Fast food market in SA growing rapidly

Image courtesy of piyato / FreeDigitalPhotos.net

The rival chicken chain next door is just as busy. But neighbouring fast food joints, which include a pizza, burger and steak outlet, tell a tamer tale.

A man, sitting by himself eats his meal while fiddling with his cellphone. Five or six customers mill around waiting for their orders. Leather booths are mostly unoccupied.

The picture raises a question: has chicken become the out-of-home dining choice du jour for South Africans?

It's no secret that we like to eat chicken.

South Africans consume more than 1-billion a year, which is more than double the amount of beef eaten in the country. Chicken options are also a traditionally less pricey alternative to beef at most fast food stores.

The CEO of the franchise restaurant group Famous Brands, Kevin Hedderwick, says in the mass market, "quite clearly" chicken is the preferred option in the quick-service restaurant business. Famous Brands' portfolio includes Steers, Debonairs Pizza and Wimpy.

Hedderwick adds that category choice is dictated by living standards measure (LSM), in that the lower LSMs are far more predisposed towards chicken than the higher ones. "That does not mean to say though that chicken as a category is not gaining momentum among the so called upper LSMs," he says.

Taste Holdings CEO Carlo Gonzaga says that while there is a correlation between LSM and choice, a customer's LSM "rating" isn't the reason they choose chicken or beef. "Your cultural preference decides it."

Taste's brands include Scooters Pizza, St Elmo's and Maxi's.

Chicken is chosen at both ends of the LSM profile, according to Trudi van Niekerk, business development director at Nando's. "The health focus at a higher LSM level, however, still directs their choice towards chicken meals, although they (customers) may opt for a salad versus chips in such instances," she says.

"As emerging black consumers enter the market, we see a focus on value for money and a greater leaning towards a meal which is a gut fill."

The "cash-rich and time-poor" phenomenon created by the growth in double-income families, and the rise in the wealth of black market entrants in SA, has also meant that eating out is no longer a luxury, but is more of a convenience.

According to Jeanine van Zyl, head of retail equity analysis at Old Mutual Equities, people with jobs have managed to climb up the wealth ladder thanks to several major trends, including above-inflation wage increases in both the public and private sectors. Further, more higher-income jobs were being created, government grants for the poor had increased strongly, and there have been relatively benign inflation and interest rates.

It's precisely in this environment that global fast-food chain Burger King will bring its famous flame-grilled beef burgers. As part of its expansion into high-growth emerging markets, the US icon will arrive in SA next year to compete with the likes of McDonald's, which now operates 161 restaurants in SA.

According to Pierre Van Tonder, CEO of Spur Corporation, Burger King's locations and operations will be a critical component should they want to compete with the "big" quick-service restaurant players in South Africa.

Meanwhile, Gonzaga says it will take a few years before a brand like Burger King gets enough traction to make inroads at national level.

Van Niekerk says consumers always want to try something new. "Competition will also increase on the property front where more than one brand may be vying for a good site."

One thing is certain though: South Africa's appetite for fast food is advancing steadily.

A report by market research firm Analytix BI released in July attributed growth in the popularity of fast food to "deliberately" large portions at low prices that appeal to consumers' desire for value for money.

Last year, three out of four South African adults aged 16 years or older, or 25.3-million people, bought from a fast-food outlet in a four-week period, up from 20.6-million in 2007, the research showed.

Results from South Africa's fast-food players, which have had a stellar run this year, suggests that this trend will continue.

Maybe the answer to chicken versus beef burgers or pizza might not be so complicated. A customer in the Rosebank Mall burger outlet says: "I just felt like having a burger today."

Source: Business Day