FAST FOOD RESTAURANT BUSINESS IN PAKISTAN

Fast food restaurant business is rapidly growing industry in Pakistan. Fast food is a food which is prepared and served quickly at outlets called fast-food restaurants. It is a multi-billion dollar industry which continues to grow rapidly in many countries. A fast food restaurant is a restaurant characterized both by food which is supplied quickly after ordering, and by minimal service.

Many fast-food restaurants are part of restaurant chains or franchise operations. Their standardized foodstuffs are shipped to each restaurant from central locations. There are also simpler fast-food outlets, such as stand or kiosks, which may or may not provide shelter or chairs for customers. Because the capital requirement to start a fast food restaurant is relatively small, particularly in areas with medium income population, small fast-food restaurants are growing throughout Pakistan.

The Fast Food Restaurant business is a growing business in Pakistan relying heavily on the changing lifestyle patterns. Population growth of the target age group and also related to increase in employment of women. With today’s hectic lifestyles, time-saving products are increasingly in demand like the fast food restaurant.

Demand for convenience has driven expenditures where people want quick and convenient meals; they do not want to spend a lot of time preparing meals, traveling to pick up meals, or waiting for meals in restaurants. As a result, consumers rely on fast food. Knowing this, fast food providers are coming up with new ways to market their products. It saves time for consumers.

Consumers want to combine meal-time with time engaged in other activities. Such as shopping, work, or travel, therefore allocating less time for food, hence the growing need for fast food.

The presence of multinational fast food chains like McDonalds, KFC, Pizza Express, Pizza Hut, Subway etc. have somewhat catered to the high income segment. Multinational corporations such as these typically modify their menus to cater local Pakistani tastes and most overseas outlets. These are owned by native franchisees to ensure that cultural, ethnic, and community values are taken care of. The fast food restaurant business is popular in Pakistan.

Additionally, multinational fast-food restaurants are not the only source of fast food in most cities of Pakistan. Many local restaurants have developed around the main cities of Pakistan. For example: Kolachi, Kababjees, Mirage, Bundu Khan, Usmania in Karachi. They compete with international restaurants and provide menu items that appeal to the unique regional tastes.

However much of the middle-income segment prefers visiting local outlets that offer low cost fast food, hence more frequent visits.

To start the fast food business following options can be considered according to current market trend (sorted with respect to investment size):

• Take away only kiosks are least expensive option available in which only counter and kitchen area are required to fulfill the take away orders. Example: Food Break at Bahadurabad in Karachi.
• Outdoor or without shelter open seating arrangement comes after take away only setup. It also include plastic chairs and tables to cater the orders. Example: Tipu Burger, Flamingo, Roll Inn and Chicks & Chips at Boat Basin in Karachi.
• Mix setup is the setup which includes partial outdoor and partial indoor setup. The quality of indoor furniture is better than the outdoor one. Example: Jan Broast, Nihari Inn, New Handi Inn, Café Peshawari at Boat Basin in Karachi.
• In Indoor setup there are two options:

Without air-condition restaurants are cheaper in capital cost which includes quality of furniture and interior décor, this cost also reflects in the menu. Example: Mr. Burger at Boat Basin. Golden Apple at Bahadurabad. Hyder’s, Royal at Sindhi Muslim Co-operative Housing Society (S.M.C.H.S.) in Karachi. o Air-condition restaurants include good to high quality furniture and décor depending on the tier of the restaurant and investment size. Example: Sizzlez, Burger Lab, The Sauce, Food’s Inn at S.M.C.H.S. in Karachi.

The rapid rate at which the fast food industry continues to add outlets is as much a reflection of consumer demand for convenience as it is a reflection of demand for fast food itself. Expanding the number of outlets increases accessibility, thus making it more convenient for consumers to purchase fast food.

Especially in recent years, much of the expansion has been in the form of “satellite” outlets. These tend to be smaller in size, with little or no seating capacity, and are often in nontraditional locations, such as office buildings, department stores, airports, and gasoline stations. Location should be chosen specifically to maximize convenience and accessibility of consumer.

Fast-food outlets have become popular with consumers for several reasons. One is that through economies of scale in purchasing and producing food, these companies can deliver food to consumers at a very low cost.

Multinational Fast food chains like McDonald’s rapidly gained a reputation for their cleanliness, fast service and a child-friendly atmosphere where families on the road could grab a quick meal, or seek a break from the routine of home cooking. Prior to the rise of the fast food chain restaurants, people generally had a choice between greasy-spoon diners (kiosk) where the quality of the food was often questionable and lacked quality service.

Fast food restaurants have rapidly become the eatery “everyone can agree on”. Its is with many featuring child-size menu combos, play areas and whimsical branding campaigns, designed to appeal to younger customers. Parents can have a few minutes of peace while children played or amused themselves with the toys included in the premises.

