Report Name: Food Service - Hotel Restaurant Institutional
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Required Report: Required - Public Distribution Date: September 27,2019 Report Number: TU2019-0015 Report Name: Food Service - Hotel Restaurant Institutional Country: Turkey Post: Ankara Report Category: Food Service - Hotel Restaurant Institutional Prepared By: Caglar Erdogan Approved By: Christine Mumma Report Highlights: Tourism continued to recover in 2018 from the low hit in 2016 when domestic and geopolitical security issues nearly halted tourism. Full-service and fine dining restaurants also started to slowly recover in 2018. Fast food restaurants have been performing well, too, thanks to young consumers and double income families, although recent economic issues have limited discretionary spending by consumers with less disposable income. Coffee shops are trendy in large cities. There are over 140,000 food service outlets in Turkey in all categories. THIS REPORT CONTAINS ASSESSMENTS OF COMMODITY AND TRADE ISSUES MADE BY USDA STAFF AND NOT NECESSARILY STATEMENTS OF OFFICIAL U.S. GOVERNMENT POLICY UNCLASSIFIED MARKET FACT SHEET: TURKEY Executive Summary Quick Facts on Turkey’s Food Sector The Republic of Turkey has a young population of 82 Consumer Food Service, 2018 million people fueling consumption. The country is in a US$ 12.5 billion (retail sales) Customs Union with the European Union (EU) and is the List of Top 10 Foreign Fast Food Chain Brands in Turkey 18th largest economy in the world. Though the Turkish (by market share in 2018) economy stagnated recently, an annual average GDP 1. Burger King (USA) 6. Arby’s (USA) 2. Mc Donald’s (USA) 7. Carl’s Jr. (USA) growth rate of 1.9 percent is forecasted by the IMF between 3. Popeye’s (USA) 8. Sbarro (USA) 2019 and 2023. Geopolitical challenges continue 4. Kentucky Fried Chick. (USA) 9. Krispy Kreme (USA) simultaneously with increasing inflation and a significant 5. Subway (USA) 10. Duran Sandwiches (USA) depreciation of the Turkish Lira over the past year. List of Top 10 Domestic Fast Food Chain Brands in Turkey Nevertheless, there are opportunities in the food sector. (by market share in 2018) 1. Tavuk Dunyasi 6. Kofteci Ramiz Food Service: Hotel, Restaurant & Institutional 2. Oses Cigkofte 7. Sultanahmet Koftecisi Tourism continued to recover in 2018 from the bottom hit 3. Simit Sarayi 8. Kahta Cigkofte in 2016 when domestic and geopolitical security issues 4. Bay Doner 9. Komagene Cigkofte nearly halted tourism. Full-service and fine dining 5. Usta Doner 10. Cig Koftem restaurants also started to slowly recover in 2018. Fast food Top 10 Retailers (by market share in 2017) 1. Bim 6. M- Jet (a Migros Brand) restaurants have been performing well, too, thanks to young 2. A 101 7. Kipa consumers and double income families. Coffee shops are 3. Şok 8. Ekomini trendy in large cities. There are over 140,000 food service 4. Migros 9. Hakmar outlets in Turkey in all segments. The industry is very 5. CarrefourSA 10. Yunus fragmented with mostly small stand-alone restaurants. Five GDP/Population thousand institutional food service companies serve Population: 82 million (2018) corporations, hospitals, schools, universities, state and GDP, PPP: U.S. $2,186 billion (2017) municipal offices, nursing homes, and some military bases. GDP Per Capita, PPP: U.S. $28,000 (2017) Sources: CIA World Fact Book; Euromonitor International; Turkish Statistical Institute; Global Trade Atlas Strengths/Weaknesses/Opportunities/Threats Strengths Weaknesses Growth of GDP and Domestic and international disposable income in the political challenges last decade Economic instabilities such Large population base: as exchange rate young and growing fluctuations Source: Euromonitor International. See Table 1 for data. Opportunities Threats Complex and time Unsaturated market, open Tourism Industry in Turkey consuming import for new items Tourism is an important industry for Turkey. As of 2018, procedures 11 percent of GDP is from the tourism industry which Growing demand for high employs about two million people. On the Mediterranean value packed food, ready Strong traditional food and coast around the province of Antalya, all-inclusive resorts to-eat/cook meals as the cuisine affecting of varying size and quality dominate the market. The share of working women consumption habits restaurant sector is not well-developed in that area, as the increases resorts largely cater to foreign tourists. However, on the Aegean coast, where domestic tourists constitute the Sources: CIA World Fact Book; Euromonitor International; majority of visitors, accommodations vary in size from Turkish Statistical Institute; Economist Intelligence Unit hostels to large-size luxury hotels. Food service in these Contact: USDA FAS Ankara Office of Agricultural Affairs towns such as Bodrum, Datca, Cesme, Kas, Kusadasi is Telephone: +90 312 457 7393 more developed than on the Mediterranean coast. Business E-mail: [email