With Australians\u2019 discretionary spending on the rise, consumers are heading back to restaurants \u2013 but with a sharper focus on value, convenience and frequency \u2013 according to newly-released research from Rabobank.<\/p>\n
In the report,\u00a0Australian foodservice: QSR expansion is changing the landscape, the specialist food and agribusiness bank\u2019s RaboResearch division says Australia\u2019s foodservice sector is back on a growth footing, but the recovery is uneven and the competitive landscape is fundamentally changing.<\/p>\n
Foodservice spending \u2013 ie. on \u2018out-of-home channels\u2019 including restaurants and take-away outlets \u2013 as a percentage of discretionary expenditure now exceeds pre-pandemic levels and has risen through 2025, the report said. \u201cThis trend aligns with a rebound in consumer confidence over the course of 2025, indicating that households are less concerned about financial pressures,\u201d it said. \u201cAnd the uplift in foot traffic has supported activity across much of the foodservice sector, although the impact has varied by segment and location.\u201d<\/p>\n
Report author, RaboResearch senior food retail analyst Michael Harvey said increasing activity in the foodservice sector is positive news for Australian agriculture and food manufacturers.<\/p>\n
\u201cFoodservice remains a strategically important channel for Australian agriculture and food manufacturers \u2013 absorbing significant volumes of animal protein, dairy, and fresh produce,\u201d he said. \u201cThis channel offers manufacturers diversification away from highly competitive grocery retail channels and volatile export markets.\u201d<\/p>\n
However, Mr Harvey said, the path to growth is more demanding than before.<\/p>\n
\u201cThe sector is undergoing a clear structural shift. Although independent restaurants and vendors still dominate by outlet count \u2013 numbering more than 50,000 outlets and accounting for over 67 per cent of the retail value of the sector in 2024 \u2013 market share is steadily shifting toward fast casual and quick service restaurant (QSR) operators,\u201d he said.<\/p>\n
\u201cThese QSR formats are outperforming on affordability, scale, digital engagement and operational efficiency \u2013 the attributes that matter most to today\u2019s consumer.<\/p>\n
\u201cIndustry data shows that 82 per cent of all Australians live within three kilometres of a major QSR brand, underscoring the sector\u2019s accessibility.\u201d<\/p>\n
The report notes Australia\u2019s \u201cBig 3\u201d QSR operators \u2013 McDonald\u2019s, KFC and Hungry Jack\u2019s \u2013 have steadily increased their market share since 2020, benefiting from dense store networks, strong brand recognition and disciplined value propositions. This is driving intense competition across formats.<\/p>\n
The margins for foodservice operators are showing signs of recovery after several years of pressure, Mr Harvey said.<\/p>\n
\u201cFood cost inflation has eased for many key inputs, and menu price inflation is slowly moderating,\u201d he said. \u201cFinancial stress remains elevated across parts of the foodservice sector though, with insolvencies still well above long-term averages.\u201d<\/p>\n
Global influx<\/p>\n
Mr Harvey said Australia has become a focal point for global foodservice investment.<\/p>\n
\u201cInternational QSR brands and private equity are betting on population growth, urban expansion and resilient consumer demand to drive long-term returns. New entrants and aggressive store roll outs by incumbents are intensifying competition for eating occasions, foot traffic and delivery demand,\u201d he said.<\/p>\n
The report said major US chains such as Wendy\u2019s, Popeyes, Chuck E. Cheese, Firehouse Subs and Shake Shack are either entering or planning entry into the Australian market.<\/p>\n
\u2018Chicken wars\u2019<\/p>\n
The battle for market share is increasingly being fought around specific eating occasions, RaboResearch says. \u201cChicken-led menus, cold beverages, snacking and breakfast are key growth battlegrounds, supported by menu innovation and targeted promotions,\u201d the report says.<\/p>\n
In Australia, Mr Harvey said, QSRs have reignited new \u201cchicken wars\u201d as they expand their chicken menu offerings as healthier and more affordable options. \u201cPremium fried-chicken concepts are all the rage. And high and rising local and global beef prices provide further impetus to move menus toward more chicken offerings,\u201d he said.<\/p>\n
For Australian primary producers and food manufacturers, Mr Harvey said, the outlook is nuanced but constructive. \u201cFoodservice continues to offer attractive, selective growth opportunities, but the sector is becoming more concentrated, more competitive and more operationally demanding.\u201d<\/p>\n
\u201cWinning in this channel will require investment and sharp decisions about which formats to serve, how to tailor products and how to meet the scale, consistency and responsiveness demanded by larger operators, while still navigating the fragmented independent segment,\u201d he said.<\/p>\n