FAST FOOD IN LATIN AMERICA

November 2018
INTRODUCTION
REGIONAL OVERVIEW
LEADING COMPANIES AND BRANDS
FORECAST PROJECTIONS
COUNTRY SNAPSHOTS
INTRODUCTION

Scope

Disclaimer
Much of the information in this
briefing is of a statistical nature and,
while every attempt has been made
to ensure accuracy and reliability,
Euromonitor International cannot be
held responsible for omissions or
errors.
Figures in tables and analyses are
calculated from unrounded data and
may not sum. Analyses found in the
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discretion is advised.

Fast food in Latin America is

growing at a significant pace, as
the economies recover post-
recession. Independent
operators dominate but chained
brands have made their mark
through aggressive investment
in product innovation. While
chained fast food is present in
most markets of the region, it
remains underpenetrated as
operators perceive these
markets as offering limited
opportunities. The preference
for healthier ingredients and
convenience of food delivery are
key trends in fast food.

© Euromonitor International CONSUMER FOOD SERVICE: FAST FOOD IN LATIN AMERICA PASSPORT 3
INTRODUCTION
Key findings
Heavy investment in
expansion and marketing
drives growth for chained
fast food
Increasing demand for
healthier fast food options
compels players to modify
their menus and packaging
Operators outsource food
delivery to widen their reach service providers, which has helped them to widen their reach to consumers
Operations of chained
brands are mostly
concentrated in a few
countries
© Euromonitor International
Chained brands, such as Subway and Burger King, have invested extensively
in expanding the number of outlets at commercial spaces and places of high
traffic, for instance shopping malls. They have also opened up takeaway
counters and set up self-ordering kiosks to enhance convenience for
customers. Pocket-friendly deals and advertisements highlighting key features
of food options have been initiated to attract consumers.
Consumers’ preference for healthier fast food options has compelled operators
to include healthier ingredients in their menu. The “open door” policy of
McDonald’s, which allows customers to visit the outlet kitchen, has been
appreciated by consumers. Brands have started to add nutritional labels on
product packaging, thereby helping consumers to make informed food
choices.
Most foodservice operators outsource food delivery to third party delivery
who prefer eating in the comfort of their homes. This is also a cost-effective
way for them to tap into the delivery segment with minimum investment.
Brazil continues to be a ripe market for chained brands, owing to its high
population, coupled with rising consumer expenditure compared to other Latin
American countries. As a result, key companies are concentrated in this
country. Countries such as Chile and Colombia have a low presence of major
brands owing to small consumer bases and difficult economic conditions.
These markets are thus dominated by independent players.
CONSUMER FOOD SERVICE: FAST FOOD IN LATIN AMERICA PASSPORT 4
INTRODUCTION
REGIONAL OVERVIEW
LEADING COMPANIES AND BRANDS
FORECAST PROJECTIONS
COUNTRY SNAPSHOTS
REGIONAL OVERVIEW

Latin America exhibits growth owing to revival of the economies

 Latin America is the fourth

largest market for fast food
globally, and is expected to grow
as the economies revive. The
market registered a 3% CAGR
over 2012-2017, owing to the
economic slowdown.
 Increases investment in network
expansion, rising consumer
expenditure on food and the
growing presence of third party
food delivery partners are key
driving forces for the category in
this region.
 The key markets in value terms
Latin America are Brazil, Mexico and Argentina.
Eastern
Europe Chained brands focus mainly on
Brazil and Mexico. Markets such
as Venezuela, Chile and
Colombia are mostly dominated
by independent players.

© Euromonitor International CONSUMER FOOD SERVICE: FAST FOOD IN LATIN AMERICA PASSPORT 6
REGIONAL OVERVIEW

Investments on expansion and promotions aids sales growth

 The sharp recession in Brazil,

coupled with economic
downturn in Venezuela, which
caused close to 100% inflation,
led to a decline in fast food
sales in 2016. the recovery of
economies is expected to
support growth in fast food sales
in the 2017-2022 forecast
period.
 Significant investment by
chained brands in outlet
expansion and promotional
activities is expected to revive
sales of fast food in the future.
 Intense price competition within
the category, particularly
amongst chained players, has
attracted price sensitive
customers, which is expected to
increase sales in the upcoming
period.

© Euromonitor International CONSUMER FOOD SERVICE: FAST FOOD IN LATIN AMERICA PASSPORT 7
REGIONAL OVERVIEW

Brazil leads the fast food sales in Latin America

 Brazil continues to be the biggest

market for fast food in terms of
value sales, owing to it having the
largest population amongst the
Latin American countries, as well as
an extensive presence of chained
outlets and rising consumer
expenditure on food.
 Chicken fast food continues to be
important as it is often shared with
family and friends. However, the
channel lost share to categories
such as bakery fast food, owing to
aggressive expansion in bakery fast
food outlets and affordable pricing.
 Peruvian and Asian fast food
targets consumers seeking
homemade food and quick service
at lower prices. In Venezuela,
operators have focused on dessert
fast food, as consumers prefer it
when visiting public places.