protected] hotels can be found in large cities where industry and trade are well-developed. Imports of Consumer-Oriented Agricultural Products EU contries are the major suppliers of consumer-oriented agricultural products to Turkey, having the advantage of proximity and Customs Union duty rates. Turkey imports some consumer-oriented products such as rice, dried beans, walnuts, almonds, bananas, coffee, cocoa, meat, fish, and different kinds of processed/packaged food items. FOOD SERVICE: HOTEL, RESTAURANT, INSTITUTIONALUNCLASSIFIED in TURKEY - 2019 2 I. MARKET SUMMARY Due to economic difficulties, in 2018, Turkey registered its lowest real Gross Domestic Product (GDP) growth rate in ten years at 2.6 percent. The record high GDP growth in 2017 was due to short term fiscal stimulus. Although the International Monetary Fund (IMF) forecasts 2.5 percent economic contraction for 2019, the GDP is expected to rebound and grow by 2.5 percent in 2020. The record high GDP growth in 2017 was due to short term fiscal stimulus and was not sustainable as forecasted in our earlier reports. IMF expects 2.5 percent real growth for 2020. Concurrently, inflation rose to double digits in 2018, (20.30 percent measured by CPI1 at the end of the year) causing a stagflationary2 trend in the economy. The value of the Turkish lira (TL) has depreciated against major currencies like the U.S. dollar and the euro. The ability of the Central Bank of Turkey to fight inflation and currency instability were undermined by political interventions. The lira-dollar exchange rate has fluctuated from 3.76 TL/USD on January 2, 2018; to 6.86 TL/USD on August 13, 2018; and stabilized somewhat at 5.70 TL/USD by July 09, 2019. Rising inflation and depreciating currency increased the operational costs of food service outlets, resulting in slower growth. Tourism continued to recover in 2018 from its low in 2016 when domestic security issues arising from several terrorist attacks and a coup attempt nearly halted tourism. The real value of tourist receipts rose by 9.4 percent in 2018 after a 23.9 percent increase in 2017 and is forecasted to increase by 5 percent more in 2019. The return of significant numbers of western European tourists who are known to spend more (compared to Middle Eastern tourists) in full service restaurants, cafes, and bars began in 2018, as seen in the chart on page 4, and is expected to continue to increase in 2019 as the security situation in Turkey improves. Depreciation of the Turkish lira is also attractive to European tourists as vacationing in Turkey now, compared to a few years ago or alternative destinations on the Mediterranean coast, is much more affordable. The majority of visitors to Istanbul are still Middle Eastern tourists who like to spend more time in shopping malls and populate food and beverage outlets through retail, e.g. food courts in the shopping malls. Russian, German and British tourists generally choose to stay at beach resorts and all-inclusive hotels in Antalya and the surrounding Mediterranean coast. Tourism associations expect an increase in the number of western European tourists in Istanbul, too, which should affect the food service business in a positive way. According to the Government of Turkey (GoT), there have been about 39 million foreign national entrants to Turkey in 2018 which is a 22 percent increase compared to previous year. Among the foreign nationals entering Turkey, a large number were from Germany. Due to the historical migration from Turkey to Germany, a large portion of German nationals visiting Turkey are second and third generation Turkish migrants to Germany carrying German passports. Some of these may be considered tourists but the majority are in the country to visit friends and family. Likewise, there may be similar travelers of Turkish descent from other western European countries, such as, but not limited to, France, Switzerland and Austria. Statistics also indicate that there is a notable increase in the number of Chinese tourists, though they are still make up a minor part of the annual tourists to Turkey. Table 1: Consumer Food Service Value, Number of Outlets and Number of Transactions Consumer Food Service Unit 2013 2014 2015 2016 2017 2018 Value by Retail Sales Price (RSP) USD (mill.) with y-o-y FX rates 20,251 18,512 15,864 14,047 13,879 12,512 Value by Retail Sales Price (RSP) USD (mill.) with 2018 fixed FX rates 7,972 8,365 8,927 8,779 10,460 12,512 Number of Outlets count 138,025 138,079 139,859 138,723 142,117 143,706 Number of Transactions millions 3,338 3,376 3,374 3,085 3,138 3,155 Source: Euromonitor International. 1 Inflation by CPI rose to 25.24 percent as of October 2018 and fell to 15.72 as of June 2019. Food inflation is considered one of the main causes of the inflation and drastic measures such as opening ‘regulatory sales stands’ were taken by Government of Turkey (GoT) intervening with free market to sell subsidized fresh produce and pulses in winter 2018.