Chile is the 41st largest economy in the world, with a nominal GDP of USD$ 247 billion in 2016. The country’s economy relies heavily on mining copper, and it suffered as the price of copper fell between 2011 to 2016, amid weak global demand. In recent years, the government has been trying to diversify the economy in order to reduce its reliance on metals exports.
Since the 1990’s, successive Chilean governments have pursued economically liberal reforms, slowly eroding their protectionist policies. Chile currently boasts trade agreements with 65 countries2, and this has fueled significant economic growth. Assessments carried out by the IMF and World Bank have deemed Chile’s regulatory system to be robust, and its financial sector to be well diversified and highly integrated in the global financial system3,4. Unemployment currently stands at 6.7%, down from over 11% in 20095, and GDP per capita has risen consistently since 2010.
Profit sector summary
In 2016, the Chilean foodservice profit sector generated a total revenue of over CLP 6.4 trillion (USD$ 9.4 billion). The value of the sector increased at a CAGR of 4.4% between 2014 and 2016, and growth is forecast to accelerate to a CAGR of 4.7% during 2016-2021.
Growth across all major channels has been, and is expected to remain primarily fueled by rising transaction numbers, rather than outlet expansion. Consumers are increasingly valuing convenience when deciding on which foodservice outlet to engage, which is reflected in the takeaway growth exceeding that of dine-in. The advent of delivery apps means consumers no longer need to compromise between quality and convenience.
The FSR channel dominates the profit sector, accounting for over half of total revenue, and it is the most fragmented major channel.
Quick service restaurants summary
The QSR channel generated a revenue of CLP 456 billion in 2016, which accounted for a 7.2% market share of the Chilean foodservice profit sector. The channel’s sales value increased at a CAGR of 4.2% between 2014 and 2016, and is forecast an accelerated CAGR of 4.5% during 2016-2021. Value growth is expected to be primarily fueled by a rising number of transactions, rather than outlet expansion.
QSR is the most consolidated channel by a sizeable margin. In 2016, chains generated 47.0% of the channel’s total revenue, and represented 23.4% of the total number of outlets. The revenue generated by chains is forecast to increase at a CAGR of 5.2% over the next five years, while that of independents is expected to rise at a CAGR of 3.9%.
The top five operators accounted for 26.0% of the channel’s total revenue in 2016. Doggis is the market leader, with an 11.7% share, and is a domestic chain whose signature dishes are hotdogs, served with generous quantities of toppings (see Doggis case study, pages 57-59).
The channel is currently dominated by American-style cuisine, but surveys indicate that consumers would like a greater number of different cuisines to choose from when dining out.
An increasing number of QSR operators are ‘premiumizing’ their menu offerings, in an effort to compete more effectively with FSR operators. Surveys underlined a significant proportion of consumers that claimed to find difficulty in eating healthily when out. This indicates there are growth opportunities to be found in offering a wider range of ‘healthy indulgent’ options, a foodservice trend which has achieved great success in mature foodservice markets, such as the US and UK.
Full service restaurants summary
In 2016, the FSR channel generated a revenue of CLP 3.2 trillion, which accounted for a 50.7% market share of the Chilean foodservice profit sector. The channel’s sales value rose at a CAGR of 4.3% over 2014-2016, and is forecast to grow at an accelerated CAGR of 4.6% during 2016-2021. As in QSR, growth is expected to be primarily fueled by a rising number of transactions, rather than outlet expansion.
The FSR channel is highly fragmented; chains accounted for just 1.1% of the total number of outlets, and generated 3.6% of the channel’s total revenue. Forecasts indicate the revenue generated by chains will rise at a CAGR of 7.2% over the next five years, while that of independent outlets is forecast to increase at a comparatively weak CAGR of 4.5%.
FSR operators are expected to be the greatest beneficiaries of the emergence of delivery services, such as UberEATS. The revenue generated by takeaway transactions is forecast to grow at a CAGR of 9.3% between 2016 and 2021, compared to 4.0% for dine-in transactions over this period. However, dine-in meal occasions will still dominate the channel.
Surveys revealed that the consumers visiting FSR are more likely to be swayed by the availability of healthy options. Operators would resonate well with these consumers by adding information regarding the nutritional content of each menu item, and by recommending meal combinations for a balanced diet.
Coffee and tea shops summary
The sales value of the coffee and tea shop channel amounted to CLP 100 billion in 2016, which represented 1.6% of the foodservice profit sector’s total sales value. The channel’s revenue grew at a CAGR of 3.7% during 2014-2016, and is expected to increase at an accelerated CAGR of 3.9% from 2016 to 2021. As in QSR and FSR, growth is expected to be primarily fueled by an increasing number of transactions, rather than a growing number of outlets.
In 2016, chain operators significantly over-traded relative to their share of outlets; they generated 31.5% of the channel’s revenue, despite accounting for just 12.0% of the total number of outlets. The revenue generated by chains is forecast to increase at a CAGR of 4.2% during 2016-2021, while that of independent outlets is expected to increase at a CAGR of 3.8%.
Respondents who visited a coffee and tea shop in the week prior to taking the survey had a markedly higher average visit frequency than consumers visiting other key channels, such as FSR and QSR. Despite this, few consumers considered their visits to be part of their routine, so operators should do more to entice repeat visits to their outlets.
As has been found in numerous other countries, the coffee and tea shop channel is broadening its appeal, as operators diversify their menu offerings. As the coffee and tea shop channel becomes less distinct from the QSR and FSR channels, it will impel fiercer competition among them.