Oils & Fats in Quick Service Restaurants

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The Challenges facing Quick Service Restaurants

Quick Service Restaurants (QSR) have adapted their menus to consumers’ new concerns. The rising consumer awareness regarding the ecological impact of palm cultivation has pushed certified sustainable (i.e. deforestation-free) palm oil into the foreground. However, we observe a slight erosion in palm oil consumption.

The demand for healthier oils, caused by the increasingly dedicated fight against the prevalence of obesity and cardiovascular risks, has spread and reduced trans and saturated fats in the diet. This trend has been supported by new legislations on edible oil and fat labeling.

As a result, more and more QSRs have undertaken to discontinue the use of palm oils altogether and to change their recipes. This pattern is in contrast with the past, when most reformulations only resulted from the impact of prices on oils in blend. Nowadays, we observe a growing demand for expensive High Oleic (HO) oils in QSRs, which are altogether stable and safe during frying operations, with no trans and low saturated fats. QSRs have undertaken, in partnership with organizations, to ensure transparency of the quality and nutritional information.

Moving forward, it is essential to get a clear picture of whether the supply side will be able to meet the new demand.

Running a demand-driven value network allows for standardization of best practices and economies of scale, with the ability to stay close to individual consumers. This is one of the many critical issues facing QSRs, several of which have the potential to change the direction in which the procurement organization is headed, with significant implications for all the major stakeholders in the sector.

Oils & Fats in Quick Service Restaurants

FAT & Associés has prepared this report to help users gain an understanding of the key issues facing oils & fats in QSRs and to present forecasts of the likely outcomes for oil blends, volumes and qualities for major companies.

Our QSR market report provides essential information for accurate business planning until 2025. Some of the main highlights are:

• Market Outlook - Consumption in 50+ key countries by oil type and by companies; the effect of Food Policy on Supply Chains Organization; Stakeholders’ Alliances

• Key Drivers of oilseeds and oils supply, and demand in all the major markets; newcomers to HO oils; strategic investments.

• Forecasts to 2025 - Outlets growth; Oils Demand in all the major markets; New Oil Blends to come, Strategic Investments

© FAT & Associés, 2019

The Report in Brief

The analysis covers the following countries, oils and companies:

Region CountriesEU Austria, Belgium, Bulgaria, Czech Republic, Denmark, France, Germany, Greece,

Hungary, Ireland, Italy, the Netherlands, Norway, Poland, Portugal, Romania, Spain, Sweden, Switzerland, UK

NAFTA Canada, Mexico, USACIS Russia, UkraineLATAM Argentina, Brazil, Chile, Colombia, Costa Rica, Ecuador, Peru, Puerto Rico, Vene-

zuelaAPAC China, Hong Kong, India, Indonesia, Japan, Malaysia, Philippines, Singapore, South

Korea, Taiwan, Thailand, VietnamAU & NZ Australia, New ZealandAME Egypt, Israel, Kuwait, Saudi Arabia, South Africa, Turkey, United Arab Emirates

Crop TraitsSunflower High Oleic (HO), ConventionalRapeseed High Oleic Low Linolenic (HOLL), ConventionalCanola HOLL, ConventionalSoybean HOLL, Conventional, Hydrogenated, Partially HydrogenatedSafflower ConventionalPalm Oil, OleinTallow ConventionalCotton ConventionalPeanut ConventionalCorn Conventional

CompaniesMcDonald’s, Wendy’s, Taco Bell, Pizza Hut, KFC, Sonic, CKE (Carl’s Jr, Hardee’s), Arby’s, A&W, Jack in the Box, Burger King, Popeyes Louisiana Kitchen, Church’s Chicken, Texas Chicken Asia, Five Guys, Quick

© FAT & Associés, 2019

Scope of the Report

The report consists of two documents:

• Executive Summary A concise overview• Main Report 200+ pages, including over 150 tables and diagrams

The Main Report is divided into three chapters, which are described below.

Chapter 1: Oils & Fats Demand - The Competitive Landscape

We begin our analysis by benchmarking the key brands in the QSR market around the world. We convert the outlet expansion in numbers into edible oil demand in volume. We consider each corporate strategy in terms of pre-frying and frying oil blends and we convert their consumption into individual oil volume and growth rate.

We also provide a snapshot of the nutritional value by profiling the QSR companies with the fatty acid composition of blends.

