Foodservice Profile – Mexico

Macroeconomic profile and consumer foodservice trends

In 2022, Mexico's total population was 126.92 million people, representing a CAGR of +0.7% (2017-2022). Mexico's total population is expected to slightly slow down between 2022 and 2027 with a CAGR of +0.5% from 127.6 million people in 2023 to reach approximately 130 million by 2027.

The country's GDP was US$1.4 trillion, equivalent to $2.9 trillion (international dollar) when measured in purchasing power parity (PPP) terms with a real GDP growth of 3.062% in 2022. The inflation rate reached 8.079% in 2022, increasing from 3.397% in 2020 and 5.689% in 2021.

In 2022, total consumer per capita expenditure (PCE) on personal goods and services in the Mexican domestic market reached US$7,725.4. Mexican consumers spent a total PCE of 23.0% (US$1,773) in the food category, followed by 5.1% (US$396.5) in foodservices, 2.8% (US$215.8) on non-alcoholic beverages, and 2.6% (US$197.1) on alcoholic drinks in 2022. Prior to the pandemic, PCE on foodservice reached US$391.9 in 2019 and only began to recover above this value in 2022 - increasing by a CAGR of 2.0% (2017-2022). PCE within the foodservice sector in Mexico is expected to recover and increase by a CAGR of 8.2% (2022 to 2027).

The Mexican foodservice market

In 2022, Mexico's consumer foodservice food and beverage sales totalled US$50.3 billion using year-over-year (y-o-y) exchange rates. Between 2017 and 2022, foodservice sales increased by a CAGR of 1.4%, despite a significant negative annual dip of −32.0% in total sales during the beginning of the COVID outbreak (2020/2019) - which still hasn't returned to its full value in 2019 (US$51.3 billion). Both food & drink foodservice categories are expected to register moderate growth over the forecast period by a CAGR of 4.4% (2022 to 2027) to reach a foodservice sales value of US$62.4 billion by 2027.

According to the Government of Mexico latest data, the foodservice sector in Mexico employed 4.18 million people in the last quarter of 2022. Of the total employed population, 23% were formal workers, while 77% correspond to the informal sector (street fast food), which encompasses taco stands, Mexican fast food joints (fondas), street markets etc. Mexico's street food vendors play a crucial role in the country's culinary landscape and have a significant impact on the economy. These vendors, known as "ambulantes," can be found in bustling markets, busy street corners, and outside offices and schools. The affordability and convenience of street food make it an integral part of Mexican culture, attracting locals and visitors alike. Street food often source their ingredients from local suppliers, supporting the agricultural sector and promoting sustainability.

Data from the 2019 Economic Census, reflects that there were a total of 612,259 foodservice places (formal and informal), highlighting Estado de Mexico (69,896), Mexico City (55,105) and Jalisco (42,731). The National Chamber of the Restaurant and Seasoned Food Industry (CANIRAC) estimates that one third of food sales are carried out through fixed, semi-fixed and casual stalls that do not contribute to the formal economy. As reported by the latest data, during the fourth quarter of 2022, the informality of street food vendors labor reached 97.6%, representing a slight decrease from the third quarter of 2022 (98.1%).^{Footnote 1}

In Mexico, standalone foodservice outlets accounted for 70.5% of sales (US$35.5 billion) in 2022, followed by 16.5% in retail (US$8.3 billion), 8.9% in travel (US$4.5 billion), 2.1% in leisure (US$1.0 billion), and 2.0% in lodging (US$981.2 million) locations. Retail outlets registered the highest growth between 2017 and 2022 at a CAGR of 4.8%, while travel locations reported the only decline (−1.3%) over this period. Over the forecast period (2022 to 2027), all foodservice channels are expected to report higher CAGRs with travel (13.7%), leisure (13.6%), and lodging (13.3%) recovering the most.

