With Australians’ discretionary spending on the rise, consumers are heading back to restaurants – but with a sharper focus on value, convenience and frequency – according to newly-released research from Rabobank.

In the report, Australian foodservice: QSR expansion is changing the landscape, the specialist food and agribusiness bank’s RaboResearch division says Australia’s foodservice sector is back on a growth footing, but the recovery is uneven and the competitive landscape is fundamentally changing.

Foodservice spending – ie. on ‘out-of-home channels’ including restaurants and take-away outlets – as a percentage of discretionary expenditure now exceeds pre-pandemic levels and has risen through 2025, the report said. “This trend aligns with a rebound in consumer confidence over the course of 2025, indicating that households are less concerned about financial pressures,” it said. “And the uplift in foot traffic has supported activity across much of the foodservice sector, although the impact has varied by segment and location.”

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.

“Foodservice remains a strategically important channel for Australian agriculture and food manufacturers – absorbing significant volumes of animal protein, dairy, and fresh produce,” he said. “This channel offers manufacturers diversification away from highly competitive grocery retail channels and volatile export markets.”

However, Mr Harvey said, the path to growth is more demanding than before.

“The sector is undergoing a clear structural shift. Although independent restaurants and vendors still dominate by outlet count – numbering more than 50,000 outlets and accounting for over 67 per cent of the retail value of the sector in 2024 – market share is steadily shifting toward fast casual and quick service restaurant (QSR) operators,” he said.

“These QSR formats are outperforming on affordability, scale, digital engagement and operational efficiency – the attributes that matter most to today’s consumer.

“Industry data shows that 82 per cent of all Australians live within three kilometres of a major QSR brand, underscoring the sector’s accessibility.”

The report notes Australia’s “Big 3” QSR operators – McDonald’s, KFC and Hungry Jack’s – 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.

The margins for foodservice operators are showing signs of recovery after several years of pressure, Mr Harvey said.

“Food cost inflation has eased for many key inputs, and menu price inflation is slowly moderating,” he said. “Financial stress remains elevated across parts of the foodservice sector though, with insolvencies still well above long-term averages.”

Global influx

Mr Harvey said Australia has become a focal point for global foodservice investment.

“International 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,” he said.

The report said major US chains such as Wendy’s, Popeyes, Chuck E. Cheese, Firehouse Subs and Shake Shack are either entering or planning entry into the Australian market.

‘Chicken wars’

The battle for market share is increasingly being fought around specific eating occasions, RaboResearch says. “Chicken-led menus, cold beverages, snacking and breakfast are key growth battlegrounds, supported by menu innovation and targeted promotions,” the report says.

In Australia, Mr Harvey said, QSRs have reignited new “chicken wars” as they expand their chicken menu offerings as healthier and more affordable options. “Premium 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,” he said.

For Australian primary producers and food manufacturers, Mr Harvey said, the outlook is nuanced but constructive. “Foodservice continues to offer attractive, selective growth opportunities, but the sector is becoming more concentrated, more competitive and more operationally demanding.”

“Winning 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,” he said.

This press release has also been published on VRITIMES