With the total amount of foreign fast food outlets in China set to break the 50,000 mark this year – up from 48,477 in 2011 and 36,037 in 2006 – and 44% of Chinese consumers saying that they plan to spend more on fast food in the coming year, the potential for the sector is clear.

However it seems that there is further opportunity for operators wanting to tap into this lucrative market, as new research from Mintel reveals that breakfast is still the under penetrated day-part for foreign fast food outlets. Indeed, only one in five (21%) urban Chinese consumers eat at fast food restaurants in the morning (4am-11am) – as opposed to 75% during lunchtime.

Tan Heng Hong, Senior China Research Analyst at Mintel, comments: “Despite having the upper hand in quality, safety and service, foreign fast food still has much work to do in flavour, affordability, health and variety in order to compete more effectively against Chinese fast food, which has the largest share of the fast food sector. To increase consumption of foreign fast food, more has to be done to unlock opportunities in the breakfast market where usage is the lowest.”

Overall, it seems foreign fast food outlets still have a way to go to match their Chinese counterparts. Mintel’s research has found 86% of respondents have eaten at Chinese fast food restaurants compared to 68% at foreign fast food restaurants in the past year. However, inclusion of local menu items could help bridge this gap.

Mintel’s research finds nearly three quarters (76%) of consumers express an interest to see more fast food options with local flavours on the menu. When asked about what consumers would like to see more of at foreign or Chinese fast food restaurants, the majority of consumers selected the introduction of food with local flavours as their top pick (15%).

Tan Heng Hong continues: “Chinese fast food restaurants, which serve Chinese staples including rice and noodles, are more popular as they win on price, variety, nutrition and flavour. Hamburgers, pizza and Japanese noodle or rice dishes served by foreign fast food restaurants are less popular because they are perceived to be more expensive or less healthy, which makes foreign fast food an occasional indulgence, rather than an everyday purchase. It is clear that consumers demand local flavours on their menu and this can be applied to the breakfast day-part, especially with items that integrate well on the menu, like porridge. The challenge for foreign fast food chains is to come up with new innovative products that can meet the demand for a more localised taste.”

The market for foreign fast food inChinahas seen steady growth over the past five years as Chinese consumers have incorporated it ever more into their lives and culture.China’s foreign fast food sector grew at a compound annual growth rate (CAGR) of 19% from 2006-11 to reach a market value of RMB 75.1 billion or 11.8% of the overall fast food sector. And there is further good news for the market for foreign fast food in China, as Mintel forecasts the sector to increase to RMB 171 billion by 2017, growing by about 95% on the expected value for 2012 or a CAGR of 14.3%. Furthermore, the number of outlets, chained and independents, is expected to increase to 71,964 outlets by 2017, up 39% on the expected number for 2012.

The classic ‘full English’ fry up could soon be off the British breakfast menu due to cheap air travel and growing multi-culturalism in the UK. According to a new report conducted for Kellogg, a breakfast of muesli and bacon and eggs could soon be toast.

The future gazing report into breakfast and flavour trends predicts that in the next two decades British consumers will have ditched today’s breakfast classics and be sitting down to dishes such as savoury crab porridge, seaweed flakes, and a distinctly fishier cooked breakfast including sardines, fish fingers and potted herring. According to experts, breakfast will also be taken as seriously as dinner is today and become the main meal of the day with people sitting down to up to three courses in the next 10 to 15 years.

British tastes are also predicted to change thanks to a variety of influences such as low cost air travel making holidaymakers more adventurous and introducing flavours they want to replicate at home. Emigration and immigration will also have a major impact on the British palate with the main influences predicted to come from Poland, China, the Middle East and Scandinavia.

The greatest change, however, will see a move towards hot, spicy and savoury breakfast products. In China, this is the norm and it is predicted that cold winter mornings will soon be warmed with ‘crab porridge with seaweed’.

In the future Middle Eastern spices such as the brightly coloured Sumac and hot chillies will also be used to add flavour to foods – with people initially shaking them on to their cereals and resulting in Sumac or Fiery breakfast cereal products on shelves. An increasing focus on health will also drive new ‘superfood’ flavours and experts predict the next ‘superfood’ fad will be seaweed – with seaweed breakfast flakes a real possibility.

The report also reveals that Scandinavian influence will make fish a more popular breakfast choice and coupled with the need for a convenient and microwaveable cooked breakfast. Consequently, consumers will move away from traditional sausage, bacon and black pudding to products such as kedgeree, kippers, sardines, fish fingers, devilled kidneys and potted fish in their ‘full English’.

The Kellogg’s report was produced by an independent panel of food experts, top chefs and food stylists.

Finnish food group Raisio has acquired UK-based Big Bear Group for Eur95.3m (£82.0m) to further its growth strategy of becoming the leading provider of healthy snacks in Europe. In the financial year to the end of August 2010, Big Bear Group’s net sales were Eur65.1 m, EBITDA was Eur13.6m and EBIT was Eur12.1m. Nearly 70% of net sales are generated by breakfast and snack products and 30% by confectionery. The company employs some 250 people and has production in two locations in Leicester and in Southall, London.

Big Bear Group was founded in 2003 and it has acquired traditional, well-known brands in Britain. In breakfast category, the company owns the brands Honey Monster, Honey Waffles and Sugar Puffs, in snack bars Harvest Cheweee and Fox’s in confectionery. The product range includes breakfast cereal products mainly for the children’s category as well as healthy snack bars and cereal products with no artificial flavours or colours.

With the acquisition, Raisio will gain a stronger foothold in the branded snacks and breakfast markets in Great Britain and Western Europe. The deal will also strengthen the company’s position in the UK confectionery market. Great Britain becomes the largest market area for Raisio’s food business with Eur140-150m in annual net sales. Raisio is already present in the British snacks market with Glisten, which it acquired for Eur22.8m in 2010.

Matti Rihko, chief executive of Raisio.

“Big Bear complements extremely well the earlier acquisition of Glisten and brings the necessary critical mass for the future,” says Matti Rihko, chief executive of Raisio. He points out that Raisio’s growth is proceeding according to plan and that the company will continue to be an active player in the acquisition market. Big Bear Group will be integrated into Raisio’s Western European brand operations.

Big Bear Group was owned by the company’s senior management together with a group of institutional investors including specialist private bank Investec.

Investec has realised an Internal Rate of Return on its original investment of over 37%. Investec has supported Big Bear since its inception, backing its first acquisition in September 2003 of a non-core division from Northern Foods and the subsequent acquisition of the Sugar Puffs, the Honey Monster and other brands from Pepsico in 2005.

Investec backed a management team led by Paul Wilkinson, John Jackson (joint chairmen) and Mario Giannotta (chief executive) to build the business via acquisition and organic growth. Since the first acquisition, management has increased group EBITDA from £1m to £12m.