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Why Africa should be considered as an alternative Quick Service Restaurant (QSR) market?

Aine Doyle, Global Business Development

Africa QSR Market.jpg

Image by: Trendtype

The Quick Service Restaurant (QSR) market in Europe and the US is saturated and overflowing with well-known QSR chains such as KFC and Burger King. For this reason, international QSR chains are beginning to look further afield to markets where there is less competition, less regulatory concerns, and high demand. In recent years, Africa has shown growth and potential within the QSR market, resulting in a formal QSR market of over €5 billion in value (Trendtype,2021). This article will look at the factors delivering this QSR growth, and the potential Africa holds within the QSR market.

Firstly, population growth and demographics are main drivers of QSR growth in Africa. Africa is a very youthful market with already more than 200 million untapped consumers in the target 18-30 age bracket (Trendtype, 2021). Within this target group, there is also a rising number of middle-class consumers who have an interest in global QSR brands.

African consumers are highly aspirational and look for quality in their QSR chains, however they still remain very price sensitive. The Kenyan QSR market focuses their target audience on aspiring young professionals as well as tourists and international visitors. The Egyptian organised QSR market also focuses on upper and middle-class consumers, which is partially due to new premium malls being built around the country (Trendtype, 2021). The growth of this organised QSR market in Egypt has led to Egypt being the most sophisticated QSR market in Africa outside of South Africa. This growth in Egypt, through Egyptian conglomerates has also helped to transform the Moroccan QSR sector through investment, scale and expertise.  

One thing worth noting is that in the QSR sector there is a substantial difference between South Africa and the countries outside South Africa. The QSR market in South Africa is much larger, with over 250 organised QSR brands (Trendtype, 2021), of which the majority are domestic. This can make South Africa hostile to international brands. Outside of South Africa, North Africa is the second largest QSR market, with Egypt as its leader. 

The acceleration of the digital transformation within Africa has also been a growth driver of the QSR market and similarly to most countries, Covid-19 has accelerated this transformation. This digitalisation has allowed for increased use of mobile money, mobile ordering and social media campaigns promoting QSR chains. Kenya has been a pioneer of mobile money usage and a strong tech innovation hub in Sub-Saharan Africa.

The increase of processing capabilities is providing market growth and greater trade integration meaning domestic processing capabilities are making local sourcing more attractive. In Kenya, there is a breed of master franchisee emerging, which will drive procurement that is more sophisticated and will lead to more purchasing at scale. The expansion of large, regional QSR operators, especially from the Gulf States is driving outlet growth and efficiencies in product sourcing and supply chains

However, although there is potential, this market is not without its challenges. Affordability and cost are still major issues and these costs have not been helped by Covid-19 and food price inflation. High franchise fees and premium rents will keep some chains expensive and out of the mass market segment that they would normally operate in. QSR franchises require partnership and flexibility from brand owners, as well as an appetite for risk.

Despite these challenges, the fundamentals of strong population growth and young demographics are growing the appetites of international QSR brands who are investing in the long term. Irish exporters who are seeking to establish business in the African QSR market should work closely with their franchisees to understand their constraints, share market information and work to overcome high costs.

For Bord Bia clients who want to learn more about the QSR research conducted in Africa, please feel free to get in touch at aine.doyle@bordbia.ie  

As limited and quick service restaurants are becoming increasingly important in the foodservice channel globally, there is a demand for information. For this reason, Bord Bia invites you to join our QSR webinar on the 19th of May. In this webinar, we explore how this channel is recovering from the past 2 years and present recent research commissioned by Bord Bia on operator dynamics, menu trends and routes to market for Irish suppliers in the home of fast food, the USA, as well as more emerging markets in the Middle East (Saudi Arabia) and Africa. This webinar will uncover key opportunities for Irish suppliers looking to explore the quick-service channel in the US and beyond.

Please register for the webinar here

 

References

Trendtype.(2021). QSR Market Analysis: Egypt.

Trendtype.(2021). QSR Market Analysis: Ghana.

Trendtype.(2021). QSR Market Analysis: Kenya.

Trendtype.(2021). QSR Market Analysis: Morocco.

Trendtype.(2021). QSR Market Analysis: Nigeria.

Trendtype.(2021). QSR Market Analysis: African supply chain insights.