Limited-Service Restaurants in Latin America

May 2021

Consumer foodservice has been strongly impacted by COVID-19, due to strict regulatory and quarantine measures, leading to many outlet closures. Limited-service restaurants is, however, the category that best aligns with post-pandemic price sensitivity and the previous socioeconomic instability of many regional markets. Independent operators dominate, but chains have managed to gain share owing to their greater financial strength. Delivery became a key sales channel in 2020.

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Key findings

Limited-service categories are able to manage demand in times of economic uncertainty

The economic instability of several countries in the region has pushed limited-service restaurants to align their offer with the needs of price-sensitive consumers from all socioeconomic levels, adapting their menus to provide high-quality food at affordable prices. Many consumers are trading down from higher priced options, although some are trading up, looking for added value in meals but still at a low price.

Chained and independent operators turn to delivery to stay afloat

Due to social distancing restrictions in physical outlets, restaurants turned to delivery apps in order to maximise exposure. Restaurants are dealing with new challenges: price competition, logistics and high delivery commissions. According to Euromonitor International's 2020 Lifestyle survey, 29% of Latin Americans ordered food for delivery weekly in 2020, up from 26% in 2019.

Locations with high traffic are most affected by the pandemic

Reduced travel, in addition to prolonged quarantines in several markets, have hit foodservice hot spots, such as shopping centres and financial districts. Only a slow recovery is projected, with outlets having to operate only through delivery and takeaway, or with very limited dine-in capacity.

Chains gain momentum in a highly fragmented market

Local independent stand-alone restaurants dominate in the region, and have been one of the main drivers of growth for foodservice aggregator platforms during the pandemic, as they use these platforms to compete with chained operators. Despite their efforts, many stand-alone outlets ceased operations during 2020, and chains have gained momentum in some markets, extending operations to mid-sized cities, as well as expanding through franchise models.

Introduction

Scope
Key findings

Regional Overview

Latin America loses momentum due to pandemic
Price competition and discounts characterise the forecast period
Delivery helps limited-service restaurant sales during the pandemic
All categories struggle to adapt to quarantine measures
Outlet closures across Latin America in 2020
Customers become less brand loyal and focus on price
Limited mobility during pandemic puts the brakes on growth
Stand-alone outlets benefit from delivery apps

Leading Companies and Brands

Top brands invest in expanding operations to mid-sized cities
McDonald’s registers rapid growth in Latin America
Brazil and Mexico are the priority markets for the top companies
The franchise format enables rapid expansion

Forecast Projections

Growth will continue to be affected by socioeconomic factors
Delivery and price competition will be key drivers for growth

Country Snapshots

Argentina: Market context
Argentina: Competitive and retail landscape
Brazil: Market context
Brazil: Competitive and retail landscape
Chile: Market context
Chile: Competitive and retail landscape
Colombia: Market context
Colombia: Competitive and retail landscape
Mexico: Market context
Mexico: Competitive and retail landscape
Peru: Market context
Peru: Competitive and retail landscape
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