SA’s quick service restaurant (QSR) sector is grappling with challenges as economic hardships and changing consumer behaviour reshape the fast-food industry.
According to a recent Trade Intelligence report, the sector has shown resilience but it is under increasing pressure from rising food prices, evolving eating habits and competition from grocery retailers, small-box stores and coffee shops targeting the on-the-go food market.
Food inflation, which has seen prices of staples rise by more than 20% in the past two years, has eroded consumer spending power, according to the report.
Trade Intelligence said though inflation had driven an 11% growth in the QSR sector this year, real growth remained limited as consumers look for cost-effective alternatives.
Many were turning to “fakeaway” meals (home-prepared versions of takeaways) reducing the frequency of fast-food purchases, Trade Intelligence said.
For cash-strapped households, affordability is becoming the deciding factor in dining choices. Trade Intelligence said consumers increasingly favour outlets that offer value, speed and convenience, but rising price sensitivity is pushing even loyal customers to reconsider their QSR habits.
According to the report, the QSR industry is also facing heightened competition from alternative food options such as fast-casual restaurants, grocery retailers offering pre-packaged meals and coffee shops. The report said these competitors are blurring traditional market lines, competing for a share of the consumer’s food budget.
In response, QSRs are leveraging digital transformation to enhance customer experiences using mobile apps, loyalty programmes and streamlined delivery options are driving convenience and improving consumer engagement.
“Ongoing innovation in digital technology is driving consumer engagement, enhancing convenience and the shopper experience,” said Sandy Sutton, a retail analyst at Trade Intelligence.
“Leading in consumer-centric innovation will be key to success in the QSR sector.”
While convenience and value remained the strongest motivators for QSR patrons, Trade Intelligence said evolving eating habits were reshaping menus. Load-shedding had made quick meal solutions from QSRs more appealing, and fast food remained a cost-effective way for families to enjoy occasional treats during tough times, it said.
However, the demand for healthier menu options is gradually influencing the sector. While health-conscious eating is not yet a primary concern for SA consumers, global trends suggest its growing significance.
“Although health is not standing out as a key influencer, it is a global trend and a non-negotiable menu option even as SA consumers lag the rest of the world.”
The QSR sector has undergone a major structural shift since the Covid-19 pandemic. Trade Intelligence said the industry now accounts for 41.3% of the food and beverage income, up from 27.5% in 2019. In contrast, full-service restaurants have struggled to recover, with their income stagnating.
Factors contributing to the QSR growth include increased reliance on online delivery services, demand for convenience and speed, affordability and suitability for power outage meal solutions and the appeal of inexpensive treats during economic downturns.
Despite these advantages, foot traffic has declined for nine of the top 10 QSR brands over the past two years, Trade Intelligence said. Famous Brands, which owns Debonairs Pizza, Steers and Wimpy, recently closed 41 outlets, citing demographic shifts and changing consumer preferences.
KFC continues to dominate the market with over 1,000 stores, but even industry leaders are feeling the pinch of a stagnant economy.
In response, QSRs are leaning heavily on digital innovations, loyalty programmes, and strategic pricing to retain customers, Trade Intelligence said. Younger consumers value speed and convenience, while older patrons prioritise proximity.
Trade Intelligence said balancing affordability, consumer expectations and operational challenges would determine the sector’s future.
“Aligning with influencers, the food needs to be the hero, before the price.”
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