Consumer Food Service in Malaysia

Topics: Malaysia, Kuala Lumpur, Fast food Pages: 64 (21474 words) Published: August 27, 2013
EXECUTIVE SUMMARY
Malaysians spend more on foodservice
Recovering from the economic crisis in 2008-2009, Malaysians spent more on eating out in 2011. More consumers were willing to pay for more expensive food, either in full-service restaurants, cafés or fast food outlets. Consumers did not mind paying for an occasional treat for themselves or their family members. Operators offered food in different parts of the day, catering to consumers who do not mind spending as a group. For example, McDonald’s launched its Family Breakfast Box and Family Dinner Box in 2011. Kenny Rogers Roasters, a full-service restaurant, offered a teatime menu. This trend still largely applied to people within key cities such as Kuala Lumpur, the Klang Valley region, Penang and Johor Bahru. Increases in prices hit consumers

Despite an increase in spending on consumer foodservice, consumers found it difficult to make ends meet, as prices in foodservice outlets increased in 2011. This was due to a number of factors. The government increased the foreign workers levy in 2011, and reduced the sugar subsidy in the same year. This decreased the profit margins of operators, and was passed on in terms of prices to consumers. Nonetheless, some operators increased their prices not due to an increase in costs, but in a bid to increase their profits. Some operators charged RM1.50-1.80 for a glass of plain water, which is considered expensive in Malaysia. Consumers found it hard to grapple with inflation in foodservice, as income levels in Malaysia are not rising in general, and consumers also faced inflation on other goods, such as housing and health. Multinational brands maintain the top positions, but local companies progress well KFC and McDonald’s showed positive growth in retail sales in 2011, thus retaining their positions as the leading multinational brands in Malaysia. Both brands expanded in terms of number of outlets, and have positive growth forecast, albeit slower. Two local companies which were listed on theMalaysia stock exchange in 2011 were Berjaya Food (the company behind Berjaya Roasters) and Old Town (the company that wholly owns White Café). This shows the strong foundation that local companies have, the good operations and management of the outlets, and the popularity of the brands amongst Malaysians. Increasing trend of dining out

Despite the global trend of an increasing number of consumers ordering take-away food, most channels in Malaysia saw the opposite – more people were dining out instead of ordering take-away. A combination of a few factors led to this phenomenon. Busier work schedules meant that consumers had less incentive to cook at home. Thus, they opted to eat out instead. Young people tend to spend more on eating out. Those who enter the workforce gain financial independence, and are willing to spend more on food at slightly higher-priced full-service restaurants or cafés. The abundance of consumer foodservice outlets which open early and have late closing hours in city centres meant that consumers could choose different outlets in which to eat at different times of the day. Positive outlook for multinational and local foodservice companies Multinational brands which have a long history in Malaysia, such as McDonald’s, KFC and Pizza Hut, have become part of the choice amongst locals when eating out. These brands will continue to flourish, as they have good management. Multinational brands which have only just entered Malaysia, such as Krispy Kreme, Popeyes and Pacific Coffee Company, will need to take precautionary steps whilst formulating strategies to approach the Malaysian market. Local companies will be able to tap into government initiatives on franchising, and if successful, will be able to expand their outlets both locally and overseas. KEY TRENDS AND DEVELOPMENTS

Rising prices affect consumer confidence
Prices of food and non-alcoholic drinks saw a higher increase in 2011 than in 2010. At a global level, the...
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