The burger business: Mouth-watering opportunity

Industry statistics reveal unwavering demand in local market.

KARACHI:

Growing annually at a little over 4%, Pakistan’s Gross Domestic Product (GDP) may be an indication of slow economic growth. But, that number does not seem to reflect the latest trend in fast food and traditional cuisines – a $1 billion-a-year market, according to industry estimates.

With dozens of fast-food restaurants opening every year in Karachi, Lahore and Islamabad, this market segment continues to witness a boom. In fact, roughly 50 restaurants open up every year in Karachi’s upscale neighbourhoods alone, according to industry sources.

Food restaurants are doing well but, burgers remain one of the top categories to drive recent growth.

“Burgers is the current fashion in fast food,” said EatOye CEO Nauman Mirza.

According to Mirza, the year 2014 saw the fastest penetration of local burger chains. “Starting from 2013, the market segment witnessed two years of high growth,” he said. The size of the pie has been increasing constantly, with the market still offering room for growth.”

“The fast-food market is gigantic and largely untapped in Pakistan,” said Mirza.

Explaining further, EatOye’s chief says there are about 5,000 restaurants in Dubai to cater to a population of more than 2 million. On the contrary, there are less than 1,000 restaurants in Karachi, which has a population of around 20 million. “The demand-supply gap is huge,” he said.

There is hardly any data that reveals specific details about the burger business, but statistics compiled by Foodpanda – a subsidiary of Germany’s Rocket Internet – offers some insight to this category.

Burgers are one of the top three fast-food categories in the country, according to Foodpanda. On an average day, burgers make 21% of the food portal’s daily orders in Karachi and remains among the three most-ordered food categories.

“The number is less because traditional food, such as Biryani, Karahi, Handi and fast foods including sandwiches and pizzas are more popular,” said Foodpanda.pk Public Relations Executive Sara Qazi. However, burgers remain the top category in Lahore, accounting for a third (around 33%) of the total daily orders on an average day.

Even during special occasions in the calendar, sports events in particular that witness a steep rise in fast food consumption, burgers remain in the top three categories.

During the 2014 ICC World Twenty20, burgers were the third most popular category after pizza, rolls and sandwiches, the food portal noted. Burgers accounted for 18% of the 6,000 orders that were placed through Foodpanda.pk during the event.

“It has become a trend to order food and burgers have increasingly become a takeaway business,” said Mr Burger General Manager Agha Muazzam Husain, the pioneer of the burger business in the country.

“The young generation is fast-food savvy and they are big on burgers,” he said.

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When it comes to food, even political instability and poor law and order situation (violence, strikes, protests and extortion) that have affected almost every other sector of the economy does not seem to hold consumers back.

“Burgers remained a highly-consumed item during these [troubled] days,” said Qazi. “About 41% of our daily orders were made for burger combos in Karachi alone,” she said, revealing statistics for December 12 – the day when Pakistan Tehreek-e-Insaf held sit-ins in Karachi, bringing the city to a standstill.

So what’s driving this boom?

According to sources, the growing middle class and overall demographics of the population are critical factors driving this consumerism. Millions of consumers are entering independent disposable income space every year. Pakistan is among the top countries adding 20-year-olds to the world.

It is for these reasons that leading international chains, including Hardee’s, Burger King, Johnny Rockets and Fatburger also entered the world’s sixth largest consumer market. This is in addition to a large number of local players that entered the market recently.

“It’s very difficult to conclude a number [for local burger chains] but it is pleasant to see that our burger-eating community is responding well to the outburst of local burger joints,” said Qazi.

Obeez Burger, Burger Lab, Burger Shack, Burger Factory, Burger Hub, Burger Inc., Big Thick Burgerz, Burger 18, Burger Corner, Burger-Z, Gourmet Burger Company, Lasani Burger, Backstreet Burger, Char Grill Central and Habanero Express are only a few names.

Despite the influx of new local and international players the business of established ones was hardly affected. All the latest entrants combined are not even close to McDonalds and KFC, which still have the largest share. This diverse set of burger chains cater to almost every kind of consumer — one can find a quality burger for Rs200 and a franchise special for as high as Rs1,500.

While fast-food boom continues to offer investment opportunities, it is not without challenges.

“Rising demands from money extortionists is the single largest challenge facing the business,” said Husain, adding it was the sole reason Mr Burger had to close a branch in its 30 years of business.

THE WRITER IS A STAFF CORRESPONDENT

Published in The Express Tribune, December 22^nd,  2014.

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