Fast-Food Brands Prove Their Agility



In the face of challenging market conditions, fast-food brands have demonstrated their resilience, according to the Kantar BrandZ Most Valuable Global Brands report for 2023.

The annual report, which ranks the world’s top 100 brands, reveals that despite a 20% drop in the overall index compared with 2022, fast-food brands performed admirably and displayed an ability to weather global economic disruption.

The survey highlights the resilience and strength of the category in the face of economic uncertainties and says that by investing in brand building, market diversification and strong consumer connections, these companies have shown their ability to navigate challenging conditions and drive growth.

McDonald’s secured the fifth spot on the list, with a brand value of $191.1bn. The success stories in the fast-food category are attributed to brands such as Burger King and Starbucks — both present in South Africa — which outperformed expectations through greater exposure and improved customer experience.

The fast-food market size, valued at about $2.8bn, is expected to reach $4.9bn by 2026, according to business analytics platform Reogma. The market makes up about 14% of South Africa’s GDP.

Investment analyst and market commentator Chris Gilmour tells the FM that fast-food outlets/quick-service restaurants (QSRs) are buoyant, as shown by the fact that they endured months of almost complete inactivity during the pandemic lockdown and then came roaring back.

Gilmour says South Africans are now choosing takeaway food over cooking at home because of load-shedding.

But, he says, “the trick is to also entice more people to come to their restaurants to eat”.

Most fast-food outlets/QSRs seem to be back to where they were before the pandemic, though the casual dining element, characterised by restaurants such as Wimpy, Spur and RocoMamas, still have capacity, especially in the evenings.

One franchise owner tells the FM: “Things are better, of that there is no doubt. The problem now is that customers are more price-conscious, avoid pricier items and look for specials. We must be more adept at managing margins and offering value.”

Gilmour says that, like their foreign counterparts, South African outlets have amplified their menus and improved their communications.

He says the poor state of the economy is helping, because consumers have to tighten their belts. “They still want to eat out, but can often no longer afford to go to bespoke fancy restaurants. That is where clever chains such as The Hussar Grill come into play, offering a top-end experience for a reasonable price.”

Behind the global fast-food category’s success in the brand rankings is the expansion of McDonald’s and Starbucks franchises. Both opened thousands of new stores across the world, building a broader offering, particularly in China and the wider Asian market, where lockdowns previously put a halt to expansion plans. The top 10 global fast-food brands have increased in value by more than 34% above pre-pandemic levels.

Improved customer experience was also a major contributor to the fast-food category’s performance. Streamlined delivery services, following the fast pivot during the pandemic, and the embrace of digital novelty concepts for store formats and takeaway services have proved successful in keeping diners happy.

Martin Guerrieria, head of Kantar BrandZ, says: “Consistent expectations and perceived value mean that people will often turn to their favourite fast-food restaurant despite having other options. And with the top brands keeping a close eye on digital trends that will consistently improve their customer experience, such as McDonald’s experimenting with AI [artificial intelligence] chatbots, this will remain a strong category for years to come.”

Fast-food brands to watch over the next year include Canadian burrito brand Freshii, Bastard Burgers in Sweden, and South Korea’s leading burger and chicken brand, Mom’s Touch.

Apple retains its crown as the world’s most valuable brand. Microsoft overtakes Amazon to join Google in the top three places. McDonald’s is the most valuable non-tech brand, while Coca-Cola rejoins the top 10.

This piece originally appeared in the Financial Mail.