Rising need for convenience boosts Australia’s foodservice

Only quick service restaurants recorded growth in 2020.

Growing demand for convenience—owing to consumers' busy lifestyles and rising number of transactions—will drive Australia’s foodservice sector, which is expected to grow to $65.7b (A$88.7b) by 2025 at a compound annual growth rate (CAGR) of 9.3%, according to a report from GlobalData.

At around 45% of the market share, the quick service restaurant (QSR) channel remained the most popular foodservice profit sector channel in 2020, whose growth was largely attributed to its convenience and value for money attributes and safe delivery services.

In terms of growth, QSR was the only channel to record growth among all foodservice channels, albeit at a moderate CAGR of 1.4%. The QSR channel also led the industry growth in terms of the number of outlets in 2020.

“Home deliveries and takeaways performed significantly in 2020, leading to a surge in businesses for food delivery providers,” GlobalData’s Consumer Analyst Bijayalaxmee Pradhan said.

Meanwhile, the travel channel is expected to record the steepest CAGR at 22.7%. As the economic sentiment returns to normalcy, workplaces are expected to record the highest growth in outlets, at a CAGR of 1.3%, during the period 2020 to 2025.

“Operators are focusing on modernizing and digitizing their operations with an online presence to meet the customer demand. Aiming to be a viable alternative to [full-service restaurant], the coffee and tea shop channel is introducing non-traditional food offerings that include local ingredients and seasonal menus,” Pradhan said.

Operators are also expected to depend more on deliveries to reduce their real estate expenses, leading to the emergence of new formats such as the virtual kitchen in the country. “During the forecast period, QSR operators are investing in virtual or dark kitchens to provide a variety of cuisines to consumers and gain from online food ordering,” Pradhan added.