Over the past few years, South Africa’s economic landscape has been shaped by various factors, with inflation increasing to over 7% in July 2023 but moderating to just over 4% in July 2024. A consequence of this economic situation is that in real terms there has been a decline in household disposable income for many. These financial pressures have notably affected spending behaviours, particularly in the fast food industry. Consumers are increasingly becoming more cost-conscious, adapting their purchasing patterns based on available income and evolving financial priorities. This resulted in declines in loyalty to particular brands and seeking value for money by purchasing from brands where consumers get “bang for their buck”.

Regarding fast food consumption, there has been a marked decline in purchase frequency since 2020, with a decrease of 39% weekly and to a lesser degree of 2% monthly. This is according to the latest Marketing All Products Survey (MAPS) findings from the Market Research Foundation (MRF)  in October 2024. This trend reflects broader shifts in consumer behavior as people become more selective in their dining choices. Fast food purchases have also seen a decrease, with only 49% of consumers buying fast food weekly, compared to previous years.

This equates with a basket spend of R195 on the last visit to a fast food restaurant. At 46%, slightly more consumers order takeaway at the restaurant compared to 41% that order and dine in. According to the latest findings, only 6% use a drive-through compared to 4% that use an in-house delivery service. The two key players in third-party delivery services are Uber Eats at 38% compared to Mr D at 33%.

When examining fast food purchasing behavior it often occurs when consumers are out shopping, emphasizing the importance of locating fast food restaurants close to shopping centres across the country. Only 38% travel to specifically purchase takeaway food while 10% indicate they purchase fast food while commuting from one area to another and only 5% use a delivery service. These statistics are vitally important to fast food brands in making decisions to locate their restaurants in target markets and to ensure a sustainable and financially viable restaurant network.

Top fast food brands in South Africa considering their market share are KFC (25%), Chicken Licken (10%), Debonairs Pizza (8%), McDonalds (7%), Hungry Lion (7%), and Burger King (5%). Debonairs Pizza with an average spend of R229.91 has the highest average spend per visit followed by McDonald’s with R226.48, Burger King with R219.14, Chicken Licken with R198.03, KFC with R185.00 and lastly Hungry Lion with R170.53. Over four years, from July 2021 to July 2024 spending on these brands has shown an increase.

KFC and McDonald’s, for instance, have maintained a steady level of consumer engagement, while Hungry Lion and Burger King have seen slight increases in consumption patterns. This highlights a shift in consumer preferences towards value offerings as a consequence of the economic situation and tightening household budgets. Fast food consumption trends reflect these broader patterns of change, where fewer people are visiting fast food outlets, but spending has remained stable.

The total quarterly expenditure on fast food has seen gradual growth, reflecting the impact of inflation repressures. These trends also suggest that while spending remains steady, consumers are more focused on value, balancing their enjoyment of fast food with financial constraints. The overall expenditure continues to rise, but it is tempered by the economic realities faced by consumers, influencing their purchase frequency and spending decisions. These factors all place pressure on the fast food industry in South Africa resulting in declining revenues and worst-case scenarios, the closure of restaurants.

Famous Brands, the owner of fast-food chains like Steers, Debonairs Pizza, and Fishaways, has closed numerous underperforming outlets across South Africa. This decision comes amid the tough consumer environment characterized by inflation, competition, and reduced disposable income. Between March 2023 and February 2024, Famous Brands closed down 47 stores, and a further 18 closures occurred in the first half of 2025. Despite the challenges, Famous Brands remains optimistic, with plans for 89 new store openings and continued investment in digital transformation to improve customer experience. The company aims for recovery as consumer sentiment improves with improvements in the economic environment and potential interest rate cuts (BusinessTech, 2024).

Strategic Responses to Economic Pressures in Closing Fast Food Restaurants

This scenario is not only unique to Famous Brands but many of the other fast food chains have to face similar challenges heading into 2025. Brands need to make informed decisions about reducing the number of restaurants in their network, especially those that are impacting the overall revenue and profitability of the brand. At the same time, they need to remain competitive and grow their revenue through expansion strategies and the location of new restaurants. Whether considering a reduction or expansion strategy, fast food brands need to undertake accessibility studies to ensure optimum growth by locating restaurants in high-potential markets.

