The fast food market sector is remained relatively healthy despite the recent economic turmoil as Russian’s crave for this type of food stuff in an increasingly hectic lifestyle. The fast food sector is expected to experience continued growth and consolidation at the expense of the smaller independent chains. Moscow and St Petersburg are cities which have relatively saturated fast food sectors although the other Russian cities are expected to see continued consolidation as the bigger brands open up an increasing number of outlets. By the end of 2010, Moskva-McDonalds had 275 outlets operational in Russia.
Russia’s fast food market increased by 11% in 2010 to be valued RUB216.0 billion. Transaction volumes in the fast food market over the same period only increased by 5% with the number of outlets totalling 20,852 in Russia, increasing by 2% in 2010. Russia’s consumer foodservice market performed relatively well despite the economic downturn with the fast food sector representing the best performer overall.
In terms of fastest growth, the burger fast food market saw an increase of 26% in terms of value with outlets in burger fast food increasing in 2010 by 21%. During the period 2011 to 2015, the fast food market is forecast to increase by 5% CAGR with the sector valued at RUB279 billion by the end of 2015.
Fast food was the only foodservice channel which performed well during the time of economic instability in the country, and actually posted positive current value growth in 2009. The recession, however, did not leave fast food entirely unscathed, and the growth of the channel was still much lower than the 10% current value CAGR in the review period. In 2010 fast food saw the highest expansion in terms of both current value sales and number of outlets, with 11% and 2% increases respectively.
Consumers’ lifestyles in Russia are becoming more hectic which supports the move towards offering more outlets in new locations. Growing disposable incomes amongst the majority of the population in the country and new multinational brands which appeared throughout the year supported the further development of fast food culture in Russia.
He Russian fast food market is dominated by smaller independent operators both in terms of value sales and also outlet numbers. The chained fast food operators continued to expand at the expense of the smaller independent counterparts. Russia’s chained fast food operators reported growth of 20% in current value during 2010 whilst over the same period, the independents increased by just 6%. The major players such as McDonalds, Subway and Baskin-Robbins all experienced extensive growth expansion by adopting a franchising model.
In 2010, Moskva McDonald’s remained the leading company in the fast food market accounting for 45% market share of all the chained outlet fast food business. McDonald’s has a stronghold on the burger fast food sector with 275 outlets in Russia in 2010. Over recent years the company constantly worked on improving its menu and introducing new service formats.
Subway, the third largest fast food brand in terms of transactions, and fourth in terms of outlets and current value sales, saw the highest increase in share in 2010. The company, being very well managed, was able to increase its revenue by 43% in 2009, during the time of economic instability in the country. The brand owners introduced new cheaper menu items, such as sandwiches for less than RUB29, which although slightly decreased the sales per outlet, helped to maintain the number of transactions per outlet compared with the previous year. In 2010, Subway recorded exceptional growth, more than doubling the number of outlets in the year (from 82 in 2009 to 167 in 2010). The Subway brand is positioned as a healthy alternative to what is increasingly perceived as unhealthy fast food. The best-selling items, such as turkey-ham, tuna and chicken breast subs, are perceived by Russian consumers as less unhealthy, and as containing less fat than burgers, for instance, so enjoyed high demand over the year.
Russia’s fast food market is forecast to report further growth up to 2015. The leading market players are forecasting a promising period of 5% CAGR sales growth and an increase in outlet numbers of 2% each year. The volume of outlets is expected to see further positive development, mainly due to the expansion of chained players into the regions of the country, with a key focus on the largest cities. The key markets of Moscow and St Petersburg are already fairly saturated, and the competition is expected to be between the current players, with chained fast food brands carving out share from independents.
The leading multinational brands are forecast to continue expanding in terms of new outlets; however, as the channel approaches saturation, the number of new entrants is likely to stagnate. The key competition is expected to appear between the existing players, with pioneers such as McDonald’s, Subway and Baskin-Robbins taking over the independents. Chained fast food is expected to record a constant value CAGR of 10%, whilst independent fast food is expected to increase by a marginal 1% over the forecast period.
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