In 2022, Mexico's foodservice industry has been transformed dramatically in terms of remodelling, new openings, the integration of upgraded technology, the development of delivery systems and menu renewals. Although, the foodservice industry in Mexico has not seen total economic recovery to pre-pandemic levels in 2022, as consumer habits are changing and businesses are working hard to adapt, many chains have reached the sales levels they had in 2019. Forced confinements brought about by the COVID-19 pandemic have resulted positively in consumers embracing the use of electronic devices and digital means of purchases. At the same time, the restaurant industry has been working hard on restructuring its increased costs around the effects of the high rate of inflation by raising its prices to less sensitive categories such as alcoholic beverages instead of fast-moving foods.^{Footnote 2}

Mexico's largest foodservice channel in terms of sales were from within full-service restaurants (FSRs) at a total registered value of US$22.2 billion (44.2%) in 2022. Within this channel over last year, Latin American FSRs accounted for 54.5% of sales, compared to North American FSRs (10.4%), Asian FSRs (9%), and pizza FSRs (6.3%). Other smaller FSRs found in Mexico were European (3%) and Middle Eastern (0.4%) restaurants in 2022.

In Mexico, sales in limited-service restaurants (LSRs) were the 2nd largest channel at a value of US$14.1 billion in 2022. Top LSR foodservice channels were from within pizza LSRs (29.6%), followed by Latin American LSRs (17.8%), burger LSRs (11.1%), bakery LSRs (10.7%), chicken LSRs (9.4%), and convenience stores (8.8%). Other smaller LSR food categories that reported sales in Mexico were ice cream (5.4%), Asian (1.3%), fish (0.2%) and Middle Eastern (0.1%) restaurants in 2022.

In 2022, other Mexican foodservice outlets by type consisted of street stalls/kiosks at a sales value of US$9.3 billion and cafés/bars (US$4.8 billion). Sales from within bars or pubs (−35.1%) and street stalls/kiosks (−28.9%) suffered the most over the 2019 and 2020 period.

Foodservice sales: chained versus independent operators

In 2022, independent operators (82.1%) were the largest foodservice providers over chained franchises (17.9%) in Mexico with value sales of US$41.3 billion and US$9.0 billion, respectively. However, chained franchises remained more stable during the pandemic at a CAGR of 3.0%, compared to independent operators with sales registering a CAGR of 0.2% between 2019 and 2022. Over this review period, many independent consumer foodservice outlets were at a disadvantage compared to chained operators as they struggled to adapt to increasing demand for home delivery, and having to stay open at a reduced eat-in capacity, operators were forced to adjust their business models or close.^{Footnote 2}

Sales within independent operators are forecast to recover in sales at a rate of 8.4%, while chained franchises are expected to grow by 10.1% in value (2022 to 2027).

In 2022, Mexico's chained franchises of LSRs registered the largest sales at a total of US$5.2 billion, followed by sales in FSRs (US$2.8 billion), cafés/bars (US$896.5 million), and street stalls/kiosks (US$40.2 million). During the pandemic (2019 to 2022), these chained LSR sub-categories that showed the highest period growth (most likely due to the addition of food delivery options) were from within LSRs that served burgers (9.7%), bakery products (8.9%), chicken (7.0%) and pizzas (6.7%). All other chained foodservice categories, registered low to moderate growth over the same period; at the exception of fish LSRs (−3%), chained bars/pubs & Latin-American FSRs and street stalls/kiosks (−1.9% each), and ice cream LSRs (−0.2%) that have not been able to reach their pre-pandemic sales values. Nevertheless, all chained foodservice outlets are forecast to recover and report positive growth between 2022 and 2027 - with those categories that registered COVID-19 losses in sales growing the strongest (CAGRs: 8.2% ≥ 12.7%).

