Australians’ preference for chain restaurants such as Fasta Pasta, La Porchetta and Hog’s Breath is waning, a recent report by market research company IBISWorld has found. 

According to its recently released Chain Restaurants in Australia market research report, the chain restaurants sector has entered a mature stage of its economic life cycle.

While its revenue is set to increase by an annualised 3.4 percent over the five years through 2013-14, the five years through 2018-19 will prove less positive.

“The outlook for the industry is not so bright with demand expected to flatten over the next five years. Industry revenue is forecast to grow at annualised 0.7 percent over the five years through 2018-19 to reach $399.5 million,” the report reads.

A number of factors are expected to contribute to the sector’s predicted decline, including people’s preference for more upmarket dining options.

According to the report: “More food-savvy diners are likely to look at menus and peer-review sites rather than rely on the reputation of a certain chains, which will lead to industry players needing to differentiate themselves with their menus and build strong reputations.”

Competition from the fast food sector will also play a part – IBISWorld predicts there will be higher demand from fast food services in 2013-14.

On the other hand, Australians are expected to become more health conscious in 2013-14, which will see them opt for chain restaurants over their fast food counterparts.

Chain restaurants operate in line with a hybrid business model – they aren’t a fast food chain yet are unlike a traditional restaurant. They are typically aligned with a particular cuisine, such as Italian or Mexican and their menus are homogenous across multiple outlets.

According to the report, this business model means the sector caters to a “niche market”.

“Since chain restaurants aim at servicing a niche market, their success depends strongly on their proximity to key customers. As a result, most chain restaurants are located in suburban areas around major capital cities,” the report reads.

Unfortunately for restaurant chains, many Australians are opting for inner-city living, which means their customer base is on the decline.

“Trends towards higher density, inner-city living will also play a role, since chain restaurants aim at servicing populations living in suburban areas. Industry revenue is forecast to grow by 2.8 percent in 2014-15.”