Shereen Tuff, senior research analyst at Euromonitor International, indicated that fast food restaurant sales reached over 24 billion rand in 2012, and that in conjunction with outlet expansion into new markets, foodservice outlets experienced favourable growth.
“One of the main trends that we observed was the fact that chained outlets account for around 70 per cent of fast food sales. Chained outlets tend to have higher sales per store. Chained fast food chicken is the biggest category with a value of 11.43 billion rand, followed by chained fast food burgers with 5.05 billion rand and chained fast food pizza with 1.3 billion rand in 2012,” Tuff told CNBCafrica.com.
KFC CONTINUES TO DOMINATE FAST FOOD IN SOUTH AFRICA
The fast food industry accounts for just under 40 per cent of total consumer foodservice sales in South Africa. Tuff stated that Yum! Brands continues to dominate fast food in South Africa with its KFC brand.
“Yum! Brands is the largest player within the South African fast food market, with its Kentucky Fried Chicken (KFC) being the leading brand. Local company Famous Brands’ Steers and Wimpy fast food brands are the second and third largest brands in terms of number of outlets,” she said.
“With a total of 672 outlets in 2012, KFC held a comfortable lead, with 177 more stores than the second largest player within chained fast food. This is due to the popularity of fast food chicken in South Africa. Famous Brands’ Steers brand is the second largest in terms of outlet numbers, with 495 outlets. The company’s Wimpy brand sits just behind Steers with 493 outlets. However, this is a decline in comparison to 2011 where the brand had 503 outlets.”
SUPPORTING THE LOCAL FAST FOOD PLAYERS
Tuff added that South Africans tend to support local fast food brands despite the increased presence of global players in the country.
“Whilst the international brands may have a loyal following in South Africa, particularly amongst the middle to upper-income groups who are familiar with the brands, it is doubtful that they will ever prove to be enough of a threat to seize the top positions from local players,” she said.
“Many South Africans are aspirational, and aspire to Western trends. However, South Africans are also brand loyal and support the much loved brands that represent their history and culture. In fact, many of these brands which started locally are now well- known international players, most notably, Nando’s. Brands such as Steers, Debonairs and Spur Steak Ranches are also present across other African countries, as well as in Europe.”
INTERNATIONAL BRAND EXPANSION IN SOUTH AFRICA
International brands are also looking to expand into South Africa as it’s believed that this could be the start of a long term plan to expand into the rest of Africa.
“In 2013, Burger King entered into South Africa, opening up in Cape Town in May. Burger King entered into a joint venture with Cape-based Grand Parade Investments, a JSE-listed company. The brand has been well-received and there are plans to roll out outlets throughout South Africa,” said Tuff.
“Yum! Brands has plans to bring Pizza Hut into South Africa in the near future. The company considers South Africa to be a good option for expansion as pizza is increasingly popular among many consumers. Pizza is relatively inexpensive to make and offers consumers value for money. It is likely that the brand would compete within full service restaurants, going head to head with brands such as Spur Corp’s Panarottis.”
SOUTH AFRICA’S LOVE FOR CHICKEN
Fast food chicken accounted for over 50 per cent share of total fast food sales in 2012 and continues to be the most popular type of fast food in South Africa.
“It is popular with all population demographics with the upper LSM groups, including the rising black middle class, choosing the more expensive Nando’s brand, as well as the variety of mid-priced products from KFC such as wraps. However, other brands such as Chicken Licken target the lower income groups with their lower prices,” explained Tuff.
“These outlets appeal to the more traditional tastes of the black population in South Africa and serve other popular side items such as Achaar, a Hindi term for pickle, usually made from mango, lime or chilli. Starting prices for a single chicken burger (Slyder) from Chicken Licken are 5.90 rand compared to 27.95 rand for a chicken burger from Nando’s and 21.90 rand for a burger from KFC. Traditionally, black South Africans also prioritise meat or chicken when choosing a 'value for money' meal.”