The fight for South Africa’s next QSR meal is getting bigger.
Our grandparents may have seen takeaway food as a newfangled notion, but it’s certainly not new, with remains of ‘kitchen shops’ and food stalls found among the ruins of Pompeii and the Aztec empire. What is relatively new, however, is the fierce competition for that elusive ‘share of stomach’.
Narrowly defined, when thinking of ready-to-eat food, most people think of ‘fast food ’ and quick service restaurants (QSR) like KFC, Debonairs, McDonald’s, Pedro’s and the like. There is a fair amount of jostling just in that defined space, with players like Hungry Lion and Pedro’s on aggressive growth streaks.
Beyond QSR, though, consumers of ready-to-eat food have so many options – they can just prepare food at home, and even use their favourite QSR-branded sauce or marinade, which they will find at their local supermarket. While they’re there, they could grab a pre-made sandwich or salad, or something from the hot food counter or deli. They could also do this at a garage shop. And then there are local specialities from street stalls or shisanyamas or any of a dizzying and colourful array of township fast-food options. These outlets are all competing to be the source of the shopper’s next meal or snack, whether planned or unplanned, for now or for later.
This competition takes place across a landscape that is constantly shifting, as shopper tastes and needs change, as new flavours become popular (think Korean barbecue and ‘swicy’), and as shopper wallets become increasingly stretched.
One particularly interesting dynamic – especially internationally – is the impact of the growing usage of GLP-1 drugs on the fast-food industry, and the FMCG industry overall. GLP-1 drugs mimic a natural metabolic hormone, and influence both our brains and digestive systems to lower blood sugar, regulate digestion and reduce appetite. The fact that one of the effects is the dulling of cravings and ‘intrusive food thoughts’ is terrible news for an industry built on delicious more-ish food. Countries like the USA – where an estimated 10-12% of adults are taking GLP-1s – are already seeing the negative impact on fast food, specifically because people just don’t crave their usual fast-food fix. Those who still do visit fast-food outlets, skip the super-sizing, extra sides and impulse desserts (since they’re just not that hungry), or they choose healthier options that aren’t commonly available at mainstream fast-food chains.
GLP-1s are slowly infiltrating the South African market, but at nowhere near the penetration levels of the USA. Yes, locally GLP-1s are a threat to ‘junk food’ suppliers to upper-income shoppers (who can afford the high price of GLP-1s), but this is not, and is unlikely to become, a large-scale phenomenon, especially while the local price of GLP-1s is way out of the reach of all but the wealthiest South Africans.
The concept of ‘value’ in this industry is also top of mind for retailers and shoppers alike. Right now, constrained economic circumstances are forcing many shoppers to tighten their belts. ‘Cheapest prices’ are not a sustainable differentiator, though. Promotions and discounting may drive footfall, but they erode margins. Some QSR players are using exclusive discounts to drive traffic to their apps and loyalty programmes, thus effectively ‘buying’ extra shopper data.
Discounts and promotions are not the only tools in the ‘value’ arsenal. For example, KFC’s newly relaunched rewards programme goes beyond (but does not exclude) promotions and discounts. Through ‘KFC Rewards’, members get three personalised ‘missions’ to fulfil (e.g. ordering via the app or trying a specific menu item). Completing these missions unlocks choices for meal rewards, secret menu access and exclusive deals such as access to limited edition sneaker drops and VIP event access. Rewards can even be transferred to friends and family or to KFC’s charity initiative.
Overall, though, with all the challenges come opportunities. Tracking shopper needs (whether in terms of health, affordability or flavour trends) is key. Understanding a target market’s ‘value for money’ trade-off in terms of quality vs price is fundamental to establishing and providing the right level of quality at the right price. Partnering with delivery specialists or food service specialists cedes control outside of the organisation but brings in expertise. Increasing demand for delivery services creates opportunity for ingredients and packaging that help an order maintain its quality through the delivery journey.
Whether South Africans are moving, shaking and needing a meal on the go, looking to treat themselves, or just not in the mood to cook, they’ll be in the market for ready-to-go food, fueling healthy competition between providers and supporting the massive networks of service providers, manufacturers and delivery riders that underpin it all. And thank goodness for that.
For more information on the ready-to-eat food industry, see Ti’s latest Ready-to-Eat Food Report. Learn more here:
Trade Intelligence, a Smollan company, is South Africa’s leading source of consumer goods retail research, insights and capability-building solutions that enable effective and profitable trading relationships and inform future-fit strategies. Ti’s 20+ years of expertise covers the FMCG environment, the major retail and wholesale players, the informal retail channel as well as emerging retail and shopper trends.
