Xerfi Global has recently published a study on the Fast Food Industry, a global market led by McDonald’s and primarily dominated by American groups.
These leaders have generally managed to generate healthy and growing profits over the last five years averaging 20% and increasing by an annual average rate of almost 2% from 2012 to 2016.
This growth in profits is primarily thanks to their focus on the most profitable parts of the value chain and leaving day-to-day restaurant management to franchisees. Groups are thus particularly focussing on restaurant concept management, corporate financing, supply chain management, marketing and information technology.
The shift towards restaurant franchising, as opposed to restaurant ownership, is thus gathering steam: franchised restaurants made up 73% of leaders’ restaurants in 2012 compared to 81% in 2016.
All is however not quiet on the Western Front for the industry. A surge in investment in foodtech has been seen over the last few years. Food delivery platforms, delivery-only restaurants, ingredient and recipe delivery, social restaurant recommendation platforms and other concepts are likely to have a tangible impact on the competitive landscape, as such services can stimulate competition and become key intermediaries that capture value at the expense of established companies.
New technology can however also work in established fast food restaurants’ favour and is being embraced by groups so as improve customer experiences but also save costs, via automation, and improve understanding of customer behaviour, via big data technologies.
Another strategic priority is the acceleration of international expansion, mostly through franchising agreements for mature restaurant concepts. The objective is twofold: increase overall fast food penetration and gain market share against independent, local fast food restaurants.
Groups are also rejuvenating their restaurant concepts and offerings to adapt to fast changing customer tastes. A trend towards higher standards particularly in terms of quality, freshness and nutritional value has been growing in recent years, although it remains a real challenge in an industry where cost control is of paramount importance.