Food & Beverage

Fast food giants locked in battle for Brazilian market

Paulo Fridman | Bloomberg | Getty Images

Global fast food chains including McDonald's are locked in battle with Brazil's independent outlets and kiosks in the race to gain a foothold in the country's rapidly expanding fast food market, according to a report.

The Brazilian fast food market has seen rapid growth over the past five years with the sector set to hit sales of 50 billion Brazilian real ($21.7 billion) in 2013 -- up 82 percent since 2008 -- a report by Mintel shows.

A burgeoning middle class with disposable income has helped fuel the popularity of fast food with nearly one in 10 Brazilians eating in a fast food shop at least once a day.

"The main drivers for this are the expansion plans of big chains, breaking out of the developed South East and bringing more added value products to the emerging middle classes, particularly in regions such as the North East of the country," Jean Manuel Gonçalves, senior food analyst at Mintel said.

While McDonald's has the strongest foothold in the South American country out of all the fast food chains with 1,308 stores, there are around 386,000 independent stores, making expansion difficult for fast food giants, according to Mintel.

(Read more: Why Brazil's once-booming economy is losing its shine)

Gonçalves warns that chain stores face other big challenges.

"As well as a more challenging distribution chain, there are strong regional taste preferences especially for spicier flavours."

But fast food restaurants do have an edge, with 74 percent of Brazilian fast food users claiming their dining experience offers "good ambience" which kiosks and independent stores cannot emulate.

Despite a growing middle class, there is still a large number of poorer consumers in the Brazilian market, who are more likely to use their local street stall than a chain restaurant.

"The challenge remains for fast food restaurants to encourage new users from the lower economic groups through their door," the report said.

—By CNBC's Arjun Kharpal: Follow him on Twitter @ArjunKharpal