Many consumers see multinational fast food restaurant business as symbols of the wealth, progress and well-ordered openness of Western society and therefore become trendy attractions in many cities around Pakistan, particularly among younger people with more varied tastes.

Fast Food outlets tend to focus on the “work while you eat”. This philosophy similar to the International chains at Airports and Railway stations. At such places where seating space is also available for passengers in transition or the outlets in large shopping malls in Karachi, Lahore, Islamabad and in other cities promoting the concept of “Shop While You Eat.”

Pakistan, currently ranked as 6th in terms of total population. It is characterized by a growth rate of 1.92% (Pakistan Economic Survey 2014-15) and is set to take 5th position in world in 2050 in terms of total population with already 191.71 Million people registered in 2014-15.  With this, the per capita income has increased to US$ 1368 while the productive age group (15 to 59) years. It is said to take the major chunk of population (67% of total population) by 2020.

The growth rate in fast food restaurant business is also augmented by the rapid increase in the employment rate. For males / female population aging between 20 to 29 years hence the greater income contribution to the overall income is expected to be higher.

Population Pyramid 1998 & 2020

Economic Survey 2014-15

Population Projections 1998-2023, Planning Commission; NIPS

Population Projections 1998-2023, Planning Commission; NIPS

The Pakistani economy is becoming increasingly service-oriented, and over the past several decades. The food service industries that offer the highest levels of convenience have been rewarded with strong sales growth. In the face of rising population, incomes and increasingly hectic work schedules. A nearly insatiable demand for convenience will continue to drive fast food sales. Fast Food Outlets will strive to find ways to make their products even more accessible.

Even if incomes stagnate or attitudes change, consumers are unlikely to return to meal preparation at home on a large scale. This suggests that even if consumers choose to spend more time at home, for family or other reasons. In this situation much of the meal preparation will still occur elsewhere.

Many more table service restaurants, which traditionally focus on full-service in house dining. They will likely try to capture part of this market by offering take-out, and possibly experimenting with home delivery.

The value of consumer time, as well as the demand for consistent, high-quality food products. It will continue to shape the fast food industry. Fast food, once considered a novelty, has become an increasingly significant part of the young generation’s diet. The role of convenience in this dietary shift cannot be over-emphasized, and the future growth of the rest of the food service industry will be driven in large part by its ability to find new ways to save consumers time.

The three main critical success factors that affect the decision to invest in the proposed business setup are:

i. Conceive the “Winning” Concept

A well-defined concept stands a much better chance of long term success than some vague notion. To start, it is wise to first set specific goals and decide on the ways you will measure your restaurants success.

ii. Longetivity

This can be described as the art of being able to maintain success over time while adjusting to meet the changing demands and buying habits of the customer.  To open a restaurant successfully and become profitable is one thing, but to maintain that success over a long period of time is “winning.”

iii. Consistency

To not simply open a restaurant, but to truly develop a winning concept requires implementing systems and procedures to ensure consistency of your operation. 

iv. Market Appeal

All restaurants want to be busy but winning concepts seem to have a broad appeal and well developed “points of difference”. It enables them to dominate their market niche. To be the first place the customer thinks of going when choosing to dine out is the goal of the winning concept.

v. Expandability

Consistency of quality and service, and operating systems and management procedures established in the first unit can result in more expandable opportunities where all systems are already developed and waiting to be implemented.

vi. Menu Pricing

One of the most important factors in the strategic planning of a restaurant is in the development of the menu. It involves designing an appealing selection of menu items that are competitively priced in the marketplace. Menu pricing is a very tricky task because you need to price items. So that you can operate profitably and, just as important, offer your targeted guests a good price/value relationship.

The specific location within your target area is also critical. If you are situated in an infrequently traveled area nowhere near complimentary businesses or at the back of a mall, you limit your earning potential. Even if you are the only outlet in town you must gauge the likelihood of outsiders visiting your restaurant. If the restaurant is right off of a major freeway heavily traveled by truckers and road trippers. In such condition you may be highly successful despite a remote location.

• Market Research

This is probably the most critical factor for running a successful fast food restaurant. You need to visit fast food outlets, franchises and other chains to see how your ‘concept’ would fit into the neighborhood you are planning to target. Talk to customers to know their preferences, some detailed meetings with restaurant managers / owners over dinner would do the trick in obtaining best practices and critical information that otherwise could have been overlooked.

Keep in mind that because a concept works in one area does not mean it will be well received by customers in your location. Tastes are subject to location preference and more often target market. In high scale urban areas (like PECHS, DHA, Clifton, Boat Basin, Bahadurabad, S.M.C.H.S, Gulshan-e-Iqbal, Gulistan-e-Johar etc.) you are more likely to be successful with a niche concept. Another thing to consider is competition. If your market is saturated with similar restaurants and the population may not be large enough to support more restaurants, you may want to rethink your concept.

Although the legal status of business tends to play an important role in any setup. The proposed fast food restaurant business is assumed to operate on a sole proprietorship.