Fast-food sector can brave economic storm

The growth of the fast-food industry has slowed to a trickle, on the back of high rentals, a manpower crunch and a general slowdown in the food-and-beverage sector.

The industry grew 1 per cent last year, a large drop from 10 per cent in 2011.

Still, the industry is doing better than restaurants, official data shows. 

According to figures from the Singapore Department of Statistics, restaurant sales paled in comparison, with a 4.6 per cent increase in sales in 2011, but a 4.9 per cent drop last year.

Academic experts said fast-food outlets could be braving the slump in the economy as well as the sector with nimble responses to food trends, a consistently low price and promotions.

"They've speed and convenience, and even the ambience is getting better at these outlets.

"They also keep having new products, which people get onto social media and talk about," Singapore Polytechnic senior retail lecturer Sarah Lim noted.

Fast food is more attractive when times are bad, added Associate Professor Prem Shamdasani from the National University of Singapore Business School.

Texas Chicken, which opened two outlets in Singapore in the second half of this year, said it had seen a 6 per cent growth in same-store sales in the first nine months of this year, compared with the same period last year.

Popeyes, also a fried-chicken chain, reported the same amount of growth.

The chains have been able to increase profits by ramping up productivity and introducing more exciting flavours in their food.

International chains like McDonald's and Popeyes, and local chain Burgerup have invested in technology like self-ordering food kiosks to make the process more seamless while cutting back on the staff needed.

Burger King is expected to join the bandwagon next year, a spokesman said.

Such technology may also be translating into more sales.

Dickson Low, chief operating officer of Revenue Valley Group that runs the Popeyes chain in Singapore, said staff have witnessed more customers ordering sides and getting bigger portions of food.

He believes this is because the self-ordering kiosks allow them to view the images of all items on the menu.

"For the restaurants that use self-ordering kiosks, the orders for add-on and top-up items are higher by 15 per cent compared with those without kiosks," he said.

Prof Shamdasani said these fast-food outlets have the money to invest as the costs can be spread over several outlets.

Restaurants may sometimes just have two or three branches, he added.

Products catering to the local palate have also been a big part of the chains' strategies to attract customers.

McDonald's, for example, introduced salted egg burgers in June this year.

It also has more than 20 offerings with 500 or less calories for the more health-conscious, a spokesman said.

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