focuses strongly on ethical issues, checking all of the moral boxes that appeal to millennials, including building outlets with sustainably sourced materials, donating to various causes, and fostering a
community-focused environment, both virtually and within the outlets. To achieve this, Shake Shack has an
active social media presence, chooses locations that can function as community centres and even hosts
group events such as running clubs at some urban outlets.
In 2015, Shake Shack filed a successful initial public offering on the New York Stock Exchange. The company has pledged to open hundreds of outlets within the US (up from 41) and has made steady
progress towards an international presence, with 30 outlets in the Middle East, Russia, Turkey and the UK.
Shake Shack sets its sights on global fresh casual burger demandCASE STUDIES
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Euromonitor International PASSPORT 49CONSUMER FOODSERVICE: A NEW ERA OF GROWTH AND COMPETITION - GLOBAL
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In Egypt, consumers want delivery and operators want to offer it but the market is lagging in terms
of access to technology. Not all restaurants have a
computer through which to accept online orders,
not to mention the software and computer savvy to
set up such functionality. As a result, some of the
online ordering hubs already operating in Egypt
bridge this gap by offering call centres that take in
online orders from customers via their ordering
hub, then call the restaurants manually to place the
order on the customers behalf. While this is an
effective enough short-term solution, it is inefficient,
expensive and very difficult to scale up. Start-up
hub Engezni seeks to address this problem by
offering an easy to use interface for both
customers and restaurant partners, and providing
tablets with which restaurants can receive the
orders.
Operators have recognised that there is still untapped delivery demand in the US as well, albeit
for very different reasons. While delivery is readily
available through many platforms, consumers are
still not quite satisfied. Delivery can be slow or
expensive, and in some categories, like specialist
coffee shops and fast food, the service is still rare.
As a result, companies like PostMates have emerged to offer even better, even more
convenient and more innovative delivery. The
company is not just a middle-man; rather, they
handle the delivery themselves, picking up and
dropping off orders. This shifts all of the costs of
delivery onto the customer and effectively opens
up the possibility of delivery service to any
restaurant a customer chooses. For example, in
2015, PostMates will begin a delivery partnership
with Starbucks.
One of the more notable aspects of rising delivery demand has been its consistency across markets. While the level of demand varies with income levels and access to the service, consumers across the spectrum of
maturity have demonstrated a growing need for extreme convenience and affordable luxury. However,
varying conditions have meant that catering to this demand has proved far easier in some markets than in
others.
Engezni and PostMates: Two markets, two solutions
CASE STUDIES
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Euromonitor International PASSPORT 50CONSUMER FOODSERVICE: A NEW ERA OF GROWTH AND COMPETITION - GLOBAL
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Asian fast food is growing rapidly all over the world, most notably (and unsurprisingly) in Asia Pacific itself. However, there is also very real demand for Asian dining experiences in Latin America, where Asian fast
food and Asian full-service are the fastest growing cuisine types within their respective categories.
In particular, there is demand for Asian foodservice that offers options beyond what is already readily available in major cities, such as sushi or Chinese fast food. This has led to new concepts offering
southeast Asian food, riffs on Asian street food, or non-sushi Japanese food concepts such as ramen or
gyudon. Sukiya is one such concept that has begun expanding to capitalise on this growth. Owned by
major Japanese operator Zensho Co, the concept began expanding to Latin America in 2010, with outlets
in Brazil, and in 2014, it began building a presence in Mexico as well.
Sukiya offers many of the benefits typically associated with Asian fast food the perception of healthier cuisine and often, higher quality ingredients, and the promise of bold flavours and a unique dining
experience. However, one of the primary factors driving Sukiyas growth in Latin America is its value
pricing. A meal with salad and a drink at Sukiya in Brazil costs around R420 (US$6.30), similar to the price
of a hamburger at a local Burger King outlet.
