News release
www.bis.com.au
For further information:
Sissel Rosengren
BIS Shrapnel
Tel: 02 8458 4235
A/h: 0432 332 233
Email: [email protected]
Cameron Wells
Watterson Marketing Communications
Tel: 02 9929 7533
A/h: 0414 867 057
Email: [email protected]
A Fast Food Chain Nation for the first time as independent outlets fall by the wayside
Middle-class women the most likely eaters, as the industry faces an anxious 12 months
Thursday, October 10, 2013 – The fast food market has seen a boom since the Global Financial Crisis
(GFC) of 2008 thanks to a continuing uncertain economic climate, with Aussies trading down to
consume fast food servings in the billions in the past 12 months.
And according to BIS Foodservice’s Fast Food 2013 Report Series, the eaters of the quick-service bite
are more likely to be mid-to-high income earning women.
The report also found that there has been a marked change in consumer behaviour which is in stark
contrast to the perception that Australian consumers value and support their independent outlets.
“It has been a bonanza in the fast food market since the GFC,” said Sissel Rosengren, Head of BIS
Foodservice. “Not to denigrate the quality of fast food in Australia – which includes everything from
a drive-thru hamburger to a chicken wrap and prepared meals such as soup – but there is a
noticeable ‘trade-down’ effect that occurs in any economic downturn.
“As a result, fast food chains are on the increase and are now the dominant force in the fast food
market for the first time in Australia’s history, which goes against the notion that we are a country
that loves its independents.”
However, the report series warns the boom in fast food may be over, with signs emerging that the
market is on the decline as the industry deals with tighter customer budgets and belts.
Fast food trends – who’s eating it and why
BIS Foodservice defines the Fast Food market as fast food chains, fast food independents and snack
food chains. According to the BIS Foodservice Fast Food Report Series, Australians spent $15 billion
dollars on fast food in the past 12 months.
Of that, around $11 billion was made up of food itself, while another $4 billion was spent on the
beverages to wash it down.
Almost one in every two servings in the fast food market (47 per cent) are either Beverages or Meals
and Snacks such as pizza, meat pies and sushi. Beverages has the highest share of purchases with 30
per cent, which equals around one billion servings, while the Meals and Snacks market makes up 17
per cent of purchases.
However, hamburgers and hot chips remain the leaders in the market with 141 million servings of
hamburgers and 193 million servings of hot potato chips eaten in the past 12 months. Further, hot
potato chips remain the number one fast food product despite the growth in Asian and bread-based
fast food such as sandwiches.
Overall, it’s estimated Australians consumed 3.088 billion servings of fast food (including beverages
from fast food outlets) in the past 12 months.
The report – which surveyed more than 1,200 people aged 14+ on their personal eating habits –
found that women are the biggest fast food eaters, making up 56 per cent of the market in terms of
all fast food eaten.
“Many might assume women are buying fast food for others, but what this report shows is that
women are actually more likely to eat fast food than men,” said Rosengren. “The assumption is that
men are typically the fast food eaters, given the marketing by fast food chains usually focuses on
blokes relaxing at the beach in their ute with a chicken burger or eating a pizza while watching the
footy. But women are the biggest fast food eaters across all fast food categories, by a healthy
majority.”
Another common misconception is that fast food is the “food of the working class”, generally
reserved for lower-income workers who can’t afford a slower-cooked restaurant meal.
“That couldn’t be further from the truth,” said Rosengren.
Of the total fast food market, 35 per cent of fast food eaters earn between $50,001 and $100,000,
while those earning $50,000 or less make up 30 per cent – although 15 per cent of respondents
preferred not to say what they earned.
“You are just as likely to see someone in an office job eating a hamburger and chips as you are
someone who is only eating fast food because it is the cheaper option,” said Rosengren. “What this
suggests is that there has been a noticeable trade down effect in the total foodservice market in the
last five years.”
Chains outnumber independents for the first time – many Indies only have themselves to blame
Independent fast food outlets – which include outlets such as Chinese takeaways, fish and chips
shops and pizza outlets – have struggled during the GFC, dropping from 8,969 stores across Australia
in 2005 to 8,498 stores in 2009.