© Euromonitor International CONSUMER FOOD SERVICE: FAST FOOD IN LATIN AMERICA PASSPORT 8
REGIONAL OVERVIEW

Bakery and chicken fast food lead the category across Latin America

 Bakery products fast food

registered 11% CAGR in Colombia
and Chile over 2012-2017. This
growth was supported by the
expansionary plans of Subway
which increased its outlet numbers
by 27% in Chile during 2017.
 A greater focus by chained outlets
such as KFC and McDonald's on
chicken fast food led to positive
growth in Argentina, Brazil, Chile
and Peru over 2012-2017. In
Argentina and Peru, it grew at
CAGRs of 25% and 6%,
respectively, in the review period
2012-17.
 Ice cream fast food struggled
during the review period with
declines in Chile, Colombia and
Venezuela. This was due to a lack
of innovation and high calorie
content.

© Euromonitor International CONSUMER FOOD SERVICE: FAST FOOD IN LATIN AMERICA PASSPORT 9
REGIONAL OVERVIEW

Extensive presence of chained outlets supports growth in Brazil

© Euromonitor International CONSUMER FOOD SERVICE: FAST FOOD IN LATIN AMERICA PASSPORT 10
REGIONAL OVERVIEW

Operators launch value for money deals to attract customers

 Burger fast food in Brazil, bakery fast food in Chile and chicken fast food in Peru are the most popular
options. Operators are constantly lowering prices and introducing value for money deals in order to attract
consumers and compete against convenience stores, which offer limited options at lower prices.
 The change in perception of fast food over the years has compelled both chained and independent fast
food outlets to adapt to consumer demand and change their menus. Operators have focused on creating
healthier menus with organic ingredients, natural flavoured water and healthy desserts (such as frozen
yoghurt with fresh fruit toppings). Salads, wraps, paninis and crepes, along with beverages such as
smoothies, frappes, natural juices and cold teas, are available at fast food outlets across Latin America.
 The Brazilian economy started recovering from crisis in 2017, and fast food operators adjusted their pricing
strategies by introducing offers that encouraged consumers to spend, such as buy-one-get-one-free from
Subway, and Burger King’s offer of two sandwiches for BRL15. These initiatives helped increase sales and
provided an opportunity for consumers to eat out at budget-friendly prices.
 In Argentina, informal foodservice outlets that offer different types of fast food by weight have gained
importance over individual menu items with set prices. These outlets are typically owned by people of Asian
origin, and offer vegetarian meals. They open only during the afternoon from Monday to Friday, targeting
consumers from nearby offices looking for cheap but healthy takeaway meals for lunch.
 In Colombia, Asian fast food chains performed poorly during 2017, and some outlets were forced to close,
owing to competition from value for money options offered by independent outlets.
 Formal fast food operators perceive innovative offerings by independent outlets as unfair competition. The
latter leverage their informal status through product offerings at low prices and adaptation to local tastes
and preferences. Chained fast food operators such McDonald's and Burger King have less penetration in
Venezuela, Colombia and Chile.

© Euromonitor International CONSUMER FOOD SERVICE: FAST FOOD IN LATIN AMERICA PASSPORT 11
REGIONAL OVERVIEW

Fast food through retail grows through investment by chained brands

© Euromonitor International CONSUMER FOOD SERVICE: FAST FOOD IN LATIN AMERICA PASSPORT 12
REGIONAL OVERVIEW

Independents dominate owing to affordable menu and local flavours

 Standalone and retail are the primary channels for fast food consumption in Latin American countries. Fast
food through retail and travel have seen growth in countries such as Colombia and Mexico, owing to retail
expansion at commercial locations such as malls and places of high traffic such as airports and stations as
travellers tend to grab a quick bite before their journey.
 Independent standalone foodservice outlets continue to form the major channel in Mexico, Argentina, Brazil
and Chile, with menus that include full meals at affordable prices, thereby posing the main competition for
chained fast food brands. These outlets have responded to consumers’ desire to improve their nutrition by
offering affordable healthy options at any time of the day, regardless of whether they prefer to eat-in,
takeaway, or get it delivered.
 In Peru, fast food through retail grew at 4.6% CAGR during 2012-17 and 11.8% y-o-y during 2016-17 owing
to a growing middle class and the development of new shopping malls. In 2017, malls continued to grow,
despite political troubles and corruption issues. According to Arellano Marketing, fast food restaurants are
the third most popular place for consumers to visit in a mall, after supermarkets and cinemas.
 In Venezuela, consumers prefer to eat in whenever possible, as fast food meals are considered a good
opportunity to take a break from work and spend time with friends and relatives. As a result, fast food
through retail continued to account for a major share of fast food sales in 2017. Fast food in Colombia has
been driven by low cost retailers as these attract savvy consumers looking for value-for-money offerings.
Operators such as Tostao’ Pan & Café and Sandwich Qbano are offering varied menus at low price, which
include healthier options such as low-fat and wholegrain bread sandwiches.
 Fast food through travel saw strong growth in Chile in 2017, on account of an influx of tourists from
Argentina, who were looking for cheaper fast food options. This had a positive effect on fast food sales
within the retail channel as well, as they offer tourists a wide variety of meal options at reasonable prices.