Sukiya combines high value and Asian fast food in Latin America
CASE STUDIES
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Euromonitor International PASSPORT 51CONSUMER FOODSERVICE: A NEW ERA OF GROWTH AND COMPETITION - GLOBAL
CONSUMER FOODSERVICE IN 2015 AND BEYOND
The largest growth opportunities in Asia Pacific are in emerging markets, but there are opportunities in
higher income areas as well. South Koreas
specialist coffee shop category has been growing
rapidly for at least five years, with annual growth
rates consistently well into the double-digits. Over
2009-2014, specialist coffee shops in South Korea
grew by US$1.9 billion in absolute value, even
higher than China. This growth has not been the
result of new coffee drinking demand, but rather
from clever positioning that encouraged changes in
consumer habits.
Coffee consumption has long been high, but consumers have only recently been switching from
low-quality instant coffee to more premium
espresso-based drinks in modern environments
that are conducive to socialising. Starbucks led this
charge and is currently the largest player, with a
19% share; however, Ediya Espresso has been
rapidly rising in the ranks. As of 2009, the chain
accounted for 5% of the market but has since risen
to 13% in 2014. In that year, the chain overtook
local operator Caff Bene to take second place.
While most of the top specialist coffee shop chains in Korea share a similar positioning premium
coffee and bakery goods in a cosy, premium
setting the key to Ediyas recent success has
been outlet expansion. Over 2009-2014, the chain
grew from 229 outlets to 1,265, with nearly 400 of
those outlets having opened in 2014 alone.
More recently, South Korea has seen a boom in more diverse coffee shop and caf concepts,
including themed fruit and dessert cafs.
Cozy environment
Premium Coffee
Rapid Expansion
Competitive Pricing
Social Occasions
Ediya Espresso demonstrates room to grow in South Korea
CASE STUDIES
Success
Factors
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Euromonitor International PASSPORT 52CONSUMER FOODSERVICE: A NEW ERA OF GROWTH AND COMPETITION - GLOBAL
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Opportunity Evolution through 2019
China for the right player
With the amount of attention given to Chinas slowing growth rates, it has been easy to forget the very real opportunities that still exist in the massive market. Chinas 2014 growth rate of 9% still topped most other major foodservice markets, and it will see the largest
absolute value increase in the world over 2014-2019.
Value
positioning in
Latin America
Latin America offers very strong opportunities, especially in value-oriented segments.
Many local consumers are eager to spend on chained foodservice, but are price-sensitive,
and seeking to maximise the value of each of their dining-out purchases.
Fast casual in
developed
markets
Fast casual continues to show very strong growth in the US, which is expected to continue.
Fast casual appeals to some of the strongest consumer-led trends in global foodservice,
including a higher quality experience, fresh ingredients, simple preparation methods and
strong branding. Amidst major challenges facing fast food leaders, the success of fast
casual points the way forward for new concept innovation.
Local chains,
local concepts
Some of the largest long-term growth opportunities in all of foodservice are actually in local
cuisines, especially in Asia Pacific and Latin America. Consumers are eager to try chained
versions of local favourites, especially at value prices.
Online, mobile
and delivery
Online and mobile channels are becoming integral to the chained foodservice experience,
and this evolution will continue. Delivery is also more popular than ever, and consumers
have demonstrated that they still want more more convenience, more variety and more options for how to get their food exactly how they want it, when they want it and through
the most satisfying experience possible.
Five growth opportunities for the next five years
CASE STUDIES
-
FOR FURTHER INSIGHT PLEASE CONTACT
RELATED ANALYSIS
Elizabeth Friend
Senior Foodservice Analyst
@ElizabethF_EMI
New Product Development in Consumer Foodservice: Asian Flavours, Freshness,
and Value Above All Else June, 2015
Master Franchisees: The New Power Players in Global Foodservice March, 2015
Beverages in Consumer Foodservice: Tools For Branding, Profitability, and Appeal
December, 2014
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Euromonitor International PASSPORT 54CONSUMER FOODSERVICE: A NEW ERA OF GROWTH AND COMPETITION - GLOBAL
CONSUMER FOODSERVICE IN 2015 AND BEYOND
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