Fast food brands strive to net early birds

In an attempt to stage a mealtime coup, McDonald’s recently handed out five million free breakfast McMuffins in Asia, the Middle East and Africa. The burger brand’s ‘National breakfast day’ is a deadly earnest attempt to grow its share of the breakfast market in Asia beyond 20 per cent of its total sales. 

Ray Pak, managing director at IPG Mediabrands Singapore, notes that as lunch and dinner crowd sales have generally stabilised for established quick service restaurant (QSR) brands, breakfast, snacking and delivery are growth opportunities.

In Asia, competition is more intense in developed markets such as Singapore, Hong Kong, Korea, Japan and Taiwan. According to Pak, these brands face an uphill task as they are not only competing with peers, but against local Asian breakfast staples, which are often cheaper and more readily available. 

The QSR brands are also competing against fast-food bakeries such as Subway and Dunkin’ Donuts, as well as local bakery shops, which provide healthier choices such as oven-fresh bread.

Country Brand Market share in 2011 (%) China Subway 9 Hong Kong Oliver’s Super Sandwiches 29 India Subway 46 Indonesia J Co Donuts & Coffee 47 Malaysia Dunkin’ Donuts 38 Philippines Red Ribbon 25 Singapore Subway 62 South Korea Paris Baguette 62 Thailand S&P 22 Vietnam Subway 2 Source: Consumer Foodservice: Euromonitor from trade sources/national statistics

According to Euromonitor, local brands dominate the bakery products fast food category (see table) with Oliver’s Super Sandwiches leading in Hong Kong, Jollibee’s Red Ribbon dominating in the Philippines, and Paris Baguette leading in South Korea. 

Thailand’s breakfast market is likewise cornered by S&P. In Korea, director of BR Korea Jung Chung-kyun notes that the breakfast market is worth about one trillion won (US$882.8 million). BR Korea operates Dunkin Donuts in the country. The concept of breakfast in Korea is changing, he says, as consumers now will only have a cup of juice or thick soup in the morning, as opposed to the traditional Korean breakfast that always includes a bowl of rice, side dishes and soup. “As the eating pattern becomes Westernised, a cup of coffee and a piece of bread is the usual breakfast now,” Jung adds. 

Tara Hirebet, head of Asia-Pacific at trendwatching.com, says international fast foods have since introduced locally-inspired menu options and are also pushing the price limit with promotions such as breakfast meal combos.

KFC Philippines, for example, has added two new options to its A.M. breakfast range in February, which incorporates its signature chicken into Filipino breakfast to include garlic rice and scrambled eggs. “On weekends, they compete with increasingly popular lazy brunches,” Hirebet adds.

Burger King and KFC, she says, both introduced healthier lifestyle-skewed breakfast options in 2011 in Singapore to appeal to the younger, more health-conscious brunch-going group. KFC emphasises fresh ingredients, while Burger King introduced a breakfast platter and turkey ham Croissan’wich.

Local chains in Asia are feeling the heat, says Hirebet. Some have added Western-style interiors to appeal to consumers who prefer a more modern ambiance.  

Citing statistics from Mintel, she notes that McDonald’s breakfast makes up 25 per cent of total sales in the United States, but it is less than 10 per cent in China. Some 86 per cent of Chinese respondents said they have eaten at Chinese fast food restaurants, compared to 68 per cent at international fast food restaurants at breakfast time.

The prospect for international fast food breakfast seems to be brighter in emerging markets, says Hirebet. These massive markets, she notes, are full of new consumers with rising disposable incomes, who are eager to try the new products. 

“Breakfast sales as a whole will definitely rise in Asia and are a key opportunity,” she adds. “This is because people are becoming more time-poor and pressed, especially in the mornings, which tend to be rushed. Breakfast also tends to be cheaper than lunch and dinners, so it is a more ready-spend for consumers.”

EXPERT OPINION Foreign brands must tune into local food culture Darlene Lee, MD, Ipsos HK On the whole, consumers from Asia-Pacific seem to favour traditional breakfasts, driven by a confluence of factors ranging from taste education to convenience and price. There is certainly no shortage of breakfast promotions across the Asian markets. According to Robin Ashton in the Foodservice Equipment Report, Chinese people make an average of 226 visits to commercial restaurants in a year; more than in the US, where 196 visits per average are made. Most of the visits in China centred around breakfast and lunch, there are huge growth opportunities around those markets. However, the drive to internationalise the first meal of the day is not limited to international players. Local chains, mom-and-pop shops and convenience stores across the region offer a range of traditional and Westernised food choices — often to loyal customers, in ideal locations, with lower prices and more familiar tastes. Given the large number of receiptless transactions dominating the breakfast market across most of Asia, any total of rising sales or market share comparisons is bound to ignore a large swathe of the market. How to best expand this market for Western brands? Cultural codes are crucial and cannot be overlooked. What a ‘healthy breakfast’ means can be very culturally specific — for the Chinese, warm, liquid food is perceived as better for the body system in the morning than cold food. For Western companies that want to expand their business in APAC, understanding and connecting with local food culture remains key.