What’s changing in Australia’s foodservice industry?

Julia Illera, Research Manager at Euromonitor International, shares her insights.

With Australian consumers increasingly prioritising value, convenience, and local experiences, QSR brands are evolving their strategies to stay competitive. From budget-friendly menu additions to digital loyalty innovations, operators are refining their approach to retain customers in a rapidly changing market.

In this Q&A, Julia Illera, Research Manager at Euromonitor International, shares insights on the biggest industry shifts, key challenges, and where competition will be the fiercest in the coming months.

How has competition evolved in the QSR industry in Australia?

Illera: Amidst ongoing economic uncertainty, Australian consumers are prioritising convenience and affordability. Whilst dining out remains common, many are trading down, seeking better value for money.

There’s also been a rise in value-driven options. This behaviour has benefitted fast food restaurants and cafés, prompting many to implement more budget menu items to retain customers or to expand their menus to offer a broader range of affordable options.  For example, the breakfast segment has seen a revival with the emergence of smaller, sometimes healthier, alternatives to the traditional “Aussie Brekkie.”

The market also leans towards independent and locally owned businesses, particularly for Cafes and certain types of limited-service restaurants, as consumers increasingly value unique, artisanal experiences and personalised service over standardised chain formats.

With competition intensifying, attracting customers is no longer enough—brands must focus on keeping them. As digital engagement accelerates, loyalty programs are emerging as a key competitive tool, helping operators strengthen relationships and drive repeat business.

How have QSR brands responded to these competitive shifts? Could you share a standout example?

Illera: QSR brands have adapted by expanding their menus to include healthier and value-driven options whilst enhancing digital engagement. Mobile ordering, AI-driven personalisation, and loyalty programs are now critical to maintaining customer engagement and retention.

Loyalty strategies have also evolved. For example, McDonald’s has strengthened its loyalty efforts through strategic partnerships, such as its collaboration with the AFL to launch the first-ever AFL-themed Happy Meal, featuring exclusive collectibles that resonate with sports fans and families. This initiative not only enhances brand loyalty but also taps into cultural moments that drive repeat visits.

Meanwhile, Grill’d has taken a unique approach to digital loyalty, launching a private TikTok account called 'Club Grill’d', which offers exclusive deals and insider content for Gen Z and Gen Alpha. By gamifying loyalty and fostering an exclusive online community, Grill’d has seen a 200% increase in its TikTok following within a week, demonstrating the power of personalisation and digital engagement.

Meanwhile, Domino’s has been a leader in digital innovation, integrating seamless ordering, real-time tracking, and targeted loyalty programs. Its continued investment in these areas has not only preserved market share but also set new benchmarks for customer experience.

We are also seeing café chains like The Coffee Club focus on premiumisation, introducing specialty coffee blends such as "Three Stories Chapter" to attract discerning consumers and justify higher price points.

What key challenges should QSR brands be mindful of in the current landscape?

Illera: With consumers increasingly adopting a value-driven mindset, we’re seeing a decline in average order value, as many are skipping extras like side dishes and desserts. At the same time, outlets are under pressure to deliver quality at lower price points whilst facing elevated costs for ingredients, energy, and other operational inputs.

Price increases are inevitable, but they need to be justified through premium or value-added offerings. Labour shortages are another major challenge, particularly in skilled roles like baristas and waitstaff, and restrictive immigration policies have further reduced the availability of international workers, forcing some operators to scale back operating hours. Meanwhile, mid-tier brands are feeling the squeeze as full-service restaurants simplify menus and fast-food operators premiumise.

To stay competitive, they’ll need to find ways to differentiate—whether through unique loyalty programs or stronger customer retention strategies.

In which areas do you expect QSR brands to compete most intensely over the next 12 to 18 months?

Illera: Enhanced mobile apps, AI-driven personalisation, and smarter loyalty programs are becoming critical as customers now expect seamless, digital-first experiences that go beyond transactions—rewarding engagement and strengthening brand affinity. At the same time, consumer behavior is shifting from delivery to pick-up, creating pressure on brands to optimise logistics. Innovations like ghost kitchens and AI-powered demand forecasting will be key to improving efficiency and service speed.

Balancing affordability with quality will also be a major focus, with brands refining their offerings through healthier, sustainable, and value-driven menu options. Bundle deals and loyalty-based incentives are gaining traction, but with a growing preference for local and artisanal experiences, differentiation will come from customisation. Personalised rewards and next-generation loyalty programs will be essential in creating emotional connections and long-term customer engagement.

What is your outlook on the long-term future of the QSR industry in Australia?

Illera: Despite economic challenges, the long-term future of Australia’s QSR industry remains strong, but success will depend on how well brands adapt through technology, menu innovation, and customer personalisation. Loyalty programs, once optional, are now a core driver of business growth, requiring brands to move beyond traditional point-based models and integrate digital engagement to enhance brand affinity and customer experience.

At the same time, the market is seeing a dual trend—fast food operators are premiumising their offerings whilst full-service restaurants are simplifying menus to stay accessible, a shift that could further consolidate the industry and squeeze out mid-tier operators. Independent and locally owned venues continue to shape the market as Australian consumers increasingly seek unique, high-quality dining experiences.

AI-driven personalisation, smarter loyalty integration, and improved operational efficiencies through automation and predictive analytics will determine future market leaders, whilst government initiatives addressing labour shortages may create new growth opportunities. However, operators must carefully balance cost, quality, and convenience to remain competitive in an evolving consumer landscape.

Want to learn more? Find out at the upcoming The Future of QSR – Loyalty, Digitalisation, and Market Dynamics in 2025.

Register now!