Fast-food franchises falling fast in SA

Updated Dec. 13, 2024, 8:05 a.m. | By East Coast Breakfast

Famous Brands has reported a string of closures of restaurants like Steers, Debonairs Pizza, and Mugg & Bean.

Fast-food franchises falling fast in SA — Supplied

South Africa’s fast food industry is grappling with significant challenges that have forced several iconic restaurant chains to close outlets across the country. Industry leaders, including Famous Brands, have reported a string of closures in the face of rising costs, changing consumer habits, and economic instability.

South Africa’s fast-food sector was valued at approximately R90 billion by the end of 2023. Yet, in the past six months alone, Famous Brands, the company behind beloved chains such as Steers, Wimpy, Mugg & Bean, and Debonairs Pizza, has closed 41 restaurants nationwide.

The closures reflect a broader strain on the fast-food restaurant and casual dining segments, which are being outpaced by convenience-driven trends and the increasing financial pressures on consumers.

Aside from brands like Steers, Milky Lane and Wimpy slowly disappearing, you’ve probably forgotten about some other iconic fast food chains that once existed in South Africa.

Brands like Scooter’s Pizza, Dunkin' Donuts, Subway and Wakaberry are brands that once existed and had major influences within the fast food industry. However, the ever-expanding market essentially rendered some of them obsolete.

Scooters Pizza was annihilated by the rapid expansion of Debonairs Pizza and Domino’s Pizza. Subway lost South African consumer interest once we realised we could make sandwiches at home.

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Jokes aside, several factors are forcing these companies to scale down or leave the sector, including:

Consumer financial pressure: Rising inflation, high interest rates, and stagnant wage growth have drastically reduced disposable incomes. Many South Africans are prioritising essential goods over unnecessary spending, like dining out.

Load-shedding and service disruptions: The constant power outages during 2023 and poor service delivery increased operational costs for restaurants, forcing many to shut down due to unruly financial burdens.

Competition from other segments: Grocery stores and fast-casual dining chains are capturing a larger share of the market, offering consumers affordable and convenient alternatives.

The changing consumer behaviour has also had an impact on the fast-food industry. The COVID-19 pandemic and the many lockdowns altered our dining habits, with many of us turning to takeout, with the occasional home cooking.

Post-pandemic, the preference for convenience has remained strong, but many fast-food chains faced intensified competition and had to adapt to the ever-changing environment.

Since then, we’ve grown accustomed to staying at home and having everything come to us. Companies that fail to adapt and offer convenient delivery options risk losing customers to competitors.

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Despite these challenges, some optimism remains for the industry. Analysts suggest that brands focusing on convenience, affordability, and strong digital strategies may thrive in the evolving market.

However, the path to recovery is slow, with broader economic pressures that continue to weigh heavily on consumer spending habits and restaurant profitability.

This indicates that South Africa’s fast-food industry faces an uncertain future. The closures are a stark reminder of how economic adversity and shifting market trends can reshape even the most entrenched sectors.

For businesses that can adapt, opportunities remain to redefine their place in the post-pandemic dining landscape.