Fast Food Sector Growing
YUM! Brands, the parent company of KFC, is planning to launch a further 100 stores across Africa in 2012 as part of a broader plan to take its presence past 1,000 by 2014. The final frontier in the eyes of many, Sub-Saharan Africa's (SSA) relative appeal to global consumer companies has strengthened considerably after the global financial crisis era. Before 2008, there was growth to be found across a lot of the developed world and in the emerging markets sphere: the opportunities on offer in Asia, emerging Europe and Latin American were so strong that SSA was not able to compete with its risk/reward offering. The situation has evolved since then with many SSA economies doing very well post-2008. A number of multinationals ranging from SABMiller and Diageo to Walmart and Nestlé have already established a presence in SSA.
YUM! Brands is the second largest fast-food company in the world (behind McDonald's) by market capitalisation and, having developed an outstanding business in China, which now accounts for about 40% of its operating income, YUM! has shown its ability to really make the most of a first-mover advantage. Expanding in SSA has not been without its challenges in fast food as getting the supply chain up to standard has not always been without difficulty.
However, YUM! is certainly making an aggressive push into SSA, having already developed a very strong business in South Africa. Attention has turned to growth in fast-growing economies such as Nigeria. It is believed that YUM! will spend heavily in Nigeria over the next few years and as incomes rise, there should be greater demand for fast-food which is perceived differently in most of the emerging world where with lower incomes, eating out at fast food outlets are seen as occasional outings.
|Source: BMI. Scores out of 100, with 100 highest. The Food & Drink Risk/Reward Rating is the principal rating. It is comprised of two sub-ratings Reward' and 'Risk'', which have a 60% and 40% weighting respectively. In turn, the 'Reward' Rating is comprised of Industry Reward and Country Reward, which have equal weighting and are based upon growth/size of food/alcohol and soft drinks industry (Market) and the broader economic/socio-demographic environment (Country). The 'Risk' rating is comprised of Industry Risk and Country Risk which both have 20% weightings respectively and are based on a subjective evaluation of industry regulatory and competitive issues (Market) and the industry's broader Country Risk exposure (Country), which is based on BMI's proprietary Country Risk Ratings.|
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