Iran Fast Food Industry Outlook

Fast Food Market Analysis

The Fast-Food industry presents significant opportunity for established international chains considering an expansion into the Iranian market, however it is not without its challenges.

Market Opportunities

Large domestic market (~37m Iranians between 10-35 years of age)
Fresh and good quality, locally sourced produce (the country of four seasons)
Sanction relief and better international conditions
Fast food is considered a leisure activity and a means of socializing
An absence of large international fast food chains in Iran
Inexpensive food material
Inexpensive labor
Changing Iranian lifestyle; rapidly modernizing (more demand for fast foods)
High rate of urbanization in Iran, moving more people into the larger cities

Market Challenges

Poor supply chain management
Less educated labor
Lack of international experience in market
A notable demand gap between Tehran and other cities

We believe many of these market challenges will be addressed over the next 5-8 years, as the Iranian market further opens up to international competition.

Conclusion & Outlook

This white paper gave a brief introduction to Iran’s fast food market. Key figures and facts in regards to the industry include:

79 million Iranians (23.8 million families) are spending 6.3 billion USD annually eating at restaurants according to official statistics in 2013.

Iranian families currently spend 2 billion USD annually on Fast Food (~85 USD per family).

During the 8 years from 2005 to 2012, Iranian spend on restaurants increased by 120% and in the coming years this increase rate is forecast to be significantly higher.

We believe less than 5% of Iran’s Fast-Food business are of High Quality and Reputable in City/Country.

Approx. 30-40% of Fast-Food brands have Medium Quality and
Reputable Locally.

Approx. 55-65% of Fast-Foods have low quality and junk food.

Iran is an emerging and growing market, providing existing businesses with an exciting opportunity for expansion. Iran has favorable demographics (a large and young population), rising rates of urbanization and a population who are increasing turning to Fast-Food as a means of socializing. At present there is no dominant business in the market and the majority of existing businesses lack the quality and efficiency of their global counterparts.

Of the challenges facing new entrants, the most notable is the lack of an established Supply Chain Management system, which makes maintaining the same quality of product and service from store to store challenging. However we believe these challenges will be addressed over the next 5-8 years, as the Iranian market further opens up to international competition.