In then last ten years, many qualified Czechs left the country seeking higher paid work in other EU countries, resulting in a population contraction. Many of these citizens are now returning, pushing a slow, but consistent, population growth.
Revenue from tourism is forecast to grow ahead of the wider economy to 2021.

Profit sector summary

Profit sector revenue rose at a CAGR of 3.2% between 2014 and 2016, and this growth rate is expected to persist to 2021. Growth across all channels has been driven primarily by increasing numbers of transactions.

Czech consumers eat out frequently, and are demanding greater levels of convenience across foodservice channels. As a result of this, delivery and takeaway revenue is forecast to grow ahead of value growth in the wider market. Intensifying cross-channel competition is also expected to 2021, as growing numbers of operators add more flexible options and all-day opening becomes more common. The foodservice market is also set to benefit from the country’s thriving tourism industry.

A smoking ban enacted in mid-2017 may impact revenues in some channels. However, many foodservice operators reported increased revenue after similar legislation was enacted in comparable countries.

Quick service restaurants summary

Sales value in the QSR channel grew at a CAGR of 3.2% between 2014 and 2016, with this growth primarily driven by an increased volume of transactions, as more consumers flock to the channel. To 2021, growth is forecast to remain steady, at 3.2%. Average transaction value growth in the channel is slow, reaching a CAGR of only 0.6% between 2014 and 2016. Key players in the channel include global leaders McDonald’s, KFC and Subway, as well as locally run chain Bageterie Boulevard.

Family diners are the most active consumers in the channel, with children driving a significant number of visits. Food offerings currently available in QSR are usually dominated by fast food options, and include chicken, burgers and carbonated drinks. Although alcohol is available in the channel, it is not a key growth area.

Location placement is extremely important in the Czech QSR channel. Visits to the are seldom planned in advance and are often made entirely on impulse. Attracting passing trade with good location placement is therefore paramount to ensuring sustained growth in the channel.

Although value concerns drive consumers’ decision-making in the channel, this focus on pricing is not more pronounced in QSR than in the wider foodservice market. This indicates that consumers are open to some degree of premiumization in the channel. As FSR operators continue to develop their convenience offerings, QSR should adjust menus to offer even greater flexibility to consumers.

Full service restaurants summary

The FSR channel is by far the largest in the Czech foodservice profit sector, accounting for over 35% of total sector revenue in 2016. Channel sales value rose at a CAGR of 3.3% between 2014 and 2016, a rate slightly in excess of the overall profit sector. Growth is forecast to continue in the channel at a similar rate to 2021. The channel is highly fragmented, with no single operator controlling more than 1.0% of total channel revenue.

The FSR channel is regarded by Czech consumers as the ‘go-to’ channel for out-of- home food consumption. Typically low prices have allowed consumers to visit frequently, and as a matter of routine. Although older and more affluent consumer groups and families over-trade, they also tend to have a lower visit frequency than younger consumers. Increasing the visit frequency of older consumer groups is a key way in which operators can increase revenue per outlet.

Consumers value local outlets, with many choosing to eat out at restaurants that are located close to their home and to their place of work or study. Independent outlets are also preferred, primarily due to consumers seeking ‘uniqueness’ from FSR operators.

Looking forward to 2021, consumers are expected to demand a greater level of convenience from the channel, and revenue generated by takeaway and delivery transactions is forecast to grow ahead of the wider channel. The rollout of delivery service providers in Czech cites will enable more FSR operators to offer convenience features such as delivery, with minimal capital cost incurred by operators themselves.

Coffee and tea shops summary

Overall revenue in the coffee and tea shop channel increased at a CAGR of 3.3% between 2014 and 2016, with the channel marginally outperforming the wider sector. Growth is forecast to persist at a steady rate to 2021. Costa Coffee and Starbucks are the two largest international players, but only generated a combined 1.9% of total channel revenue in 2016. Overall, chains controlled a 12.0% share of the market.

Coffee and light food options rule in Czech coffee and tea shops. In contrast to other key restaurant channels, coffee and tea shops are not expected to see takeaway revenue growth outpace growth in the wider channel, reflecting consumers’ preference for a strong dine-in proposition from coffee houses. Proximity to both work and home drives a significant percentage of visits.

Consumers visit the channel for relaxation, to take a break either during or after work. Transaction value is currently low, as most consumers visit for purely drink-based occasions. Increasing dwell times can cater to consumers seeking relaxation, while offering a greater provision of ‘upsold’ food items is key to raising average consumer spend in the channel.

Value motivations are not central to consumers’ decision-making in the channel, and growing consumer demand for higher-quality products is expected to drive premiumization in the channel in coming years. Operators offering locally produced beverages and products command a premium over more generic outlets, and many consumers, especially those in large urban centers, will seek out these unique options.

Pubs, clubs and bars summary

The pub, club and bar channel is the second largest channel in the Czech foodservice profit sector, accounting for 22% of total sector revenue in 2016. Value in the channel grew at a CAGR of 3.2% between 2014 and 2016, a rate in line with average value growth in the overall profit sector. Looking forward to 2021, growth in the channel is forecast to accelerate slightly to a CAGR of 3.3%.

The channel is the default option for out-of-home socializing in the Czech Republic. Czech consumes are, by many measures, the world’s leading per-capita consumers of beer, and alcoholic drinks dominate both operator and consumer buying in the channel. The vast majority of Czech pubs, clubs and bars are small, locally-run independent outlets, with chains only accounting for a 12.1% share of the market in 2016. Consumers show little interest in more chained operators in the channel, and their choice of outlet is seldom driven by familiar branding. Atmosphere drives the greatest share of visits and, while consumers do consider pricing important, this focus on value is not more pronounced in the channel than in the wider foodservice market.
Pubs, clubs and bars are expected to face multiple challenges to 2021.

A newly enacted smoking ban may reduce visit frequency among socializing consumers. Furthermore, competition from off-trade sales precludes operators from raising prices without adding value to their product proposition. Operators can add value to their product ranges by offering more localized and higher quality options, such as craft beers, which have seen strong growth and command a price premium over more generic choices. There is also significant demand for an enhanced food provision in the channel. Providing added value options and more comprehensive meal solutions will increase dwell times in pubs, clubs and bars, which could help mitigate the smoking ban’s potentially detrimental impact on business.

Related feature–czech-republic-the-future-of-foodservice-to-2021/

“Czech Republic – The Future of Foodservice to 2021”, published by GlobalData provides extensive insight and analysis of the Czech Foodservice market over the next five years (2016-2021) and acts as a vital point of reference for operators or suppliers.