Mexican independent operators of FSRs was the largest foodservice segment at sales of US$19.4 billion, followed by sales in independent street stalls/kiosks (US$9.2 billion), LSRs (US$8.9 billion), and cafés/bars (US$3.9 million) in 2022. Those independent foodservice categories that adjusted well during the pandemic and that showed the highest period growth (2019 to 2022) were independent LSRs serving burgers (5.7%), pizzas (4.7%), chicken (4.5%), and bakery products (2%). The categories that didn't reach pre-pandemic values were independent European FSRs (−4.1%) and independent bars/pubs (−0.1%). All independent operator foodservice outlets are forecast to recover with positive growths between 2022 and 2027.

Foodservice: eat-in versus delivery and to-go sales

Total sector drive-through services at sales of US$374.8 million (+36.3%), home delivery at US$7.1 billion (+20.4%) and takeaway at US$14.1 billion (+5.8%) in Mexico have managed to exceed pre-pandemic sales in 2022. Conversely, total sector eat-in services (−5.8%) have registered a loss over this period reaching sales of US$28.7 billion in 2022 from sales of US$36.5 billion in 2019.

Mexican FSRs with eat-in services registered the highest sales at US$17.8 billion, accounting for a market share of 35.5% of total sales, followed by takeaway services from street stalls/kiosks at US$7.2 billion (14.3%), LSRs: eat-in services at US$5.1 billion (10.2%), takeaway at US$4.4 billion (8.7%), home-delivery at US$4.3 billion (8.5%), and eat-in cafés/bars at US$3.9 billion (7.7%) in 2022. Smaller channel categories by service type that experienced higher growth rates over the pandemic (2019 to 2022) were drive-through LSRs at sales of US$293 million (+70.6%), takeaway cafés/bars at US$485.4 million (+65.9%), and takeaway FSRs at US$2.0 billion (+50.3%) in 2022. Between 2022 and 2027, all channels by various service types are expected to register moderate growth, at the exception of eat-in street stalls expected to decrease by 2.5% over the forecast period.

Foodservice sales: offline retail versus online

In Mexico, offline retail (in-person) foodservice sales totaled US$44.1 billion (87.6%) versus online sales of US$6.2 billion (12.4%) in 2022. E-commerce sales accounted for 5.9% share from within Mexican LSRs, followed by FSRs (5.8%), cafés/bars (0.6%), and street stalls/kiosks (0.1%) over the year. Since the beginning of the pandemic, growth in online sales occurred in all categories, registering positive CAGRs respectively in cafés/bars (51%), LSRs (48.4%), FSRs (43.3%), and street stalls/kiosks (27.4%) between 2019 and 2022. Conversely, offline retail foodservice sales declined over this same period in all categories, registering losses respectively in FSRs (4.4%), LSRs (2.5%), cafés/bars (2.2%), and street stalls/kiosks (1.2%). Overall online foodservice sales are forecast to grow at a CAGR of 15.9% (2022 to 2027), to reach US$13 billion (20.8%) in 2027.

Competitive landscape in Mexico

The consumer foodservice sector in Mexico is characterized by a highly fragmented competitive landscape dominated by independent outlets, although it continues to be led by chained players such as Alsea and FEMSA Comercio, in value sales share terms. Established operators that were able to offer delivery options were more likely to survive during the COVID-19 crisis and were more easily able to bounce back to normal sales by 2022. Nevertheless, Alsea and CMR SAB de CV companies were forced to close a small number of non-profitable outlets to focus on more efficient and profitable outlets.^{Footnote 2}

During the review period, these successful companies often partnered with last-mile delivery services like Rappi, Uber Eats, and Cornershop. However, as fees from these services became too high, many players explored alternative options including social media platforms or message apps to communicate directly with customers, especially as a method to advertise price promotions and offer special deals. Many independent operators created their own websites or offered in-house delivery options, in which Mexican consumers also became more open to adapting their purchasing habits to efficiently use such online platforms, delivery and digital payment services. The consumer foodservice industry has often successfully taken advantage of the rapid penetration of smartphones in the Mexican population.^{Footnote 2}

In 2022, Mexico's top foodservice company was Fomento Económico Mexicano SAB de CV (FEMSA) with value sales of US$1.1 billion for its OXXO brand, representing a 2.2% share of the foodservice market. The chained Yum! Brands incorporation (brands: KFC, Pizza Hut) was the second largest foodservice company with value sales of US$497.1 million (share: 1.0%), followed by Starbucks Corporation at US$489.1 million (brand: Starbucks, share: 1.0%), Alsea SAB de CV at US$374.7 million (VIPs, 0.7%), and McDonald's Corporation at US$338.7 million (McDonald's, 0.7%) in 2022. These top five companies only accounted for 5.6% of the total foodservice market in Mexico.