© Euromonitor International CONSUMER FOOD SERVICE: FAST FOOD IN LATIN AMERICA PASSPORT 13
INTRODUCTION
REGIONAL OVERVIEW
LEADING COMPANIES AND BRANDS
FORECAST PROJECTIONS
COUNTRY SNAPSHOTS
LEADING COMPANIES AND BRANDS

Economic slowdown restricts growth for the top brands

 The fast food market in Latin

America is highly fragmented, with
small independent local players
dominating sales. Aggressive
marketing strategies have yet to
deliver results for top ranked
companies, as economies are still
recovering from economic
slowdown.
 Most markets are dominated by
independent players, with only
Venezuela being led by the top
five ranked companies.
 In Mexico, companies are opting
to expand through franchises,
which has yielded favourable
results in the past. Investor groups
are supporting the development of
outlets in small to medium sized
cities, and are investing mainly in
fast food franchises of all food
types.

© Euromonitor International CONSUMER FOOD SERVICE: FAST FOOD IN LATIN AMERICA PASSPORT 15
LEADING COMPANIES AND BRANDS

McDonald’s register its highest growth in Latin America

 McDonald’s continued to lead fast

food in 2017. The company has
invested heavily in promotions in
response to the economic
downturn, in order to encourage
consumers to eat out.
 McDonald’s introduced an “open
door” policy, allowing consumers to
witness the preparation of products
and assess the measures taken by
the company to guarantee product
safety and quality.
 Restaurant Brands International
(Burger King) and Doctor’s
Associates (Subway) registered
strong growth over 2012-2017, on
account of heavy investment in
outlet expansion. Combo meals,
cheaper alternatives by Burger
King and healthier fast food
options by Subway, in the form of
subs and salads, have been key in
attracting consumers.

© Euromonitor International CONSUMER FOOD SERVICE: FAST FOOD IN LATIN AMERICA PASSPORT 16
LEADING COMPANIES AND BRANDS

Presence of major fast food players remains skewed except in Brazil

 Brazil is the largest market for

chained fast food companies such
as McDonald’s, Doctor’s
Associates Inc (Subway) and
Restaurant Brands International
(Burger King), owing it to having
the largest population amongst
the Latin American countries, its
recovery from economic crisis and
rising expenditure on food.
 Among the other leaders, Brazil
Fast Food Corp operates in
Brazil, Grupo Norkys in Peru, and
Helacor SA in Argentina. These
companies have almost 100% of
their businesses in a single
country, reflecting the general
lack of regional diversity in fast
food operations.
 In Chile, Colombia and
Venezuela, the presence of major
fast food players is very minimal.

© Euromonitor International CONSUMER FOOD SERVICE: FAST FOOD IN LATIN AMERICA PASSPORT 17
LEADING COMPANIES AND BRANDS

Brands adapt to changing circumstances through innovation

 With more premium items on its

menu and the aggressive
promotional activities for its
products, McDonald’s managed to
retain its value share in 2017.
 Habib’s is focusing on artificial
intelligence to increase its
profitability by providing a better
purchasing experience through the
use of chatbots for orders via
Facebook messenger.
 Brands have modified their menus
according to the ingredients which
are locally available, owing to
heavy taxes on imported
ingredients. For instance, KFC
introduced burgers without bread
in the state of Zulia, Venezuela.
 Burger King saw growth as a
result of an increase in the number
of its outlets and the introduction
of affordable deals.

