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APAC foodservice spending to exceed pre-Covid levels in 2024, artisan coffee and tea shops still on the rise

Consumer foodservice in the Asia-Pacific region is on track to reach pre-pandemic levels by 2024, although dining-in at restaurants is not expected to fully recover until 2028, according to research firm Euromonitor International.

After a challenging year in 2022, when the consumer foodservice sector faced stringent restrictions, revenues rebounded by 12 percent and transaction volumes saw a healthy growth rate of 10 percent in 2023, outpacing the opening of new outlets, which grew by a modest 3 percent.

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Dine-in restaurants to experience a slower recovery

Source: Shutterstock

As cost-conscious consumers attempt to weather an uncertain economic landscape, home delivery services are expected to gain a larger share of the foodservice pie compared to dine-in restaurants. Delivery services are also slated for a boost, thanks to ongoing enhancements in convenience and service.

But there are still ways for restaurants to shift the trend in their favour, according to Euromonitor’s Emil Fazira, such as “putting in efforts in creating new in-store concepts that encourage consumers to stay longer or as social hubs beyond the lure of the menu itself.”

“For example, in India consumers pay a flat rate for their time spent at the GVQ Time Café with the option to bring their own food, and in Singapore Swensen’s launched an Unlimited outlet at Changi airport which features a buffet spread rather than a la carte meals, allowing consumers to stretch their dollar,” Fazira notes.

Diversification is also key strategy to sustain consumer retention and grow brand loyalty by providing options for consumers through different occasions and lifestyles.

Delivery is projected to account for 23 percent of total sales in the Asia-Pacific region by 2028, compared to 21 percent in 2023.

The share of eat-in spending, on the other hand, is expected to remain around 60 percent, reaching 67 percent by 2028. Prior to the Covid-19 pandemic, eat-in spending accounted for 76 percent of total foodservice spending in 2019.

Customers queue outside a Blue Bottle Coffee shop in Shanghai. Source: Shutterstock

Coffee and tea shops remain consumer hot spots

The coffee and tea shop industry experienced a significant surge in growth with the entry of various global coffee chains into countries in the Asia Pacific region, especially in Southeast Asia.

This expansion has resulted in a market worth USD4.4 billion. Between 2023 and 2028, it’s projected to continue growing at a compound annual growth rate (CAGR) of 8 percent.

Singapore for example has seen the entry of various coffee chains, including China’s Luckin Coffee, which opened over 20 outlets in less than a year; South Korea’s Compose Coffee; and Canada’s Tim Hortons. Indonesian brand Kopi Kenangan recently also made its debut in Malaysia and Singapore, launching 50 outlets and offering local espresso options.

A Luckin Coffee store in Singapore in 2023. Source: Shutterstock

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“In other markets like Vietnam and Thailand, established local chains such as Café Amazon and Trung Nguyen continue to open new outlets, increasing their availability. Local consumers are more coffee-savvy, and seek new coffee flavours involving local coffee beans for their caffeine fix,” says Nathanael Lim, beverage insights manager at Euromonitor.

To thrive in the long term, regional coffee shops must secure strong investor funding and introduce innovations while maintaining affordable pricing to appeal to local consumers. Expanding into new channels such as vending, drive-thru, and subscription services will also be crucial for their success, according to Euromonitor.