A reduction strategy involves systematically evaluating the performance of the entire store network ensuring that closures are made thoughtfully to minimize negative impacts on the financial viability of the brand. By adopting a reduction strategy, fast food chains can navigate closures with precision, ensuring that each decision aligns with broader business objectives and customer needs. Applying this approach to fast-food restaurant closures offers several advantages over traditional methods.

1. Data-Driven Decision-Making: By analyzing performance metrics, customer demographics, and geographic factors using accessibility studies, brands can make better decisions about which locations to close, reducing reliance on subjective judgments and minimizing the risk to the entire brand. This approach was applied several years ago when Mazda split from Ford requiring a reduction strategy that would stabilize the brand in the short term and allow it to organically grow as new motor vehicles came on the market and the OEM was able to systematically reposition itself within its target market.
2. Optimized Resource Allocation: Identifying and closing outlets that are negatively impacting their restaurant network allows companies to reallocate resources – such as capital, labour, and inventory—to more profitable locations, enhancing overall operational efficiency.
3. Enhanced Customer Experience: Focusing on high-performing locations enables fast food brands to invest in improving the performance of existing outlets, leading to better service quality and customer satisfaction.
4. Strategic Market Positioning: A reduction strategy enables companies to refine their market presence, concentrating on higher potential markets to enable sustainable growth, and strengthen a brand’s competitive edge. The use of the MAPS data placed in a geospatial format to form GeoMAPS Is the only true source of consumer data that will allow fast food brands in South Africa to effectively accomplish this.

This is in contrast to traditional methods of using univariate or bivariate feasibility studies or making gut-feeling decisions worked out on the back of a matchbox to close underperforming restaurants. Thorough analysis is needed to prevent placing an entire brand in jeopardy while maximizing opportunities, improving customer satisfaction, and improving financial revenues. A reduction strategy, grounded in data and strategic planning, offers a more effective and sustainable approach to managing fast food restaurant chains.

Navigating Growth Opportunities in South Africa’s Fast Food Industry through Strategic Expansion

An expansion strategy involves a company broadening its operations by entering new markets, launching additional products, or increasing its presence in existing markets. This approach aims to drive growth, enhance brand recognition, and capture a larger market share. For Famous Brands, the owner of popular fast-food chains like Steers, Debonairs Pizza, and Fishaways, implementing an effective expansion strategy is crucial, especially in light of recent closures of underperforming outlets across South Africa. To navigate this transition and foster growth, the company must consider the following approaches:

1. Market Penetration: Focus on increasing market share within existing markets by enhancing marketing efforts, improving customer service, and offering promotions to attract new customers. This includes the introduction of menu items offered at a lower price that customers see as signature or hero products that drive traffic to the restaurant. This will contribute to reversing the declining consumer trends at particular brands.
2. Product Diversification: Introduce new menu items or services that cater to evolving consumer preferences, such as healthier options or culture-based alternatives, to attract a broader customer base.
3. Geographic Expansion: Explore opportunities to enter new mixed residential and commercial developments, fill gaps in existing markets with appropriately sized new outlet types, or open them in provinces or countries where the brand is not yet present. Conducting thorough accessibility studies with access to granular data on consumption patterns, existing brand and competitor stores as well as preferred economic sites is vital.
4. Digital Transformation: Invest in online ordering platforms, delivery services, and mobile applications to meet the growing demand for convenience and reach a broader audience of tech-savvy consumers.
5. Strategic Partnerships: Collaborate with other brands from other sectors to co-create products, enter new markets, or leverage each other’s customer bases for mutual benefit.

By adopting a comprehensive strategy that aligns with market trends and consumer demands, fast-food brands can position themselves for sustainable growth and ensure resilience in the competitive fast-food industry of South Africa. By implementing data-driven reduction strategies, brands can optimize their operations and focus on high-performing locations to enhance profitability. Simultaneously, by embracing strategies such as market penetration, product diversification, geographic expansion, digital transformation, and strategic partnerships, can drive growth and strengthen market presence. These approaches, grounded in comprehensive accessibility studies and consumer insights, are essential for fast-food brands aiming to achieve sustainable success in a competitive and evolving fast-food market landscape.

To read more about reduction and expansion strategies when conducting accessibility studies   

Read about the the case studies of retail network optimization done for companies such as Levi Strauss, McDonald’s and Hungry Lion