What you need to know about investing in the burger industry.

Australia’s burger industry is growing at a similar pace to the overall economy, according to a September report from business intelligence company IbisWorld.

For the decade to 2021-22, the industry is expected to deliver value to the economy at a 2.6 per cent compound annual rate, matching the annualised GDP growth, says the Fast Food Burger Shops in Australia report.

New entrants in the market are capitalising on customer preference for premium products, says the report, which is good news for employees in the sector but a challenge for established players.

Today’s outlets might cater to a niche or meet all-day demand. So what are they selling?

Burgers

While the meat patties still represent a significant proportion of industry revenue, they are in decline as today’s burger’s can feature beef, chicken, lamb or even vegetables.

Breakfast

Giants such as McDonald’s and Hungry Jacks introduced pancakes, hash browns, breakfast wraps and burgers to capture a nascent demand for breakfast on the go. Now hungry consumers are just as likely to head to a local cafe or coffee shop for a broader – and healthier – breakfast menu.

Sides

Yes, customers do want fries with their burger, or perhaps onion rings or salad. Side orders are low revenue-earners, but are steady sellers.

Drinks

Coffee – even alcohol in casual-dining restaurants – is now offered alongside traditional soft drinks and milkshakes in burger outlets. Greater choice equates to a greater income for franchisees.

Other items

Increasing revenue from items such as wraps, salads and desserts reflects the diversification of menus to suit changing tastes.

What drives consumers?

• Convenience

• Discretionary income

• Health consciousness

• Price

• Alternatives

Time-constrained consumers always appreciate a quick meal, but increasingly they are searching for the healthier options – and burger outlets are often viewed as unhealthy, according to the report.

“The trend toward premium products and healthier food options is expected to continue rising for quite some time, particularly as consumers become more health-conscious and demand more upmarket, high-quality products,” says IbisWorld senior industry analyst Nick Tarrant.

“Low entry barriers and generally stable profitability have incentivised many smaller, niche operators to establish themselves over the past five years, such as food vans or outlets that offer fresh, local and premium ingredients as a point-of-difference over the major chains.

“As younger consumers become more and more health-conscious, the demand for premium and healthier options is likely to continue growing into the foreseeable future.”

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