Food for thought

IBISWorld estimates that industry revenue in the takeaway food retailing sector will decline at an average annualised rate of 0.3% over the five years to 2009-10. Increasing consumer awareness about the importance of a healthy diet, along with intense levels of competition within the industry has affected the performance of takeaway food retailers over this period.

To the demise of some fast food retailers, the increased availability of ‘home meal replacements’ and ‘heat and serve’ products being offered by supermarkets has been viewed as a cheaper alternative to takeaway by consumers.

Changing consumer attitudes towards healthy eating and the growing popularity of other cuisines has revolutionised the fast food options available to consumers. With this change has come an influx of new healthy eating options ranging from salad and juice bars to grilled chicken shops and sushi retailers.

The strong rise in industry employment has stemmed largely from the entry of new players such as Boost Juice. However, the competitive landscape has proved a difficult time for smaller operators with continued pressure from the industry’s heavyweights on their ability to post profits in an environment of strong competition, particularly with regard to price. As a result, enterprise numbers have been affected by merger and consolidations leading to a rationalisation of operators.

IBISWorld forecasts that industry revenue will grow at an average annualised rate of 1.9% over the five years to 2014-15. Despite continued competition from supermarkets and convenience stores, industry sales will benefit from an increased focus on healthy eating. While demand will largely be driven by healthy food options, traditional favourites such as frozen pizza will continue to fill the shopping trolley of time-poor consumers. Convenience stores are also expected to account for a larger share of the fast food pie, with their expanded range of food service items.

Following a dip in income levels due to a lack of Federal Government handouts, consumers will experience a steady rise in income levels over the five years to 2014-15, providing them with more spending power and the ability to demand a broader range of goods.

The competitive trading environment for takeaway food retailers will result in modest growth in enterprise numbers over the next five years. It is anticipated that competitive pressures will continue to force players to exit the industry while there may be an influx of new players in niche markets. The industry will also experience stable growth in establishment numbers, due to the launch of new stores by operators. Employment levels for this industry will rise as well.

Key success factors for operators in the industry:

• Access to multi-skilled and flexible workforce: Due to the nature of this industry, some operators need to be able to operate for long hours, especially those in a family business situation. As a result, operators require reliable relief staff.
• Attractive product presentation: Operators benefit from displaying stock in an organised and attractive manner so as to maximise impulse sales.
• Having a clear market position: Operators need to ensure that their market positioning projects a clear and consistent image of the company.
• Easy access for clients: Operators should have ample parking and convenient access to the premises for consumers.
• Proximity to key markets: Retailers benefit from being located in an area that has a high volume of passing traffic.
• Ability to control stock on hand: The use of tightly monitored stock control systems ensures operating costs are kept to a minimum and operators are aware of low stock levels.

Robert Bryant is the general manager of business information firm IBISWorld.