You are on page 1of 3

Momentum

A tasty business

* Marcos Gouvêa de Souza, CEO, GS&MD – Gouvêa de Souza

Recently, fast food chain Burger King was purchased by a Brazilian group of investor, in
a US$ 4 billion transaction. In spite the fact recent performance of the chain has not
been bright, there are still strong perspectives of expansion in Latin America, specially
in Brazil, where the company runs arund 90 stores. Asia is also a good target, and
sometime in the future Europe and the US will recover. After the experience these
investors had with Wendy’s and Carl’s, chains in which they were relatively small
shareholders, they decided to sell these positions and focus on Burger King. With
significant share on AB InBev beer group, they can create a synergy to leverage
businesses in all fronts.
In mid-August, Starbucks bought 100% of its Brazilian operations (it owned only 49%).
Brought to the country in 2006, the operation was expanding gradually, today with 23
shops. Starbucks’ approach indicates total control and new investments will generate a
faster growth.
In April, 2007, Advent International purchased RA group, who runs restaurants in
airports and catering services. In the same year, also purchased Viena group, with
several restaurant brands, adding one more stone in its project to create a Latin
American restaurant group, as in 2006 it had bought Mexican casual dining group La
Mansión.
Definitely, these are not isolated facts. They point to a growing interest for foodservice
businesses in Brazil, a segment that has increased its share in the consumers’ food
expenses from 24% in 2004 to 31.1% in 2008, according to statistics agency IBGE. In
the largest cities, however, this share is close to 40% of the food expenses, a figure
expected to go up, due to improvements in the family income, rising mass wage and
consumer’s change of behavior, specially in the emerging groups.
The rising presence of foodservice all over the world has structural factors, including
woman’s presence in the marketplace, consumers’ mature behavior and the irreversible
demand for convenience, due to the faster and faster rhythm of urban life.
But this behavior can retract in moments of economic crisis, as consumers tend to
spend less eating at home. In the United States, the share of foodservice went back
from 51% to 48% as the recession came.
But the structural consumer behavior component, with increasing option for foodservice,
has led to several market changes, as the ones mentioned earlier in this article, with
new players, growing foreign presence and supermarketers stepping in to grab a share
of this market.
In Mexico, Comerci brought to its supermarkets several restaurant operations, including
fast food, sushi bar and sel service. As Monoprix did in France, also with store-in-stores,
including sushi bar, restaurant and wine point. Or Selfridges, in the UK, who, in its
boldest projects, converted all the ground floor of its shops into a foodservice
department, take-home options included.
Other department store chains, trying to reinvent the model, have also opted to increase
the food areas. In Germany, KaDeWe redesigned its Berlin shop, putting gourmet food
in the ground floor and opening a whole story to in-store food consumption. In France,
Galeries Lafayette revamped its shops, mixing restaurant operations in a compelling
way. In Spain, El Corte Inglés was even more aggressive, creating supermarket and c-
store chains.
In the US, several supermarket chains, as Whole Foods, have brought to its stores
several restaurant formats, trying to be on top of the trend. In one of its Chicago shops,
Whole Foods offers five different food propositions, in different environments, to local
food and beverage consumption. In New York, its Columbus Circle shop is also full and
its hard to get a place to seat in the food area. Other chains have already created
multiple concepts to address this demand, creating areas with several food options,
even some ethnic ones, to be eaten on-site or at home.
In Brazil, some supermarket chains, as Pão de Açúcar, Angeloni and Zona Sul, have
been developing some concepts, also presenting in their hypermarket galleries some
spaces for fast food players. Maybe the biggest difference is in the strategy, as in many
foreign chains the company runs their own foodservice operations, while in Brazil, with
only a few exceptions, this is only a complement to the main activity.
The conclusion is that there is a broad market change been shaped, with current and
new groups consolidating operations, increasing investments, diversifying the offer,
creating new services and options to capture and serve this food shopping and
consumption behavior change. And in the process bringing new challenges to the
supermarket chains and traditional food industries.
A move that can’t be underrated.

You might also like