FAST FOOD SECTOR
Compiled by Yamini Sequeira
THE FORCES OF COMPETITION
Dasun Yatawara addresses the myriad challenges posed by intense competition
Q: What are the current trends in the fast food sector?
A: In Sri Lanka, fast food trends are evolving rapidly to meet changing consumer preferences and lifestyles. There’s a notable surge in demand for convenience and quick service, driven by urbanisation and busy lifestyles.
There’s also a growing preference for healthier options and ingredient transparency as consumers have become more health conscious. The rise of online ordering and home delivery services is also prominent, facilitated by the growth of digital platforms.
Local flavours and fusion cuisines are gaining popularity, reflecting a desire for unique culinary experiences that blend traditional Sri Lankan ingredients with international influences.
Q: How did the pandemic transform home delivery?
A: The pandemic catalysed significant changes, transforming consumer behaviour and expectations.
With lockdowns and social distancing measures in place, home delivery emerged as a safe and convenient option. This led to a surge in online orders and the expansion of delivery networks.
Even as restrictions eased, the shift to digital platforms and contactless delivery persisted, indicating a lasting transformation in consumer habits. The pandemic also accelerated the adoption of digital payment methods, enhancing convenience and reducing physical contact.
Q: What are the emerging trends vis-à-vis fast food and dining out?
A: Sector-wide trends in fast food and dining out include a growing emphasis on health and sustainability, with consumers seeking healthier options and eco-friendly practices.
Personalisation and convenience remain key drivers of consumer behaviour, which is reflected in customisable menu offerings and seamless online ordering experiences.
The fusion of global and local flavours is also popular, catering to diverse culinary preferences. Additionally, tech integration continues to enhance the customer experience.
Q: And what are the main challenges faced by such businesses?
A: The local fast food sector faces several challenges including rising costs, regulatory complexities and intense competition, compelling businesses to innovate.
Economic instability and the fluctuating cost of raw materials pose major hurdles to maintaining profitability.
Navigating regulatory changes and ensuring compliance with food safety standards are also complex tasks. Intense competition, both from established international brands and emerging local players, requires constant innovation and strategic differentiation.
Additionally, recruiting and retaining skilled staff in a high turnover sector presents ongoing challenges for businesses.
Q: What is the competition like?
A: Competition in the Sri Lankan fast food market is fierce, characterised by intense price wars and competitive offerings. Established global brands and emerging local players compete for market share, leveraging diverse strategies to attract and retain customers.
Differentiation through product quality, menu innovation and service excellence is crucial to standing out in this landscape. Moreover, the rise of digital platforms has intensified competition, as brands compete to offer seamless online ordering and delivery experiences.
Q: How would you address the emergence of lower disposable incomes?
A: To address the impact of reduced disposable incomes on consumption, it’s essential to implement targeted fiscal stimulus measures aimed at boosting spending power. This could include measures such as tax relief for low and middle income households, and financial assistance for small businesses.
Encouraging digitalisation and e-commerce can also stimulate economic activity, by expanding market access and reducing transaction costs. Investing in infrastructure projects and promoting domestic production, can create job opportunities and drive economic growth.
Q: What areas need a sustainability focus among corporates, in your opinion?
A: Sustainability is increasingly important for businesses with a focus on areas such as energy efficiency, sustainable sourcing and waste reduction. Investing in renewable energy sources and implementing energy efficient practices can reduce environmental impacts and operating costs.
Sustainable sourcing of raw materials and reducing food waste are critical to preserving resources and minimising the environmental footprint. And fostering a culture of sustainability among employees and stakeholders through education and engagement is essential for driving meaningful change.
Q: So how do you view 2024 for the dining out and home delivery segment?
A: The outlook is promising despite challenges. As the economy recovers from the pandemic, economic crisis and hyperinflation, we anticipate a resurgence in consumer confidence and spending.
Businesses may need to adapt to changing consumer preferences and market dynamics, including continued reliance on digital platforms, and evolving health and safety concerns.
However, with strategic innovation and customer centric approaches, businesses can capitalise on opportunities for growth and resilience this year.
