Mexico Foodservice Market - Growth, Trends, Covid-19 Impact, And Forecasts (2021 - 2026)

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In-restaurant dining and street stall segments that hold a noteworthy portion of the market studied have been the worst-hit segment as an impact of COVID-19, largely due to the travel curbs and a general avoidance of people for large gatherings, and with social distancing regulations closing millions of restaurants.

The restaurants and bars located within mall premises have already shut down, with a significant percentage unlikely to reopen. Moreover, post-crisis recession is expected to drive further contraction in foodservice and consumers' spending through an overall focus on convenient and affordable options.

The rapid growth of the fast-food sector in the country has led to the expansion of more chains in the fast-food sector. This growth of the sector can be attributed to factors, such as convenience and availability of foods at lower costs, as compared to independent full-service restaurants.

Franchising and sub-franchising have become very popular tools for multinational and local players in the country. Foodservice chains, like McDonald's, are prominent examples of the largest (QSR) restaurant chains ...
... in the country.

The all-time popularity of fast-food restaurants, coupled with an increased presence of restaurants offering a comprehensive menu and better experiences for consumers, remained the major reason for their growth in the country.

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Key Market Trends

Booming Tourism Industry In Mexico

Mexico is experiencing rapid growth in the tourism industry which is, in turn, profitable for international foodservice brands in the country. For instance, according to Banco de México; INEGI; the Ministry of Tourism (Mexico), the average growth of tourism between 2016 to 2019 in Mexico was 7.44%. In 2018, tourism contributed 8.7% of GDP, higher than contributions from the construction, financial services and mining sectors; and tourism directly employed more than 2.3 million people, its highest level since 2006. Additionally, tourism export earnings of MXN 215.5 billion were recorded; with most tourism consumption being inbound (82.5%) rather than outbound leading to a balance of payments surplus. Inbound tourism consumption grew by 2.8% as compared to the previous year, a higher growth rate than the general economy. Moreover, favorable government initiatives are being conducted with an aim to increase the tourism rate. This, in turn, benefits the foodservice industry.

Chained Consumer Foodservice is witnessing the Fastest Growth

Although the market is dominated by independent consumer foodservice, the chained consumer restaurants are the ones experiencing the fastest growth with numerous global as well as local chains widely expanding their branches in the country. Chained consumer foodservice majorly relies on effective marketing, advertising, and product campaigns to create awareness about their offerings Apart from this, chained restaurants also focusing on options for dine in, drive-throughs and home delivery options. The companies are implementing strategic initiatives in order to capture market share and expand their presence in the region.

For instance, in 2020, Arbys, sandwich chain debuted its first restaurant in Guadalajara, Mexico, marking its entrance into Latin America. Further, the chain planned to adapt 20% to 30% of its menu to suit local tastes by introducing pork belly and pulled pork sandwiches and adding lettuce, tomato and cheese as toppings. It will also offer beer, selling Modelo Especial and Negra Modelo in the market. Apart from normal strategic expansion strategies, like product launches, and expansion, foodservice operators are focussing on gaining consumer trust and interest by offering unique service in terms of providing discounts and schemes. For Instance, in 2020, from December 13 to 19 KFC in partnership with Uber Eats gave away six free chicken strips in the purchase of MXN 402 or more.

Competitive Landscape

The Mexican foodservice market is highly competitive owing to numerous local and international players capturing the market. Some of the leading players, including Alsea, Restaurantes Toks, Restaurantes Toks (parent company- Grupo Gigante), Arcos Dorados México, CMR, and FEMSA - Oxxo, are holding significant market shares. This is attributable to their higher market penetration, reflecting a strong industry grip through subsidiaries and brands. International fast-food chains continued to dominate the Pizza Consumer Food Service and Fast-Food sector in the country. Higher prominence of brands, such as KFC, McDonald's, Burger King, Subway, Little Caesar's Pizza, and Domino's Pizza, were witnessed in the review year.

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