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In terms of value growth rates, fast food in Asia Pacific witnessed a series of ups and downs over the last decade, although with a constant positive trend, which was primarily driven by rising disposable incomes and the overall health of economies, which allowed consumers to eat out more.
Eating out in Asia Pacific is a mixed picture. Countries such as Hong Kong, Japan and South Korea have a frequency of eating out and per capita expenditure almost as high their Western counterparts. However, in countries such as Indonesia, the Philippines and India it is still a weekly practice, and not daily, unlike in their Western counterparts. Consumers have an affinity for Asian food, which is perceived as healthy and tasty.
Rising incomes and the need for hygienic food drive growth
Asia Pacific was the fourth fastest growing fast food region in the world in 2016. This growth was driven by the Philippines, India and Malaysia. The growth opportunities in these markets were much stronger, as these are relatively small markets in the region.
These three countries were also amongst the fast growing economies in terms of growth in disposable income during 2011-2016. With growing modernisation and incomes, the lack of time amongst the youth population led a considerable number of people to opt for fast food. Furthermore, the growing millennial population in the region and rising incomes led to an increase in the importance of hygienic food, and most fast food chains were well-known by consumers, and hence frequented on a regular basis.
Convenience stores fast food continues to be an important channel
Convenience stores fast food led growth for the majority of countries in Asia Pacific over 2011- 2016. Convenience stores had more elaborate menus, offering fresh and hygienic food, which in many cases tasted better than food from street kiosks, leading to an increased preference for convenience stores fast food. Convenience stores were also revolutionary in attracting new consumers, who would probably not usually step into a fast food outlet. However, whilst shopping for groceries they might be hungry, and hence opt for fast food. Furthermore, these stores started to offer freshly prepared food, and not just boxed food, which is generally heated and served. The availability of quality freshly prepared fast food made convenience stores popular amongst a wider range of consumers.
Price, cuisine and proximity shape the preference for fast food
Affordability is always an important deciding factor when it comes to the type of cuisine and food. One of the primary reasons for the popularity of fast food in Asia Pacific is its pricing. The spend per transaction on fast food in Asia Pacific is the lowest in the world, at less than USD2 per transaction. This is primarily driven by independents rather than chained outlets, which are still more expensive, and hence not always preferred by consumers. Price also drives the preference within fast food. Asian fast food is amongst the most popular cuisines in fast food, along with burger and chicken fast food. The preference for Asian fast food is driven by the restaurants in the region serving this cuisine. They are mostly independents/stand-alone, and the price per meal is relatively lower compared with burger and chicken fast food, which is dominated by chained retailers. Chicken and burger fast food are also quite popular in the region, making Asia Pacific the second and third largest markets in the world, respectively. Brands such as KFC and McDonald’s are urban household names, and they customise their menus to a great extent to suit the palates of different countries in Asia Pacific. Customisation according to the country was visible when KFC, one of the leading chicken fast food chains globally, launched an all-vegetarian menu for India in 2014.