Opportunities for Canada

Subsectors of interest

In 2022, Mexico was the 16th largest importer of agri-food and seafood products in the world with imports of US$32.8 billion (Can$42.8 billion), accounting for a market share of 1.6% over the year. There are several sectors where Mexico relies heavily on imports. Four categories, meat, cereals, oilseeds, and dairy, account for around 45% (US$19.4 billion) of Mexican agri-food imports. Mexico is a net importer of yellow corn and oilseeds such as soybeans and canola, used for oils and animal feed. Mexico is also a large importer of wheat and malt, used for the bakery and beer industries. Animal proteins such as pork, beef, and milk powder also hold an important proportion of Mexican imports. Higher-end agri-food products also play an important role among imports, spurred by the growth of demographics interested in such products.

There is a growing demand in Mexico for healthy foods due to COVID and existing health problems (obesity and diabetes), also fueled by an existing 8% tax on high-calorie foods, and recent changes to food labeling to inform consumers about products with excess sugar, salt, and fats.

Overall, the Mexican market offers interesting opportunities for Canadian agri-food products, which benefit from a positive reputation. Among the best business prospects are found in the following areas:

• Grains and seeds with a high content of protein and fiber;
• Oilseeds with high nutritional content;
• Plant-based proteins;
• Animal proteins;
• Functional food ingredients and "superfoods" of plant origin;
• Specialty food ingredients, including healthy, "better-for-you", organic ingredients
• Gourmet food ingredients
• Functional beverages

Labelling requirements

The Mexican government is taking action to encourage healthier eating habits among the population, including a recent change to the Mexican Official Standard NOM-051-scfi/ssa1-2010 on labelling requirements to help consumers make informed choices about their foods. Products high in calories, fat, sugar, and/or sodium content must include black octagonal signs on the front of their packages. As a result, many food processors are reformulating their products to eliminate or reduce their calories, fat, sugar, sodium, and fat contents, and to include more functional ingredients to achieve the healthy attributes that consumers are pursuing.

To note, exporters of food products intended to be imported in Mexico as inputs for the preparation of dishes at restaurants or foodservice outlets, can obtain an exemption from complying with the labelling requirements of NOM-051. In order to obtain this exemption, the importer needs to follow certain official guidelines published in 2020, which state that the Mexican importer needs to declare in the "PEDIMENTO" (official document presented at Mexican Customs for importing a shipment) a specific identification code ("EN", plus a corresponding complement: "ENOM", "U" or "E" - depending on the case) to declare that the product is excluded from NOM-051 due to its intended final use.

Canadian exporters that want to make use of this NOM-051 labelling exemption (only applicable for food products not intended for retail sale), should ensure that their Mexican importer is aware about this option before sending any shipment, and make sure that the Mexican importer follows the correct guidelines to obtain the exemption. For further reference, please have your Mexican importer consult the Official Exemption Guidelines (in Spanish only) document.

For more information

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Resources

• Aguilar, Armando. GOULA: Food, Ambulance, Consumption. January 3, 2020. Informal trade of food on public roads: the magnitude of a bargain (in Spanish only)
• Euromonitor International, 2023
• Euromonitor International. February 2023. Country Report: Consumer Foodservice in Mexico
• Government of Canada. Food Services and Drinking Places (Subsector 722)

Foodservice Profile – Mexico
Global Analysis Report

Prepared by: Erin-Ann Chauvin, Senior Market Analyst

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