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Where to Play in Foodservice in Mexico?

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Foodservice in Mexico ranks 11th in Euromonitor’s global ranking in 2022, reaching USD50 billion in sales and expects a 6% CAGR in the next five years (2023-2027)

Source: Euromonitor International

Understanding channel trends, how competitors are innovating in response, and where growth opportunities lie are all crucial elements in building a well-informed consumer foodservice strategy.

Today, consumers are looking for affordable experiences that help them maintain their lifestyle in a context of inflation and loss of purchasing power. The challenge is that lifestyles have undergone many changes in a short period of time, so adapting is not up for discussion, and has become the only option. But how to achieve that? This article summarises key findings from the report, Consumer Foodservice Insights in Mexico, which could be the start of a more in-depth conversation to inform your business strategy.

What is the current scenario of consumer foodservice in Mexico?

In 2022, consumer foodservice sales in Mexico recovered to their pre-pandemic levels and growth trend. Resilience and adaptability have been key to the channel's recovery, especially with the development of more efficient communications and home delivery platforms, but in general, the main driver behind the recovery and future growth is the persistent interest in going out. There is increasing interest in out-of-home dining options, especially in the face of a return to the office, such as going out to eat or drink after work as consumers relish their new-found freedoms post-pandemic.

Currently, the biggest challenge for consumer foodservice players is to create strategies to minimise price increases. While inflation is down in 2023 (5.5%) vs 2022 (8.0%), and expected to continue decreasing, reaching 4% in 2024, its effects have had a strong impact on discretionary spending.

Delivery, e-commerce, and loyalty programmes are key growth pillars

37% of consumers declared that they get food for home delivery weekly

Source: Euromonitor’s Voice of the Consumer: Lifestyles Survey 2022

Consumers have shown greater openness to home delivery. Hence, increasing geographic coverage across cities, reducing delivery times and product re-engineering to ensure orders reach diners as if they were on the premises are among the growth strategies.

Rising living costs represent a challenge for consumer foodservice players, as consumers seek to optimise value for money with every purchase. Thus, loyalty programmes represent an incentive for diners when choosing where to eat, being a useful tool to increase the frequency of consumption.Consumers Ordering Food at Home

“The consumer foodservice channel will continue to grow with a higher degree of competition and encourage loyalty programs to take advantage of the momentum of going out to eat.”

Rocio Franco, Consumer Foodservice Consultant for Latin America, Euromonitor International

While delivery, e-commerce, and loyalty programmes are growth strategies across the channel, it is important to understand other specific strategies followed by specific foodservice formats. For example, independent cafés are creating their own differentiating stamp through innovative flavours or blends, while chained cafés want to generate an extension of their brands for home consumption.

Cafés/bars accounted for only 9% of channel total sales in 2022 but is the fastest growing subchannel (8% CAGR 2022-2027, USD y-o-y growth). In full-service restaurants (44% of sales in 2022), there is a growing emphasis on sustainability and in the reinterpretation of local gastronomy to create attractive concepts for consumers, which is also a major draw for international visitors.

Baked goods lead, while coffee and tea are the two fastest growing in future

Food and ingredients represent 62% of the sales to consumer foodservice in 2022, led by baked goods (42%) and cheese (11%)

Source: Euromonitor International

Baked goods suppliers are taking advantage of the inflationary context to grow with products at the base of the Mexican food pyramid that serve as substitutes for other high-price foods.

In terms of other opportunities, consumers and players are aware of the importance of thinking about healthier and more sustainable options, but it will also be important to continue offering options for enjoyment and indulgence. This is reflected in the expected growth in categories such as dairy and snacks and fundamental to the development of experiences that are perceived as a “touch to the hearts” of diners. For example, sweet biscuits expects a CAGR of 4% in volume over 2022-2027.

Drinks represent 38% of the sales to consumer foodservice in 2022 and include the fastest growing categories within the channel. For example, coffee expects the highest growth in consumer foodservice with a 14% CAGR over 2022-2027. There is a growing need to create experiences for consumers; competitors in the channel are aware that it is important not only to continue to show good quality products and supplies, but also to develop concepts that are attractive to consumers. The creation of cocktails or coffees with differentiated blends and concepts helps to maintain or increase the frequency of consumption, in both on-the-go and at-home formats.Category sales in Foodservice

The parameter of satisfaction will go beyond quality ingredients and dishes

The adaptability of consumer foodservice must go hand in hand with a synchronous adaptation of suppliers. Players aiming to succeed should eliminate the idea that the strategies should only focus on face-to-face experiences, because, in the wake of the pandemic, food delivery is here to stay for the long term.

Players should reduce the barriers for micro-businesses to drive channel growth, as post-pandemic there is a growing increase of entrepreneurs within the sector. They should increase the use of digital and technological tools that allow restaurants, cafés and bars to connect in more effective ways with the final consumer to offer greater practicality and, with it, increase the frequency of purchase or ticket.

Finally, players should create alliances, loyalty programmes and experiences that allow them to connect with consumers at different moments of consumption. Quality ingredients and dishes will no longer be the only parameter of satisfaction.

If you want to have a demo or would like access to the Consumer Foodservice in Mexico report, please get in touch and we can discuss your requirements.

For more insight to food trends in Latin America, please read our article, Key Factors Shaping Food Consumption in Latin America.

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