Changing Consumer Tastes Reduce Demand for Chain Restaurants
Australian chains in danger.
According to a new study by industry research firm IBISWorld, the outlook for the industry is not so bright with demand expected to flatten over the next five years.
Although the industry is forecasted to record growth through 2013-14, the industry’s strong performance over the previous decade is not expected to continue over the next five years.
"The Chain Restaurants industry has entered a mature stage of its economic life cycle with the number of enterprises expected to decline over the five years through 2018-19," it said.
Industry revenue is forecast to grow by a mere 0.7% annualised over the period, reaching $399.5 million.
"This poor performance will be partially attributed to changing consumer preferences as people start to focus on more premium dining experiences. More food-savvy diners are likely to look at menus and peer-review sites rather than rely on the reputation of a certain chains, which will lead to industry players needing to differentiate themselves with their menus and build strong reputations."
The study also suggests that trends towards higher density, inner-city living will also play a role, since chain restaurants aim at servicing populations living in suburban areas.
CURRENT PERFORMANCE
The study admits that the restaurant chain concept has proven relatively successful in Australia.
Over the five years through 2013-14, revenue for the Chain Restaurants industry is forecasted to grow at an annualised 3.4% to reach $384.9 million.
The growth is attributed to growing levels of discretionary income, improving consumer sentiment, growing health consciousness, and busier lifestyles.
In 2013-14, industry revenue is forecast to increase by a strong 8.6% on the back of new restaurant openings and growth in revenue per establishment.
