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Fast food outlets adapt

Fast FoodConsumer trends have been favouring premium dining, greater convenience and healthier menu items, study shows.

As a result, fast food outlets have adapted their business models to cater to an evolving market, with players such as Domino’s finding success by offering convenience, according to research firm IBISWorld. At the same time, others players such as McDonald’s, KFC and Hungry Jack’s have chosen to pursue premium and healthy menu items.

“Consumers have favoured premium and healthy food in recent years, to the detriment of traditional fast food outlets,” said IBISWorld analyst, Andrew Ledovskikh.

“For example, the strategy for Domino’s has differed to other traditional fast food outlets. Instead of only attempting to compete with premium pizza stores or just add healthy options to its menu, the company has expanded its store network by more than 100 locations in five years and focused on technology-related convenience, such as guaranteed 20-minute delivery times and SMS ordering.”

IBISWorld also identified the role of online ordering platforms, including Delivery Hero and MenuLog, for fast food operators. These platforms allow smaller restaurant and takeaway businesses to access a wider customer base and improve the convenience of their delivery services. As a result, they can more effectively compete with larger, more established fast food brands.

Commenting on the size and performance of players in the industry, Ledovskikh said, “While many larger, traditional food operators have struggled over the past five years, smaller operators have benefited from premium and healthy eating trends. These operators have also been attempting to improve the convenience of their product offerings through online and mobile ordering platforms.”

The fast food services industry is expected to generate revenue of $19.3 billion in 2016-2017 and post annualised growth of 1.4 per cent over the five years through 2021-2022.

The pizza restaurants and takeaway industry is expected to generate revenue of $3.7 billion in 2016-2017, and post annualised growth of 2.2 per cent over the five years through 2021-2022.

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