15th April, 2014

Cafes eating into fast food profits

Health-conscious Aussies are forgoing fast-food restaurants in favour of cafes, new figures have revealed.

IBISWorld statistics showed that while the fast food industry still dwarfs the coffee shop sector, cafes are becoming increasingly competitive. According to the organisation, time-poor Australians are living their lives on the move, which means grabbing food on the go is now a more popular option. 

"While such a trend would usually spell profit for fast-food vendors, Australia's booming coffee culture has diluted their success," the company's Stephen Gargano said.

"The popularity of coffee has encouraged cafe operators to offer a range of complementary meals, allowing busy consumers to grab a sandwich with their usual coffee."

Cafes are expected to experience revenue growth of 3.7 per cent over 2013-14, compared with 2.8 per cent for their fast-food rivals.

Coffee shops are benefiting from a gourmet-eating trend, which prioritises fresh food over unhealthier alternatives. Only Subway, known for its slimming-based advertising, has been able to enjoy a slice of this success.

"Healthier eating has bolstered the cafes and coffee shops industry. With food items often carrying higher margins, increased food sales at cafes have significantly boosted industry revenue," Mr Gargano stated.

IBISWorld predicted cafes will continue to experience solid growth in the coming years, increasing market share against fast-food outlets. Many fast-food operators are trying to counter this by introducing new, healthier menus. However, while this may provide more choice for consumers, establishments may find it difficult to shake an unhealthy image.

With Australia's cafe culture in full swing, coffee shop owners should take the opportunity to review their existing insurance policy to ensure it covers their needs. 

Bruce Insurance can offer a range of cafe insurance options specifically tailored to your organisation so that you can run your business safe in the knowledge that you are protected against any unexpected problems.

Author: Murray Bruce