Background
Food service 18 May 2016

Business opportunities
in quick-service restaurants

In an effort to gain a bigger share of the stomach of potato consumers, InZpire brings a series of articles on business opportunities in the foodservice channel. In this edition, we focus on the quick-service restaurant sector, good for 42.9% of the turnover of the foodservice industry and still growing. What opportunities are there within QSR for the potato industry?

Why quick-service restaurants became popular

Fast food outlets have become popular with consumers for several reasons. One reason is that, through economies of scale in purchasing and producing food, these companies can deliver food to consumers at a very low cost. In the post-World War II period in the United States, fast food chains like McDonald's rapidly gained a reputation for their cleanliness, fast service, and  child-friendly atmosphere where families on the road could grab a quick meal, or seek a break from the routine of home cooking.

In other parts of the world, such as India or China, American-style fast food outlets have been popular for their quality, customer service, and novelty. Many consumers see them as symbols of the wealth, progress, and well-ordered openness of Western society and they therefore become trendy attractions in many cities around the world, particularly among younger people.

The QSR segment and its key players

Quick-service restaurants are often chains that operate on the basis of the franchise concept. Some of the most successful quick-service restaurants, such as Starbucks and McDonald’s, have achieved such enormous market shares due to their many locations. Starbucks currently runs more than 18,000 locations worldwide, while McDonald’s boasts over 33,000. Quick-service restaurants offer consistent food. Due to highly regulated production systems, food suppliers and menu development, they are known for their consistency.

“Some of the most successful quick-service restaurants have achieved enormous market shares”

Top 20 QSR chains in the world in 2015

 

Quick service chain

Revenue in billion US $

McDonald's (United States) 25,41
Subway (United States) 19,2
Yum! Brands (United States) 13,11
Chick-fil-A (United States) 5,7
Chipotle Mexican Grill (United States) 4,5
Tim Hortons (Canada) 2,26
Domino's Pizza (United States) 2,22
Wendy's (United States) 1,87
Buffalo Wild Wings (United States) 1,81
Papa John's (United States) 1,64
Jack in the Box (United States) 1,54
Quick (Belgium) 1,5
Hotto Motto (Japan) 1,5
Dicos (China) 1,5
Yoshinoya (Japan) 1,4
CKE Restaurants (United States) 1,33
Five Guys Burgers and Fries (United States) 1,32
Lotteria (South Korea) 1,2
Jollibee (Philippines) 1,2
MOS Burger (Japan) 1,2
Burger King (United States) 1,1
 

Important QSR trends

Health concerns are perhaps the most important trend. Some of the large fast food chains are incorporating healthier alternatives in their menu, e.g. white meat, snack wraps, salads, and fresh fruit. Fast food marketing largely focusses on children and teenagers. This has created controversy due to the rising issue of child obesity in countries such as the USA. After long debates, two basic requirements were identified as regards food advertised for children: (1) The food must include healthy ingredients; (2) The food must not contain unhealthy amounts of sugar, saturated fat, trans fat, and salt. Thus, health became an important issue for quick-service restaurants.

A second trend is local adaptation. Good examples are offering halal food in Muslim-majority countries, and chicken burgers in countries like India. Another important trend is the upswing of fast casual as the future for classic fast food. Classic fast food providers are losing out, while fast casual chains are growing. Examples of fast casual chains are The Five Guys Burgers and Fries, Panera Bread and Chipotle Mexican Grill.

“Fast casual dining
as the future for
classic fast food”

Fast casual chains saw a significant growth in visits; by up to 15% during the last 5 years. Consumers also spend significantly more money there: McDonald’s average $3.93, Chipotle Mexican Grill $11.90 (research USA, year 2015). Important success factors for the growth of fast casual are:

•    Fresh ingredients
•    Open kitchen/front cooking
•    Customization of meals
•    Focus on health
•    Entertainment/fun (atmosphere)
•    Value for money
•    Value for time

Classic QSR brands such as McDonald’s are adapting to this trend by changing their restaurants and service to be more in line with the fast casual set up (today, it is possible to be served at the table in some McDonald's restaurants). They are also gaining more experience with customized meals.

What does this mean for the potato industry?

In particular, the success factors 'fresh, healthy and fun' are options to be considered for the potato industry. Nutritious and healthy food is an important consumer trend that is increasing rapidly. 40% of consumers have the intention to eat healthier and, as a result, the demand for healthy food is growing. It is up to the food industry to provide food that is both healthy and delicious.

HZPC & trends in QSR

Together with two business partners, HZPC took on the challenge of developing healthier and excellent tasting French fries for conscious consumers, without compromising on texture or taste. This innovative product is pure and made from fresh potatoes. The fries contain 40% less carbs, 30% less fat, 30-40% less calories, no additives, low/no acrylamides, low additional oil and no GMO. The fries are prepared in airfryers and professional hot air ovens, with the benefit that these French fries can also be offered by QSR chains not working with oil fryers.  By developing these special French fries, we want to do our part to contribute to healthier food that brings pleasure to people.