Growing Appetite for Fast Food in MENA

    Fast food continues to be one of key channels within the consumer food service industry in the Middle East and North Africa (Mena) region. The fast food market in MENA is mainly driven by modern lifestyle, changing food habits, rapid growth of population and increasing urbanization. The rising number of shopping malls in the region also has a positive impact on the performance of fast food. In Saudi Arabia, fast food value sales at constant 2016 prices are expected to grow at a CAGR of 4% to reach USD8 billion in 2021, according to Euromonitor International. In Egypt, this category is likely to continue performing positively during 2016-2021. Finally, in the UAE, fast food brands are likely to be more quality conscience as the competition increases with a greater level of consumer and health awareness.

    Food consumption in the GCC is expected to expand at a CAGR of 4% from an estimated 48 million MT in 2016 to 59 million MT in 2021. This growth is primarily attributable to the increase in the consumer base coupled with a higher per capita income, as GCC economies stage a sustained economic recovery from the recent downturn related to oil prices. An expanding multi-ethnic, young and affluent society, supplemented by a growing tourism sector continue to drive the GCC region’s appetite for food, according to a report by Alpen Capital. In Saudi Arabia, the entry of more women into the workforce was one of the main factors driving the positive development of fast food in 2016, according to Euromonitor. Fast food also benefited from rapid urbanization and the general lack of entertainment facilities in Saudi Arabia, as well as from continued growth in the young adult population. At the same time, the category continued to benefit from the entry of new players and the expansion of established operators. McDonald’s remained the leading brand in fast food in value sales terms in 2016 with an overall share of 8%. It opened 26 new outlets in 2016, bringing the total number in the chain to 250. McDonald’s in Saudi Arabia is 100% owned and operated by two local companies; Riyadh International Catering Company (RICC) and Reza Food Services. Thanks to the expansion of both chained and independent players, the total number of outlets in the category is expected to grow at a CAGR of 3% to reach 17,669 in 2021. Meanwhile, the Egyptian fast food market and operators were hit by the economic crisis and the devaluation of the Egyptian pound in 2016. Indeed, all fast food restaurants increased their prices more than once in 2016 in order to cover costs. Americana Group led sales in 2016, recording a value share of 8%. The company is well established in the market and owns many fast food brands in Egypt. Prices are expected to continue to increase in 2017 until the exchange rate of the Egyptian pound against the dollar stabilizes. The dynamics of the fast food market in the UAE during 2016 showed that players competed on the basis of quality and premiumisation. Angus beef was a key trend in terms of major menu item developments in fast food burger while many players strained to highlight their halal meat procurement practices and were being more transparent regarding their culinary practices inside the kitchen in order to be hygienically safe. Additionally, 2016 also saw initiatives regarding the digitalization of in-store and ordering experiences for customers by prominent players in the channel. Americana Group remained the leading player in fast food with a value share of 9% during 2016. 

    Fatima Saab
    Editor & Researcher