Foodservice chains in Brazil and Mexico dominate the ranks of the largest local restaurant players in Latin America, led by the uniquely Brazilian Habib’s, a brand offering low-priced, meat-filled pastries popular in a region where low-income consumers still account for a major portion of demand.

Habib’s meat-filled offerings, or esfihas, are ubiquitous in Brazil and are based on similar pastries found in the Middle East. Indeed, the chain is sometimes referred to as the largest chain specializing in Middle Eastern cuisine anywhere around the globe, a testament to the diversity of Brazilian society, which is home to sizable Lebanese and Syrian immigrant communities.

One of the distinguishing factors of the most successful local chains in Latin America is strategic diversity, or the ability to compete across multiple consumer groups, often through a combination of effective outlet and menu segmentation. Another Brazilian player, hamburger chain Bob’s, has achieved impressive growth by hewing closely to a template first laid down by McDonald’s, using satellite kiosk outlets to complement nearby traditional units. Offering low-priced impulse items like ice cream and beverages, kiosks allow better penetration into high-traffic areas where space is at a premium, while also allowing a chain to target low-income consumers. Because of slightly rising disposable incomes, these consumers are eager to spend, yet still remain price constrained.

Data

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• Chains by worldwide units, growth
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Convenience stores have also prospered in Latin America, led by Mexico’s mammoth OXXO chain, operated by beverage giant and Coca-Cola bottler Fomento Economico Mexicano S.A. de C.V., or FEMSA. With nearly 10,000 outlets across Mexico, OXXO has emerged as a clean, modern alternative to traditional corner shops. The brand offers a wider selection of goods and better quality than competitors, providing a chain foodservice experience in areas where chain penetration is still limited. Indeed, the story of chain expansion in Latin America is often less one of creating an eating-out market and much more one of providing an alternative to a thriving existing culture. OXXO shops, for instance, compete as much with the thousands of small grocery stores and street vendors serving small meals and snacks in every Mexican town as they do with international players like McDonald’s.  

Additional clues pointing to the future development of foodservice in Latin America can be found in Mexico, far and away the most developed market in the region in terms of chain restaurant offerings. Local operators continue to grow in confidence and ambition, with FEMSA recently announcing the purchase of the local chain Gorditas Doña Tota, giving the OXXO operator a presence in the vast market for local dishes. Likewise, Alsea S.A.B. de C.V., Mexican franchisee of Burger King, Starbucks and others, announced the purchase of Wal-Mart de Mexico’s foodservice operations earlier this year, giving the company full control of a number of popular local brands, including the Vips chain of family restaurants. This trend of well-financed local operators making inroads into the market for local items presented in a modern environment is set to intensify. Further acquisitions will be fueled, creating real competition — and potential operating conflicts — with the largest global brands.

By the numbers

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