Consumer Food Service
The consumer foodservice market is recording slow growth. While more and more consumer foodservice outlet open every year, many struggle to survive and close. Foodservice is perceived by consumers as an attractive market and therefore many open outlets without enough knowledge and experience in management. When they fail to make enough profit for a long while, they are forced to close. the main reasons are:
Profitability in foodservice has been on the decline during the past few years for several reasons. First, the constant opening of new outlets increases competition, which is also reflected in the decreasing prices. Second, rental expenses – which make up a large part of foodservice outlets' overall expenses – are rising fast. Third, prices of raw materials in the local market are high, and some outlets also pay a fee for Kosher certification. In addition, in recent years there are more regulations regarding working conditions which cause an increase in payroll expenses.
The increase in retail spaces and malls allows restaurant and café chains to expand fast, as the leading chains seek presence and exposure in as many high-traffic locations as possible. Therefore, the chains' growth isn’t organic; it is accelerated by the opening of many new retail areas. Restaurant chains operate outlets through franchises, allowing them to expand without major risks to the chain itself – it is the franchiser who risks the most.
Street food has developed greatly during the past few years. This is due to restaurant owners' wish to open outlets with smaller risks as well as Israelis' growing interest in eating out at low prices, not as an outing but simply as on-the-go meals. This development is also driven by well-known chefs who have been opening such fast food outlets offering food of high quality, thus making their culinary creations more accessible to a wider consumer audience. In addition, many hummus and burger places have opened during the past two years.
Periphery as a growth engine
In central Israel the consumer foodservice market is very saturated, with high costs and tough competition, which makes it difficult for restaurants to survive for long. However, in the outlying areas there is great growth potential as rental rates are lower and the number of foodservice outlets is far lower.
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