Consumer Foodservice in Egypt

Abstract

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• Get insight into trends in market performance
• Pinpoint growth sectors and identify factors driving change
• Identify market and brand leaders and understand the competitive environment

Product coverage

Consumer foodservice by chained/independent; Consumer foodservice by type; Consumer foodservice by type and chained/independent

Executive summary

Another good year for consumer foodservice in Egypt

Consumer foodservice in Egypt saw strong value growth in 2006 despite price increases. Changes in consumers' lifestyles contributed to the rise in consumer foodservice expenditure. The improved performance of the economy balanced with the increasing prices of items across all sectors kept sales on the rise. Dining out is becoming an essential part of the modern consumer' s lifestyle. This is driven by the younger generation' s exposure to Western culture and the growing incomes of consumers.

Starbucks -- the world' s leading coffee shop -- opens its first outlet in Egypt

The Kuwaiti conglomerate holding the master franchise rights for Starbucks in Russia and the Middle East, operating nearly 200 Starbucks outlets in nine countries in the region, opened its first store in Egypt in December 2006 in City Centre. The company plans to change the way people think about coffee, turning a coffee shop into a chic place to serve well-to-do consumers. It is expected that a second branch will appear on the other side of Cairo in the near future. This is because people now travel from Zamalek and Mohandesin residential areas for 45 minutes to have coffee in Starbucks, which is located in Nasr City. Moreover, the Starbucks sign has been put in key locations in Cairo, Alexandria and Sharm El Sheikh announcing "Opening Soon". The brand plans to operate around 30 outlets in Egypt in 2008. It is worth noting that most of Starbucks' locations are next to its main competitor Cilantro -- the local champion of specialist coffee houses in Egypt.

Advertising support generating consumer demand

Marketing support has proven to be the most efficient tool for promoting consumer foodservice outlets in Egypt. Advertising expenditure is allocated to promote the introduction of a new chain or an item on the menu.

2006 witnessed high media spending on promotions in magazines, on radio and on billboards on 6th of October Bridge in Cairo. Radio -- specifically Nile FM station -- took the lead in the amount of advertisers and budget spent on such promotion, due to its popularity among the youth population, who regularly listen to its programmes whilst driving.

International chains are moving strongly into Egypt

During 2006 Egypt witnessed the introduction of several prominent international chains in different sectors. The Italian food chain Sbarro appeared in Cairo with an optimistic plan to expand to 20 outlets across the country. Papa Johns is another international key player in pizza consumer foodservice, which opened its first outlet towards the end of the year. Papa Johns seemed very enthusiastic about opening its first outlet. It chose a mezzanine floor in a three-star hotel in Mohandessin area to cut through the lengthy licensing procedures of a stand-alone location. Moreover Burger King -- the international burger chain -- has already secured a location in Il Mircato shopping Mall in Sharm el Sheikh resort area due to operate in 2007.

Chained consumer foodservice is seeing a growth trend due to consumers' appreciation of quality

Independent consumer foodservice accounts for the majority of outlets across most sectors of the market. These include small and local operations, which are not able to expand into a chained set up. However, as the market has increasingly proven to be attractive, several international chained operations are being introduced appealing more to end users taking shares from independent outlets. End users are becoming more quality conscious and interested in international processes and hygienic standards.

Bright future expected across different sectors during the forecast period

Over the forecast period consumer foodservice is expected to experience positive value growth due to lifestyle and demographic changes. Western culture is increasingly being adopted by the younger generation, who are more open to its influence. Fast food will see the fastest value growth, largely due to its high penetration across Egypt and its friendly and non-costly atmosphere. Moreover, self-service cafeterias are expected to play a key role in the forecast period due to new outlets opening. 100% home delivery/takeaway will achieve the highest growth in terms of transactions.