Socio-Demographic Indicators of Turkey
Turkey is a country located
primarily in Western Asia, with a portion belonging to Southeast Europe. The
country currently has a population of 84.3 Mn people, 25.1 Mn households and
GDP per Capita of USD 8,538. Turkey has been witnessing an inflationary crisis,
with an increase of XX% in the Consumer Price Index (CPI) over previous year.
The unemployment rate in the country stood at XX% in September, 2021.
Around XX Million people
visited Turkey from other foreign countries in the first nine months of the
year 2021, Istanbul is the most preferred destination for restaurant customers
across Turkey. Istanbul also attracts high domestic tourists and internally
migrating population. Istanbul is mostly preferred by foreign visitors from
Western Asia and Europe, with countries such as Germany, Iran and Russia being
the leading countries in terms of percentage of tourist population visiting the
country of Turkey.
Industry
Ecosystem
The Food
& Beverage Market in Turkey imports XX% of the food ingredients
used all over the industry. There are around XX thousand food and XX beverage
firms, providing employment to around XXX thousand people. USD XX Billion is
the grocery retailer sale industry market size for the year 2019. The market size
for the F&B Industry stands at USD XX Billion for the year 2020, projected
to increase to USD XX Billion by the year 2025. Favorable unit economics and
multi-fold adoption during outbreak of COVID-19 has shaped up to the bright
future of online food delivery segment in Turkey.
Overview
of Restaurants Industry in Turkey
Restaurants sub-sector
contributes XX% to the F&B industry owing to the dynamic ecosystem of
international brands and high influx of tourists every year. Quick Service
Restaurants are the most popular category, and include brands such as
McDonalds, Burger King and Sbarro. Other categories include Fine Dining
Restaurants such as Zuma and Nobu, Casual Dining Restaurants such as Sazeli and
Cookshop, Nightclubs and Shisha Lounges such as Klein and Sortie, Coffee Shops
such as Cup of Joy and Petra, Desert Parlors such as Asuman and Vakko, and
Hotel based Restaurants such as Shangri-La and Hilton. Istanbul is the
most-preferred destination for restaurant customers across Turkey followed by
Ankara, Izmir, Bursa, Antalya and others.
Istanbul
– Largest City in Turkey
Istanbul has a total of XX
Million population, residing across XX urban municipalities. XX% of the
households in Istanbul have internet access, of which XX% use it for online
shopping and XX% use it for ordering food. This, along with a XX% penetration
rate for e-delivery services, equates to around USD XX Billion worth restaurant
industry in Istanbul, in 2021. Additionally, around USD XX is the average
monthly household disposable income in Istanbul, of which XX% is spent on food
and beverage consumption.
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District
Analysis of Istanbul
Esenyurt is the most
populated district in Istanbul, with a population of around XXX people.
Gaziosmanpaşa is the district with the highest population density in Istanbul,
and Fatih is the district which witnesses the highest foreign visitor count.
Beyoğlu and Şişli are second and third in order after Fatih, for witnessing the
most foreign visitors on an annual basis.
Analysis
of Categories of Restaurants
Quick Service Restaurants
(QSRs) lead the rest of the restaurant categories when it comes to the end-user
spend, accounting for XX% of the same. QSRs usually cater to population of all
income categories collectively, along with a focus on students and working
professionals. They usually don’t have a set ‘peak period’, and service
customers round the year, with more demand than usual flowing in at the time of
Christmas and New Year. The “occasional” nature of demand across categories
such as desert parlors, cuisine-specific restaurants and nightclubs leads to
them contributing around X% to the end-user spend in the F&B industry,
collectively.
Business
Environment in Turkey
Turkey ranks at XX position
nations in terms of ease of doing business owing to majority compliance related
facilities available online. While Turkey ranks strongly in Ease of Doing
Business Index, the process of submitting documents and seeking approvals for
starting restaurant business is still cumbersome.
High direct and indirect
taxation adds to the barrier for strong performance of HORECA sector. General
VAT rate is XX%, with XX% VAT being applicable to Agricultural products such as
raw cotton and dried hazelnut, and XX% VAT being applicable to items such as
basic food stuff, textiles, books etc. There are some common malpractices in
the restaurants industry of Istanbul, namely reporting of revenue, staff
salaries, rent payable and inflating other expenses.
Impact
of Covid-19 on Restaurants Industry in Istanbul
While no country could escape
the impact of COVID-19, Turkey got severely affected due to economic downturn
since past few years and high dependency on tourist expenditure. Restrictions
for tourists have included mandatory COVID-19 tests and 14-day mandatory
quarantine for travelers arriving in Turkey. Post descending into normalcy,
quarantine-free travel has also been offered to foreign visitors.
While certain restaurants
suffered due to operational restrictions, few restaurants leveraged on D2C
‘retail sales’ of their food ingredients and diversified business segments.
Subsequent waves and variants of COVID-19 coupled with fast pace of vaccination
have prompted businesses, customers and government to “learn to live” and
strategize accordingly. There has also been a visible increase in the online
food delivery segments as well as a noticeable rise of cloud kitchens.
Future
Outlook of Restaurants Industry in Istanbul and F&B Industry in Turkey
The fear of virus still
looms yet the improvement in macroeconomic indicators coupled with re-bound in
tourism activity is expected to propel Growth
in Restaurants Industry of Istanbul. The growth is further expected to
be shaped by changing customer behavior to becoming online savvy & focus on
alternate channels of revenue by businesses.
Analyst
Recommendations and Risk Factors
Analyst recommendations
include must have’s across important criterion such as location, design of
outlet, engagement with customers, popularity of the chef, operational
efficiencies and focus on word of mouth. For example, when considering
operational efficiencies, focusing on digitalizing restaurant menu and order
systems and building loyalty programs could lead to better utilization of the
restaurant space and lead to a maintained order flow.
Risk factors would be centered
on parameters such as revenue dependency, customer stickiness, operational
feasibility, ecosystem support, financial feasibility, government factors and
demand momentum. For example, when considering ecosystem support, it is
important to be cognizant of the import restrictions and rapidly changing
prices since it may become difficult to ensure adequate supply and type of raw
materials.
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