Premium healthy food options will command higher prices and drive revenue growth
New York, NY (PRWEB) April 11, 2014
Over the past five years, the Canadian Fast Food Restaurants industry has expanded despite changing consumer tastes and slow economic growth. According to IBISWorld Industry Analyst Andy Brennan, “The industry managed to escape the recession mostly unscathed due to the low price of its products compared with other types of restaurants.” Since 2009, the industry has been driven by a combination of higher consumer spending and product innovation by fast food restaurants that has renewed consumer interest in fast food. Products with higher profit margins, such as coffee, smoothies and salads, have become more prominent at traditional fast food restaurants, leading to an increase in the average industry profit margin. Over the five years to 2014, industry revenue is expected to grow at an average annual rate of 1.9% to $19.5 billion. The industry is expected to grow an additional 1.1% in 2014.
Over the past five years consumer eating habits have changed as people have become increasingly health conscious and demanded alternatives to traditional greasy fast food options. While major fast-food retailers have responded by expanding the number of healthy menu items, the general trend toward health awareness has decreased demand for traditional fast food restaurants. In response, major chains, such as McDonald's, have expanded their menus to include healthier options, such as salads, fruit and smoothies. Subway was one of the first restaurants to capitalize on consumers' health and weight concerns, having successfully marketed the health benefits of its sandwiches.
The industry's slow, consistent growth is expected to continue over the next five years. “Healthy food alternatives and gourmet items will play a larger role on the menus of most fast food restaurants,” says Brennan. This includes more made-to-order menu items using fresh and possibly even organic produce, as well as much less fried food. While these changes will involve fewer standardized menu selection purchases, consumers are expected to be more willing to pay higher prices for healthier food selections, which will help drive revenue growth. These positive developments, along with greater consumer spending, will result in industry revenue in the five years to 2019.
IBISWorld estimates that the industry exhibits a low level of concentration. Given the diversity of food styles and operations, nearly 51.0% of establishments are small-business operators that have nine or fewer employees. An additional 48.3% of establishments have between 10 and 99 employees. Over time, the industry's concentration has increased as the major chains have increased their footprint, mainly through aggressive franchising. Over the past five years there has been an increasing trend of the major chain operators selling their company-operated stores to focus on franchising. The lower capital requirements and less risk associated with selling franchises have helped chains grow despite relatively flat restaurant sales.
For more information, visit IBISWorld’s Fast Food Restaurants in Canada industry report page.
Follow IBISWorld on Twitter: https://twitter.com/#!/IBISWorld.
Friend IBISWorld on Facebook: http://www.facebook.com/pages/IBISWorld/121347533189.
IBISWorld industry Report Key Topics
Canada's Fast Food Restaurants industry is composed of restaurants where patrons pay for quick-service food products before eating. Purchases may be consumed on-site, taken out or delivered. Gross revenue is derived from both franchised and company-owned stores. Franchise fees are not accounted for in total industry revenue. This industry specifically excludes coffee and snack shops. Most of the industry's establishments also sell beverages, such as water, juice and sodas, but usually not alcohol.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
About IBISWorld Inc.
Recognized as the nation’s most trusted independent source of industry and market research, IBISWorld offers a comprehensive database of unique information and analysis on every US and Canadian industry. With an extensive online portfolio, valued for its depth and scope, the company equips clients with the insight necessary to make better business decisions. Headquartered in Los Angeles, IBISWorld serves a range of business, professional service and government organizations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.com or call 1-800-330-3772.