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Blog: 22 March 2017 (Food and Beverages industry in SA)
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In today's blog we take a look at South Africa's spending on Food and Beverages at various outlet types (including coffee shops and restaurants, takeaway and fast food chains and catering services (which includes canteens and pubs). One thing becomes clear during this article, South Africans do love their Take-away and Fast food outlets. And it is now the biggest Food and Beverage outlet type in South Africa.
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Which food outlet type brings in the most bacon?
The first graphic we will look at shows the relative contribution of each outlet type to total income earned for the year 2016.
As the pie chart above shows the split between restaurants and coffee shops and Take-away and Fast Food outlets are very similar. With Take-away and Fast food places just beating restaurants and coffee shops. With catering services (including canteens, bars and pubs) bringing in a respectable 16.8%.
Total income earned by all outlet types amounted to R42.14billion for 2016 when values are expressed in constant prices (effect of inflation removed). When looking at current prices (inflation included in the values), total income earned by all outlet types amounted to R55.2billion for 2016. Next question is on what did each of the outlet types earn their income? Was it food sales, bar sales or other income (such as cigarettes and other odds and ends sold at outlets)
Total income earned by all outlet types amounted to R42.14billion for 2016 when values are expressed in constant prices (effect of inflation removed). When looking at current prices (inflation included in the values), total income earned by all outlet types amounted to R55.2billion for 2016. Next question is on what did each of the outlet types earn their income? Was it food sales, bar sales or other income (such as cigarettes and other odds and ends sold at outlets)
The clustered bar chart below shows the percentage contribution different income streams made to the various outlet types total income.
As the bar chart above shows the majority of income earned by all outlet types comes from food sales. While this is the case there is large differences in the percentage of income earned from food sales across outlet types. With take-away and fast food joints earning over 90% of their income of food sales, restaurants and coffee shops earning roughly 76% of food sales and catering services just over 73% of income from food sales.
Restaurants and coffee shops earned the highest percentage of income from bar sales with it bringing in around 21% (note coffees and non alcoholic beverages are included in bar sales), so it is therefore not surprising that this outlet type earned the highest percentage of their income of bar sales, when compared to the other outlet types. Catering services (which includes pubs, bars and taverns) earned 18% of income from bar sales while Take-away and fast food joints only earned 2.9% of income from bar sales.
Catering services earned by far the most from other income items (when compared to other outlet types), with this income stream bringing in 8.9% of total income for catering services, only 2.1% for restaurants and coffee shops and less than 1% for Take-away and fast food outlets.
So now that we know which outlet type earns the most, and where different outlet types get their money from, the question is how are they performing when looking at historical data? Has spending at restaurants and coffee shops, or Take-away and fast food outlets increased in South Africa in recent years, or is the industry just drifting along like the rest of South Africa's economy?
The graphics below will look at the historical performance of each of the outlet types individually.
Restaurants and coffee shops earned the highest percentage of income from bar sales with it bringing in around 21% (note coffees and non alcoholic beverages are included in bar sales), so it is therefore not surprising that this outlet type earned the highest percentage of their income of bar sales, when compared to the other outlet types. Catering services (which includes pubs, bars and taverns) earned 18% of income from bar sales while Take-away and fast food joints only earned 2.9% of income from bar sales.
Catering services earned by far the most from other income items (when compared to other outlet types), with this income stream bringing in 8.9% of total income for catering services, only 2.1% for restaurants and coffee shops and less than 1% for Take-away and fast food outlets.
So now that we know which outlet type earns the most, and where different outlet types get their money from, the question is how are they performing when looking at historical data? Has spending at restaurants and coffee shops, or Take-away and fast food outlets increased in South Africa in recent years, or is the industry just drifting along like the rest of South Africa's economy?
The graphics below will look at the historical performance of each of the outlet types individually.
Restaurants and Coffee Shops
As the bar chart above indicates the total income earned by Restaurants and coffee shops have seen a sharp decline since 2008, and has been bringing in income below the average from 2008-2015 for the last 6 years. With only the last three years seeing modest growth in income. During this slump in the income from Restaurants and Coffee Shops, Take-aways and Fast Food outlets have surprised Restaurants and Coffee shops as the biggest outlet tye (in terms of income generated).
Take-away and Fast Food Outlets
In stark contrast to the bar chart of Restaurants and Coffee shops, the Take-away and Fast food outlets have seen significant growth over the last number of years. With the last 4 years all bringing in more income than the average for the period 2008-2015. 2016 being the highest income earning year for the outlet type for the time period in question, while for Restaurants and Coffee Shops its the third lowest income earning year for the period.
Catering Services
While we have seen a slight recovery in income earned from Restaurants and Coffee shops in the last three years, and strong growth in income from Take-away and Fast Food outlets, the same can not be said for Catering services. With 2016 being the worst year in terms of income earned over the period 2008-2016. And the last 3 years all bringing in less income than the average over the period 2008-2016. Whether the decline is due to less corporates using catering services, or less patrons and spending at pubs, bars and taverns, we are not sure, but the one thing that is clear is the fact that companies active in this outlet space is finding things a lot tougher than they did in say 2008.
Perhaps a clam down on drinking and driving is limiting the amount of money people spend at these outlets or more restaurants offering alcoholic beverages plays a part in the declining trend experienced by this outlet type.
While the industry did bring in R42billion in 2016, it equates to only 1.4% of South Africa's GDP. Looked at a little differntly, for 2016, each and every South African spent R763 at Food and Beverage establishments in 2016. That equates to roughly 20 Big Mac burgers from Mcdonalds in a year, or about 2.5 Big Mac's a month.
Perhaps a clam down on drinking and driving is limiting the amount of money people spend at these outlets or more restaurants offering alcoholic beverages plays a part in the declining trend experienced by this outlet type.
While the industry did bring in R42billion in 2016, it equates to only 1.4% of South Africa's GDP. Looked at a little differntly, for 2016, each and every South African spent R763 at Food and Beverage establishments in 2016. That equates to roughly 20 Big Mac burgers from Mcdonalds in a year, or about 2.5 Big Mac's a month.