Key Indicators: What Makes a Market Drive-Through Ready?
Drive-through culture is about more than just cars—it’s about convenience, hectic lifestyles, economic conditions, infrastructure, rental costs and even such intangibles as customer education and awareness. Below, we’ll take a look three major indicators—takeaway dining, the strength of local car culture, and annual disposable income—and use those metrics to highlight some potential global opportunities for drive-through expansion over the long-term.
The value of convenience
The number one driving force behind drive-through culture has always been convenience—and an extreme form of it, at that. When even the fastest fast food became too slow for hungry Americans, operators turned to the drive-through to increase outlet capacity, cater to on-the-go families and travellers, and find a way to be even more convenient than a burger and fries in sixty seconds. Consumers markets that are conducive to drive-through growth will have similar demands on their time, especially in emerging markets with growing middle classes that are seeing their lifestyles evolve toward longer working hours and a greater need to quick, easy meal options. While demand for convenience is difficult to quantify, there are many contributing factors that can be more easily measured.
An evolution in household profiles—and therefore the home life of consumers—can yield valuable information about demand for convenience. In developed markets where women typically work outside of the home, as well as in emerging markets where this is becoming more common, the need for convenient meals is much more apparent, especially during the dinner daypart. Growth in convenience demand can also stem from a move away from traditional family homes toward more modern nuclear-family arrangements. In markets where extended families typically live together, there are lots of hands available to prepare meals, and time is likely to be a less precious commodity during the workweek. This evolution can be most typically found in urban areas of major emerging markets. Shenzhen, China, for example, saw a decrease in average household size of 32% over 2007-2012, while Zhongshan declined 25%, indicative of changing lifestyles across multiple city tiers.
Ultimately, the best measure of convenience available is a look at how much consumers are already taking advantage of takeaway or delivery options in all categories. Among the 54 markets researched by Euromonitor International, the US, UK, and Canada unsurprisingly had the highest combined percent of foodservice value attributable to takeaway and delivery demand in 2012. Of course these markets already have thriving drive-through cultures, but beyond that things get a little more interesting. Mexico, the Philippines, Taiwan, Thailand and the UAE all also have relatively high shares of foodservice driven by non-dining-in demand, indicating these consumers could also be open to other convenience-based services.
Meals on wheels?
Complicating things even further, operators must take car culture—or a lack thereof—into account. Drive-through consumers not only have to have the money and the desire, but they have to have the vehicle. And they have to have the roads to reach the outlet, drive through the window, and be on their way, burger in hand. Car culture can be quantified through a look at the total passenger cars in use per household in a given market or city, and this metric gives us a pretty clear picture of which markets are the most traffic-clogged. Kuwait City, Kuwait; Kuala Lumpur, Malaysia; and Riyadh, Saudi Arabia all rank among the highest car-using cities with more than two cars in use per household, whereas San Jose, Costa Rica; Douala, Cameroon; and Manila, Philippines all rank among the least at 0.1. At the market-level, Saudi Arabia, the UAE, and Malaysia all have very high passenger cars in use per household, indicating potential future opportunities.
Cold hard cash
Finally, consumers in the largest drive-through growth markets have to have the cash to want to patronize chained foodservice, and often enough to require the speed and convenience of a drive-through lane. Per-household annual disposable income figures again highlight some key markets in the Middle East and Asia Pacific, including the UAE at US$134,500 per household per year, Singapore at US$97,400, and Hong Kong at US$86,500.
Taken all together, these three major indicators can be used to rank global drive-through potential by country, as seen in the graph below. To build the drive-through potential score seen on the left axis, Euromonitor analysts ranked 54 global markets by each of the three above metrics, assigned scores based on their rankings in each category, then summed each one to assign each market an overall individual rating.
X-axis values were calculated by ranking each of the 54 major global foodservice markets by three 2012 metrics: % of foodservice value through takeway or delivery, passenger cars in use per household, and annual disposable income per household. Each market was assigned a score for each data point based on its ranking among the other markets (first place received 54 points, last place received 1). These three scores were then added together to create an aggregate score measuring overall drive-through potential relative to other markets, with a maximum potential score of 162. This graph shows the 30 markets with the highest total scores.
It should come as no surprise that many of the top scorers in this exercise are already home to thriving drive-through markets, such as the US, Canada, Australasia and many parts of Western Europe. Among those, however, we can see some less developed foodservice markets that nonetheless showed high conductivity to drive-through potential. The UAE and Saudi Arabia scored very highly due to high incomes and deeply ingrained car culture, though there are many other local factors that could also speak to high potential for drive-through sales. Extremely high temperatures in both markets give consumers every reason to stay inside—or in their vehicles—and rapidly growing awareness of and desire for Western-style foodservice also speaks to long-term potential.
Malaysia also scored particularly highly, especially in comparison to other key emerging markets in Asia Pacific. Much of this was due to being one of the highest-ranking countries in passenger cars in use per household, coupled with a relatively high current percentage of foodservice sales through takeaway or delivery. This lack of dependence on dining-in is rarer in Asia Pacific than in other regions, and speaks to a general open-mindedness toward alternative service formats that could benefit operators.
Finally, Mexico also scores highly as the top Latin American market in these three combined areas. While drive-through service is already available in some outlets in the market, there’s certainly more room for growth as the need for convenience in Mexico’s traffic-choked cities continue to rise. Mexican consumers also have very high awareness of a broad range of chained fast food brands due to the market’s proximity to the US, and its long-standing street food tradition means the idea of food for takeaway is deeply ingrained.
The bottom line
Selecting new markets for services like the drive-through is a complex process, and certainly one that involves a look at more than three metrics; however, these three measures get to some of the fundamentals of what can drive demand for drive-through service, and they’re a good place to start. Many other factors should also be taken into account, including such location-based factors as consumer density and rental costs for larger-footprint outlets, and site selection must be based not only on identifying markets, but cities within those markets that strike the perfect balance between affluent consumers, busy professionals, relatively sophisticated dining culture and enough space to keep real estate prices low.
Ultimately, just like choosing any new market for expansion, mapping drive-through opportunities is a complex process with many working parts. But as drive-through continues to make its way deeper into key emerging markets, and other categories of foodservice like specialist coffee shops continue experimenting with the service, the drive-through revolution is well underway. In a global market where finding new ways to reach customers is paramount—whether through additional services, longer hours, or new menu items—no incremental growth strategy is off-limits, and no opportunity is too small for consideration.