Data

• Chains by sales, growth
• Chains by worldwide units, growth
• Companies by sales, growth
• Chains by estimated sales per unit

Japanese operators lead the pack in Asia, with four out of five of Asia Pacific’s leading foodservice companies headquartered in the island nation. Convenience store operators hold the top three positions for sales, led by 7-Eleven and its parent company, retail conglomerate 7 & I Holdings, reflecting the importance of the format both within Japan and increasingly across the region.

With tens of thousands of outlets between them, 7-Eleven, FamilyMart, and Lawson account for a significant portion of foodservice traffic in both Japan and Taiwan, and continue to aggressively expand their offerings. In 2013 and 2014, for instance, all of the major convenience store chains made a major push into home meal delivery, looking to build a customer base among Japan’s growing number of elderly consumers.

While Japan is one of the most well-developed chain restaurant markets in the world, with Japanese companies accounting for 13 of the top 25 largest non-U.S./Canadian restaurant operators, most still derive the vast majority of total sales from their home market, with any international presence nascent or nonexistent. Though this is changing, with a number of convenience store operators continuing to expand into markets like China and Thailand alongside 7-Eleven’s decades-long international presence, Japanese chains remain heavily focused on Japanese consumers.

This has remained the case despite an anemic growth landscape, with overall foodservice spending in Japan contracting every year since 2003. A major government stimulus program provided a boost to eating-out demand in 2013, but a significant VAT tax increase in 2014 has had a serious impact on the industry, with overall spending on dining out expected to contract this year as well. Survival in this environment favors value-focused chains. In addition to the c-store operators, the other two largest brands are Sukiya, a chain specializing value-priced beef-and-rice bowls popular throughout Japan, and Hotto Motto, a takeout chain known for affordable prepackaged lunches.

Elsewhere in Asia, growth remains impressive. The number three non-U.S./Canada-based player on the list, fried chicken chain Dico’s, is a China-only operation, where it has carefully built a presence in smaller second- and third-tier cities across China. That has enabled Dico’s to build scale before branching out into higher-end flagship locations in major Chinese cities like Beijing or Shanghai.

A number of markets in Southeast Asia continue to enjoy brisk expansion, led by Thailand, Indonesia, and increasingly Vietnam. All three markets boast strong traditional eating cultures, with Thai consumers in particular known for their frequent dining-out, often one to two times per day in urban areas. The region has proven particularly fertile ground for convenience store operators, with more than 6,000 7-Eleven outlets in Thailand alone. Particularly in Indonesia, convenience stores have begun to take the place of traditional corner shops as a place for small purchases, light meals and socializing, driving much higher spending and far greater outlet density than might be expected based on income levels.

A number of Chinese chains are expected to make their way up the global rankings in the next five years, joining operators like Dico’s, now China’s third largest, behind KFC and McDonald’s. A spate of food safety scandals in recent years has generated significant skepticism among Chinese consumers toward the largest foreign foodservice companies, creating opportunity for aggressive local operators. At the same time, a slowing Chinese economy and a government-led crackdown on extravagant spending have put a brake on overall expansion, with the double-digit growth of years past now a distant memory. That trend is likely to remain going forward. Though the overall opportunity in China remains significant, the competitive environment is more challenging than ever. The potential for growth elsewhere in Asia should not be overlooked.