Fast-food industry resilient

Cape Town - Consumers continue to enjoy their takeaways, despite the recession eroding their finances.

Cadiz African Harvest analyst Mark Ansley reckons the fast-food industry is pretty defensive in hard times.

"We see that consumers who previously dined at restaurants downgrade to fast food when pressure is exerted on their spending. On the other hand, people who would previously not have been able to afford it, upgrade to fast food when their finances improve."

International fast-food chain McDonald's last week decided to leave its South African operations in the hands of a licence holder, but denied it was doing so because it considered the local industry in bad shape.

Bendeta Gordon from franchise consultation group Franchizedirections says South African fast food franchises are flourishing.

"The industry is pumping. Even in recessionary times people find it essential to get something to eat in a hurry."

The latest Statistics South Africa survey of the food and beverage industry shows that food sales in the first quarter of this year rose 4.3% compared with the same period last year. The top performers among food retailers are the take-away establishments and fast food restaurants, which show growth of 8.1%.

Ansley notes that one should keep in mind that the rise in food inflation also bumps up these figures, which may not necessarily reflect volumes.

McDonald's chief executive in South Africa, Greg Solomon, says that the local market is a tremendously successful one for the group. "Indeed, decision to choose a local partner reflects our confidence and our desire to reach the maximum potential as quickly as possible."

This local partner is as yet unknown.

According to the group, it has limited capital which it will in future focus on large strategic markets.

"Where McDonald's lacks the funds to invest in a promising market like South Africa, it is better to obtain local finance for expansion," Solomon explains.

He does not expect the 123 McDonald's branches in the country to reduce in number, but believes that the brand is on a strong growth trajectory after 14 years in the South African market.

Gordon says the new dispensation is unlikely to change anything for consumers. McDonald's has strong criteria with which its brand must comply.

- Sake24.com

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