Finally, we analyze the evolution of the supply chain towards centralization and global stakeholders’ alliances, and its impact on the edible oil procurement strategy.

The tables and diagrams in Chapter 1 include:

• QSR Expansion by Company by Region, in number of outlets• Frying Oil Usage by type of Oil by Region by Company, 2012-2018• Pre-Frying Oil Usage by type of Oil by Region by Company, 2012-2018

Chapter 2: The Impact of Policy and Prices upon Oil Blends

Is the issue one of palm alternative or healthy alternative? Moving away from the emotional debate (about environmental issues) and breaking down the complexity of assessing the effect of palm oil on health, we present facts behind palm oil substitution.

In this chapter, we calculate a saturated fatty acids (SAFA) intake in frying oil blends by region and we answer the following: what is the impact of palm oil on the dietary SAFA intake by region? What QSR companies are the most exposed? By how much does reformulation reduce the SAFA intake?

We also question to what degree an out-of-palm reformulation influences the price sensitivity of frying oil blends. We describe the palm oil alternatives and we extensively introduce High Oleic oils in the QSR market: volume and value, key consumers and suppliers, sourcing & trading strategy, and the flexibility of blends.

The tables and diagrams in Chapter 2 include:

• Sustainable Palm Oil Commitment by Brand• Regulation on trans-fat Labelling by Country• High Oleic Oils Consumption in QSR by Company By Country

© FAT & Associés, 2019

Coverage of the Report

Chapter 3: Projected Demand in the QSR Sector to 2025

This chapter summarizes our demand growth forecasts to 2025 for edible oil in blends in the 50+ featured countries and the companies listed in Scope and Coverage. Our demand analysis takes into account:

• QSR outlets year on year growth - by companies - in the mature markets of NAFTA, EU, CIS and Japan and in rising economies such as LATAM and APAC

• Country Development Criteria (GDP per capita, population growth, urbanization rate)

• The impact of Health Policies on edible oil demand and the potential risks from changes in oil & fat blend composition

The tables and diagrams in Chapter 3 include:

• Outlets CAGR by Country, 2018-2025f• Oil Consumption by Region by Company, 2018-2025f • Consumption by Type of Oil By Region by Company, 2018-2025f

Chapter 4: Strategic Conclusions and Recommendations

In this final chapter, we draw together the conclusions and insights from the preceding chapters, identifying the factors of strategic importance for the future of edible oils in QSR around the world. We first highlight those issues that will shape the structure of the QSR industry over the next five years, before pinpointing the crucial considerations for each brand. We consider the winners and the losers in the edible oil landscape in the near future:

• How far is the QSR market shifting towards sustainable palm oil?

• What is the outlook for palm oil substitutes?

• Which countries will face the most disruptive changes?

© FAT & Associés, 2019

About FAT & Associés

What you get

• Main Report & Executive Summary - electronic files

When

The Oils & Fats in Global Quick Service Restaurants report - release in early 2019

Fee

The Oils & Fats in Global Quick Service Restaurants report - €2,990 or USD3,6901

Confidentiality

This report is offered by FAT & Associés for subscription with the strict understanding that the subscriber agrees to the following: the content of the report and related materials provided shall remain confidential within the subscribing organization, and shall not be disclosed, in whole or in part, in any matter, to any third party, without the prior written consent of FAT & Associés.

FAT & Associés is a privately owned business intelligence company, exclusively serving the Oilseeds, Oils & Lipids Industry since 2010. Our key strengths include:

• Our Specialized Expertise - We all have worked in the Oilseeds & Oils Sectors, so we know and understand the Issues and Rules

• Our Proprietary Tools and Business Intelligence - patent & publication mining, consumer blog mining, B2C consumption estimate & projection, farming costs structure & crop competition, Monte-Carlo simulation, price forecast models.

• Our Objectivity - We do not produce, trade or broker. Being independent, our work is unbiased, and our conclusions are based on objective analysis

• Our Global Reach - Our staff travel to some 20 countries a year, participate in international conferences, and build on an extensive body of research and a global network to answer specific questions

• Our Three Pillars - Our services are built on customized consulting, off-the-shelf reports, and annual international congresses (namely High Oleic Oils Congress and Sustainable Oils & Fats International Congress).

1 Value added tax is not included in this figure

© FAT & Associés, 2019

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