Fast food industry: Competition helps middle-class contribute to growth

Sector, once believed to serve elite only, has evolved to expand customer base.

LAHORE:

Pakistan is classified among laggards in adopting modern trends; however, once adopted these trends often spread like wildfire as people get on the bandwagon quickly. This is good news for any multinational or local companies seeking to enter the Pakistani market as the rising middle-class of Pakistan allows healthy competition among rivals.

The fast food boom in Pakistan is a really practical example. It was well-received by the local community and now enjoys healthy growth and stellar profitability despite fierce competition.

Introduction of multinational food franchises, initiated in the 1990s, was in the midst of non-existent local fast food restaurants. Today, the trend is spreading fast and the industry experts believe this to be just the beginning for the flourishing industry.

Some reasons for the spectacular rise of the industry are that Pakistani middle-class has welcomed the cuisine due to variety of bargain deals, products, atmosphere, attitude and strict hygiene standards, not to mention more disposable income.



In the beginning, the concept was only welcomed by the higher-income segments as prices made the food unaffordable for middle or lower income classes. However, the industry has evolved since then as the restaurants now offer promotions at various hours of the day and on different products to open doors for the middle-class and low-income class.

Presently along with the high-end deals, franchises are focusing on medium- and low-end deals which target the middle- and lower- income classes as they constitute a much larger portion of the population of 180 million.

“It is true that the middle-class is now the priority for many franchisers. At lease for us (McDonalds) the middle-class is the real target as they spend more on fast food of their disposable income,” said Sohail Malik, country manager of McDonalds Pakistan, while speaking to The Express Tribune. “With the introduction of plenty of choices available in the industry, the masses have gained awareness and this awareness is the key to healthy competition, he added.

Marketing is the other key for franchises to grow their respective businesses. Previously amid insignificant competition, the restaurants did not really latch on to the importance of marketing, but it is completely inverse in the present scenario as competition has grown and major international brands such as Hardees Incorporated, Fatburger and Kentucky Fried Chicken already operate in the country.

“Tough competition also proves to be a blessing for the consumers because of the choices and great bargain and promotional deals available,” said Bilal Hanif, a fast food enthusiast.

As far as the growth of the industry is concerned, according to McDonalds Pakistan’s country director, this is just the beginning.

“I believe that, currently, less than 1% of Pakistan’s total population spends on fast foods regularly,” Malik said. As awareness spreads and the trend catches momentum in urban areas, there will still be a lot of room for expansion in the rural areas.

“The journey has just started.”

Published in The Express Tribune, July 14^th, 2013.

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