Affordable and convenient, Quick Service Restaurants have bloomed during the pandemic. Let’s unpick the channel’s success.
Quick Service Restaurants (QSRs) has been the only channel to grow in actual terms as a result of the pandemic, with a +21% revenue uplift in OOH spend when comparing Q2 2022 with Q2 2019 in Western Europe.
The first thing to mention is that QSRs growth may be due to it being one of the most affordable channels. Amidst rising inflation around the globe, QSRs offers a lower cost meal option.
As you can see from the data, QSRs have seen a 7% increase in buyers. But this is not where we see most of the channel’s growth. We are seeing that the channel has seen buyers spending more – with an increase of 25% per trip.
Consumers aren’t spending more due to menu item price increases – as of Q2 2022, there have been no relevant price increases in the basic range of key QSR chains. What is instead happening, is two things. One, is a story of premiumisation, where consumers are buying products with a higher price when compared with the store’s basic range. This may be through choosing limited edition menu items that have a higher cost, or simply more premium ranges. The second thing is that, with each trip, consumers are adding additional items to their order, generating a higher spend.
Post-COVID, it is clear that OOH eating habits have changed. Consumers are back eating in the OOH space, but there is a shift in priorities; they are putting weekend meals on-premise first, but are opting for the more affordable channel of QSR. For QSR brands looking to capitalise on the trend, it will be fruitful to extend the menu choice to include more affordable ranges. As the cost of living becomes an increasing concern amongst consumers, brands who keep pace and develop discounts and promotions will ultimately win out.
Close to home: where QSRs are seeing the most growth
When we compare the different restaurant types over the three-year period in Western Europe, we see two different stories.
For Coffee Shops, Independent FSRs and Chain FSRs, we see a similar trend: Covid changed how these channels operated, meaning they leaned more heavily on deliveries and collections in 2021. Consumers were likely deterred from their usual on-premise consumption due to anxieties around catching Covid in environments with larger groups, and many restaurants and coffee shops closed due to government enforced lockdowns in the period. With 2022’s ‘return to normal’, we generally see consumers migrating back to their previous habits, enjoying being on premise in a way they either hadn’t been able to or hadn’t felt comfortable to in 2021.
With QSR we see an entirely different story. For a start, it is the only channel that has seen value growth (vs 2019) – and steep growth at that (21%).
Pre-pandemic, the channel already had a higher share of value coming from delivery and collection pre-pandemic, meaning QSRs were best-prepared for the disruption COVID would cause. The channel saw growth in delivery and collection during this time to a far greater degree than the other channels, and in 2022 off the back of the pandemic, that continues to be the story. Food delivery and collection contributes to two thirds of the total QSR revenue.
While this provides an interesting departure for QSRs and its consumption, it also has the potential to generate a future risk. There are some outlets that are now starting to incentivise the on premise, restaurant experience with exclusive toys or gifts. It is clear that the pandemic has shifted how we engage with foodservice, and for QSRs the challenge lies in finding creative ways to bringing people back to eating in-person.
Crowning the king of Foodservice
So, we know QSRs are growing. But which outlets across channels are gaining the most new shoppers?
We ranked OOH outlets based on which saw the biggest penetration gains last year – and there is a clear pattern across countries.
We are seeing a similar story in terms of growth: QSRs is queen and Burger King is… king – the only constant across all four markets. The ranking is generally heavily reliant on QSR outlets – perhaps for their ease, affordability and for their presence across countries.
It is important to mention the presence of Coffee Chains here too, with Starbucks and Costa. Coffee chains were the channel most impacted by the pandemic, as the channel most often features as an on-the-go food and drink option for those in the office. But coffee shops are an extremely versatile channel, and with more people heading back into the office as well as outlets understanding how to pivot their offering by to meet different service occasions (incorporating more food items on menus, for example) they are recovering and winning new buyers once again.
