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Fast-Food Industry Continues to Grow in Mexico

By Alessa Flores | Tue, 10/13/2020 - 12:48

Mexico’s fast food industry is estimated to be worth MX$203 billion (US$9.5 billion) with more than 262,000 sales points throughout the country. The sector is expected to grow by 3 percent annually and to be worth more than MX$234 billion (US$10.9 billion) by 2022, according to Seale & Associates. In addition, Merca 2.0 estimated that 47.43 percent of consumers who eat outside do so in a fast-food establishment. Burger King is positioned as the favorite fast-food restaurant of Mexicans, followed by McDonald's, Starbucks, Subway, KFC and Domino's Pizza.

With the growth of the fast-food industry, it is no surprise that a new concept of fast food has arrived in Mexico City. Known as the "MUY" restaurants, these establishments offer food bowls at MX$59 (US$2.8) with drinks included. These affordable prices make these an attractive choice for office workers. The MUY restaurant chain announced its expansion in Mexico with a US$15 million investment aimed at opening between 50 and 70 points of sale in Mexico City by 2021 and to look for opportunities in other large cities like Guadalajara and Monterrey, explained José Guillermo Calderón, CEO and Founder of the company, to El Economista.

Calderon explained that the chain plans to invest strongly in Mexico because the country offers opportunities for new players thanks to its highly segmented market for restaurants where there are no big players. "He explained that while in the US McDonald’s holds 8 percent of the market, in Mexico 10 restaurant chains put together would represent only 6-7 percent of the local market.

The fast food and restaurant industries are also undergoing a transformation with the growth of home delivery and online sales. Duncan Montero, General Manager LAC North Region of Burger King at Restaurant Brands International, told MBN that part of Burger King's strategy to boost online sales is to simplify the food ordering processes. To do so, the company is developing a pilot product with WhatsApp. “We have been piloting the WhatsApp chatbot with very interesting preliminary results. WhatsApp has a significant user base of approximately 57 million people in Mexico. In addition, we expect social media-based ordering to grow tenfold in the next eight to 10 years so playing in this channel is key for us,” says Montero.

In Mexico and Latin America, bringing fast food to consumers through a single click has been a success. Today, Mexico City is home to four major ordering platforms: Uber Eats, Rappi, Didi Food and Sin Delantal. Demand has led companies to grow at a double-digit rate in Mexico, especially since five out of every 10 consumers prefer to stay home and order in, Merca 2.0 study shows. The Latin American market has grown strongly in revenue generated by online food orders, according to estimates from Statista Digital Market Outlook. According to this study, Brazil holds the largest fast food market valued at US$2.4 billion, followed by Mexico’s US$ 1.3 billion, Argentina’s US$635.6 million, Colombia’s US$290.5 million and Chile’s US$172.9 million.

The Mexican Restaurant Association (AMR) revealed that of the 555,122 food establishments spread throughout the country, 53,647 are based in Mexico City, which is one of the states with the highest concentration of restaurants alongside Jalisco, Puebla, Veracruz, Michoacan, Guanajuato and the State of Mexico. In addition, the restaurant industry is the second largest economic sector in terms of employment generation and the first in terms of self-employment, with more than 5.5 million jobs, according to AMR.

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Alessa Flores Alessa Flores Senior Journalist and Industry Analyst