Limited-Service Restaurants in Mexico

PROSPECTS

Strong growth for number of transactions supported by attract price promotions

Limited-service restaurants recorded a positive performance in 2019, driven by an increasing number of players within the Asian, pizza and burger categories offering accessible pricing strategies and promotional bundles to attract less affluent consumers, employees who eat away from home and younger consumers who look for the most affordable options. Successful promotions were also launched within a limited time frame to boost demand during notably slower periods or during “happy hours”, a strategy traditionally used by cafés/bars including Starbucks, but has now been extended to limited-service restaurants.

Home delivery option continues to gain momentum, driven by online ordering apps

Home delivery continued to rapidly gain momentum within limited-service restaurants in 2019, with the channel holding the highest value share for this service within the overall market. Its growing popularity is being driven by the increasing number of local consumers placing orders online, supported by third party delivery platforms such as Uber Eats, Sin Delantal and Rappi which tend to form partnerships with chained players.

Unstable economy could lead to players postponing wider expansion plans

Despite plans for a number of international brands to enter limited-service restaurants in Mexico over the forecast period, deceleration of the local economy and a looming recession is likely to influence both local and foreign investors’ confidence, leading to a slowdown and in some cases, even withdrawal of investment funds across various consumer foodservice channels including limited-service restaurants. Crowdfunding could therefore be a vital support system for sourcing finance for smaller chained limited-service players, particularly if they want to grow using a franchising model, a strategy adopted by bakery products brand Cinnabon.

COMPETITIVE LANDSCAPE

Highly fragmented competitive landscape where promotions and special editions help players to attract consumers

Limited-service restaurants in Mexico remained a highly fragmented competitive landscape in 2019, dominated by independent operators. However, the channel was led by chained convenience store banner OXXO from FEMSA Comercio SA de CV which continued to expand its vast outlet network at the end of the review period.

CMR looks to expand its brand portfolio with Sushi Itto

One of the leading brands in chained Asian limited-service restaurants, Sushi Itto, which recorded an impressive performance in 2019, has been merged with CMR SAB de CV, owner of a number of chained full-service restaurants including Wings, Olive Garden and Chili's Grill & Bar, as part of an ongoing strategy to diversify its existing restaurant portfolio. The acquisition has been positioned as a strategic alliance between the two, in which CMR intends to contribute its vast knowledge and position to help Sushi Itto to further develop and expand across the country.

Shake Shack launches in Mexico and aims to disrupt burger limited-service restaurants

The fairly consolidated competitive landscape of burger limited-edition restaurants, led by global names McDonald’s and Burger King, witnessed a new entry in the form of US hamburger giant Shake Shack, which arrived in Paseo de la Reforma, a more affluent area of Mexico City at the end of the review period with the aim of disrupting the monopoly of its American rivals. The exterior of the outlet was designed and decorated as a mural as part of a collaboration with a Mexican artist, who took inspiration based on iconic elements of both New York (the birthplace of Shake Shack) and Mexico City, entitled “A Happy Confluence”, strengthening the image of the two cities.

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