© Euromonitor International CONSUMER FOOD SERVICE: FAST FOOD IN LATIN AMERICA PASSPORT 18
INTRODUCTION
REGIONAL OVERVIEW
LEADING COMPANIES AND BRANDS
FORECAST PROJECTIONS
COUNTRY SNAPSHOTS
FORECAST PROJECTIONS

Chained brands will drive growth for fast food in Latin America

© Euromonitor International CONSUMER FOOD SERVICE: FAST FOOD IN LATIN AMERICA PASSPORT 20
FORECAST PROJECTIONS

Delivery service providers will drive sales for fast food in future

 Fast food chains in Latin America are increasingly employing technology to reduce costs and improve the
customer experience. McDonald’s in Argentina has developed a system that enables customers to place
orders and pay via credit card through touch-screen computers. This makes ordering faster for customers
and also reduces labour costs for the chain. Such technology-driven innovation is expected to drive growth
for chained fast food brands over the 2017-2022 forecast period.
 As consumers become more health conscious, foodservice chains are aiming to offer consumers a
healthier menu and be more transparent about the nutritional value of their products, thereby helping
customers make informed decisions. In Chile, where obesity has become a major issue, outlets with
healthier fast food options are expected to register growth in the forecast period, with consumers being
more inclined towards nutritious options.
 In Colombia, Brazil and Venezuela, the use of third party delivery service providers, such as iFood and
UberEATS, by independent and chained outlets is expected to drive growth in the forecast period, until
consumers gradually recover their willingness to spend and start going to shopping centres once again.
 As independents and local fast food outlets still command the majority of market share in Latin American
countries, adaptation to local preferences will be the key factors determining the growth of major brands in
the forecast period.
 The introduction of value packs such as full meals at affordable prices with healthier ingredients in Mexico
has contributed to stronger sales of fast food, and this trend is expected to continue in the forecast period.
Such efforts have helped independent outlets to attract customers, as has offering them customised meals
to cater to the specific requirements of the customer.

© Euromonitor International CONSUMER FOOD SERVICE: FAST FOOD IN LATIN AMERICA PASSPORT 21
INTRODUCTION
REGIONAL OVERVIEW
LEADING COMPANIES AND BRANDS
FORECAST PROJECTIONS
COUNTRY SNAPSHOTS
COUNTRY SNAPSHOTS

Argentina: market context

© Euromonitor International CONSUMER FOOD SERVICE: FAST FOOD IN LATIN AMERICA PASSPORT 23
COUNTRY SNAPSHOTS

Argentina: competitive and retail landscape

© Euromonitor International CONSUMER FOOD SERVICE: FAST FOOD IN LATIN AMERICA PASSPORT 24
COUNTRY SNAPSHOTS

Brazil: market context

© Euromonitor International CONSUMER FOOD SERVICE: FAST FOOD IN LATIN AMERICA PASSPORT 25
COUNTRY SNAPSHOTS

Brazil: competitive and retail landscape

© Euromonitor International CONSUMER FOOD SERVICE: FAST FOOD IN LATIN AMERICA PASSPORT 26
COUNTRY SNAPSHOTS

Chile: market context

© Euromonitor International CONSUMER FOOD SERVICE: FAST FOOD IN LATIN AMERICA PASSPORT 27
COUNTRY SNAPSHOTS

Chile: competitive and retail landscape

© Euromonitor International CONSUMER FOOD SERVICE: FAST FOOD IN LATIN AMERICA PASSPORT 28
COUNTRY SNAPSHOTS

Colombia: market context

© Euromonitor International CONSUMER FOOD SERVICE: FAST FOOD IN LATIN AMERICA PASSPORT 29
COUNTRY SNAPSHOTS

Colombia: competitive and retail landscape

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COUNTRY SNAPSHOTS

Mexico: market context

© Euromonitor International CONSUMER FOOD SERVICE: FAST FOOD IN LATIN AMERICA PASSPORT 31
COUNTRY SNAPSHOTS

Mexico: competitive and retail landscape

© Euromonitor International CONSUMER FOOD SERVICE: FAST FOOD IN LATIN AMERICA PASSPORT 32
COUNTRY SNAPSHOTS

Peru: market context

© Euromonitor International CONSUMER FOOD SERVICE: FAST FOOD IN LATIN AMERICA PASSPORT 33
COUNTRY SNAPSHOTS

Peru: competitive and retail landscape

© Euromonitor International CONSUMER FOOD SERVICE: FAST FOOD IN LATIN AMERICA PASSPORT 34
COUNTRY SNAPSHOTS

Venezuela: market context

© Euromonitor International CONSUMER FOOD SERVICE: FAST FOOD IN LATIN AMERICA PASSPORT 35
COUNTRY SNAPSHOTS

Venezuela: competitive and retail landscape

© Euromonitor International CONSUMER FOOD SERVICE: FAST FOOD IN LATIN AMERICA PASSPORT 36
FOR FURTHER INSIGHT PLEASE CONTACT
Siddhartha Gupta
Research Associate
Siddhartha.Gupta@Euromonitor.com
+91 80 67740500 Ext: 5538
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© Euromonitor International CONSUMER FOOD SERVICE: FAST FOOD IN LATIN AMERICA PASSPORT 38