While their numbers are beginning to recover, increasing over the past two years, they are still short
of the pre-GFC totals.
“The Independent Fast Food market has been as flat as yesterday’s soft drink,” said Rosengren.
“Since 2005 the number of independent fast food outlets has declined by 0.3 per cent.”
This is in stark contrast to the rise of Fast Food Chains which have increased in outlet numbers on
average by 5.3 per cent annually over the same period, while Snack Food Chains have increased by a
whopping 10.8 per cent on average per annum in this period.
Further, the report found that Fast Food and Snack Chains now outnumber Independent Fast Food
outlets for the first time in the country’s history.
“Australia has never been a chain-loving country,” said Rosengren. “If you look at coffee outlets for
example, there are around 13,000 outlets across Australia but only around 2,000 of them would be
considered chains such as Starbucks.
“This is the first time in Australian history that chains now dominate the landscape in any sub-sector
of the foodservice market.”
Rosengren says that many Independents – such as fish and chips stores – have let themselves down
with the quality of their offerings.
“More often than not, fish and chip stores in Australia will serve frozen chips and battered fish for a
price that does not match the quality,” said Rosengren. “If you go to New Zealand they are
competing with the chains by offering quality, fresh fish and hand-cut chips for less than the price of
a value meal at most chains. They compete on cost and quality, but in Australia they have slipped to
the point where many compete on neither.
“They are not only pricing themselves out of the market against some of the bigger fast food chains,
but the quality leaves a lot to be desired.”
But tightening belts and budgets signal a slowdown in fast food market
Despite the boom since 2008, the foodservice market as a whole – including restaurants, cafés and
clubs among others – faces a challenging road in the next six to 12 months.
Consumer research contained within the report series found that there were much fewer visits to
fast food restaurants in the past six months, with a net decrease of 41 per cent reported. But the
forecast for the next six months is also grim, with consumers expected to decrease their visits by a
further 26 per cent.
Rosengren said the drop could be due to a myriad of factors, including the obesity message starting
to take effect. Regardless, with fast food chains during the GFC being the star performer in the
foodservice market, the expected hard road ahead for that area of the market signals that the
beacon of hope for the challenged industry has gone out.
“With fast food now expected to struggle in the next six to 12 months, the industry as a whole will
struggle to keep its head above water,” said Rosengren. “The shine is coming off the fast food chains
which are now starting to feel the same pinch the rest of the industry has been feeling.”
Evidence of this can be seen in the Foodservice Dollar – which depicts the percentage of Australian
households’ food & non-alcoholic beverage budgets/expenditure spent on eating out of home.
The Foodservice Dollar aptly portrays a nation’s propensity to eat out and the overall development
of a foodservice market. In 1960, Australians spent 12 cents in the dollar of their total food & nonalcoholic beverage budget on eating out. By 1980, it had risen to 25 cents. In 2005/06, it reached 38
cents.
But today, it is 33.5 cents – falling during 2012 from 34.4 cents in 2010 and 2011. That number is
forecast to fall once again as growth in the commercial foodservice market has slowed during the
first half of 2013 as budgets tighten at the rate of most belts in Australia as customers look to save
money and get healthier.
“The outlook for the foodservice market appears weaker as consumer confidence wanes and they
look to get healthier,” said Rosengren. “But there are opportunities for those in the foodservice
industry to set themselves apart from the rest, as eating out remains a way of life for Australians
despite the slowdown in recent times.”
About BIS Foodservice – A business unit of BIS Shrapnel
BIS Foodservice is a business unit of BIS Shrapnel, with more than 25 years’ experience in the Food
and Beverages industry. Our country coverage extends to more than 20 countries in the Asia Pacific
region, the Middle East and Europe.
BIS Shrapnel is Australia's leading provider of industry research, analysis and forecasting services. BIS
Shrapnel helps clients better understand the markets in which they operate, through reliable and
detailed market data, analysis of developments and drivers and thoroughly researched forecasts.
For further details about our business and studies please visit our website: www.bis.com.au and click
on Foodservice.