Volume 12 No. 5 August 2012 DETERMINANTS OF FAST FOOD CONSUMPTION IN KAMPALA, UGANDA. Jackline Bonabana-Wabbi. Sarah Ayo

Transcription

1 DETERMINANTS OF FAST FOOD CONSUMPTION IN KAMPALA, UGANDA Ayo SA, Bonabana-Wabb J * and D Sserunkuuma Jacklne Bonabana-Wabb Sarah Ayo * Correspondng author emal: jbexm@gmal.com Department of Agrbusness and Natural Resource Economcs, Makerere Unversty P.O. Box 706 Kampala, Uganda 6567

2 ABSTRACT Consumpton of fast-food n Uganda s becomng an ncreasngly mportant component of the food market as more of the workng class choose to dne out rather than prepare meals at home. Despte the mportance of the fast-food sector, lmted attempts have been made to study the consumpton and expendture behavour of consumers of fast-food n Uganda. The man objectve of ths study was to assess characterstcs nfluencng the consumpton of fast-food n Kampala dstrct. Specfcally, the objectves of the study were: to assess the factors nfluencng the probablty of consumng fast-food; and to determne the level of expendture on fastfood. Prmary data on soco-economc characterstcs were collected from a sample of 300 respondents usng a mult-stage samplng procedure. The study revealed that majorty (90%) of the respondents consumed fast-food. The consumpton of fast-food was most motvated by ther taste and convenence. Results from the Heckman model show that household sze, educaton level and dstance from work-place to restaurant negatvely nfluenced the probablty of fast-food consumpton and level of expendture on fast-food whle dsposable monthly ncome had a postve effect on the probablty of consumpton and level of expendture on fast-food. The hgh demand for fast-food s seen as an easy soluton to consumers busy schedules and lmted meal preparaton tme. As changng tastes and need for convenence become the goal of households, consumpton of fast-food wll be expected to rse especally n urban areas. T hs ncrease n fast-food consumpton, coupled wth rsng populaton and urbanzaton n Uganda offers new market opportuntes for agrbusness frms to explot the growng demand by nvestng n the fast-food sector and producng suffcently for ths market. In addton, fast-food establshments should ensure proxmty of ther products and servces to the consumers as convenence greatly nfluences fast-food consumpton. Future research should nclude dentfcaton of sources of agrcultural products used by fast-food outlets to provde nformaton about the contrbuton of the fast-food sector to agrcultural marketng and farmers lvelhoods n Uganda. Key words: Fast-food consumpton, Heckman model, Uganda 6568

3 INTRODUCTION Global food consumpton patterns have dramatcally changed n recent years. One common consumpton pattern that s shared by many countres s the ncreasng expendture on food away from home (FAFH). Ths s evdent n the growth of the FAFH market segment whch has become very popular n recent years [, ]. The fast-food outlets have, however, surpassed the full-servce restaurants as the man source of the FAFH [3]. Many scholars have attrbuted the growth n the FAFH market to a number of soco-economc/demographc factors such as ncome, age, urbanzaton, gender, household sze and composton, tme value, educaton level, dstance from restaurants to work place and occupaton, among others. For nstance, Ekelund and Watson [], Jekanowsk et al. [5], Stewart and Yen [6], Matthews [7] and Akbay et al. [8] all dentfed household ncome as an mportant determnant of household expendture on F AFH. Specfcally, Ekelund and Watson [] found that fast-food consumpton was emprcally related to opportunty cost of the household. Jekanowsk et al. [5] noted that the growth n FAFH was due to fast-food companes buldng more outlets closer to where people work. Fast-food, as defned n ths study s food that s readly avalable for consumpton wthn the premse (s) or to be carred away. Despte the growng concern on consumer health [9, 0, ], the fast-food ndustry n Uganda has grown n the past decade as evdenced by the emergence of multnatonal fast-food outlets lke Nandos, Domnos Pzza Inn and Steers and contnues to attract more propretors lke fast-food outlets n new shoppng malls/supermarkets especally n the urban settngs []. Wth a changng lfestyle and populaton growth n Kampala (estmated at.66 mllon n 00 md year from. mllon people n 00 [3] and the growng number of hgh value markets lke fast-food outlets and supermarkets, fast-food consumpton s expected to ncrease n urban areas []. Ths trend suggests that the success of exstng fast-food outlets and entry of more s nevtable. Thus, the ncreasng consumpton of fast-food and number of fast-food outlets calls for ncreased nvestment n the producton of both agrcultural products (raw materals used n the producton of fast-food products) and the fast-food products. Consumpton patterns keep changng thus affectng the avalablty and access to food through changes n agrcultural producton, procurement and dstrbuton systems [5]. Ths, however, requres knowledge of the behavour of consumers who eat away from home. Gven ths change n food consumpton patterns, there s need to assess the characterstcs underlyng the consumpton of fast-food as a means of nformng Agrbusness enterprses on how best to ganfully explot ths growng demand. The understandng of these factors (consumer characterstcs) wll be pertnent for proper assessment of the agrcultural product market opportuntes n Uganda. That s, by dentfyng characterstcs of consumers and fast-food products desred by the consumers of fast-food, agrbusness frms can desgn approprate programmes to promote the producton and dstrbuton of fast-food products to meet ths demand. In addton, the government can desgn approprate polces to promote the producton and dstrbuton of agrcultural products that can be used to make fast-food products. 6569

4 Whereas researchers outsde Uganda have studed factors affectng fast-food consumpton, few studes n Uganda have been done on fast-food and more so, factors nfluencng fast-food consumpton have not been studed. For nstance, Kayemba [] studed the growth and development of fast-food outlets n Kampala; Nakalung [6] studed the challenges of runnng fast-food servces n a vbrant food ndustry; Nambazra [7] studed the mportance of fast-food to the development of the Toursm ndustry; and Namawejje [8] studed the spatal dstrbuton and development of restaurants and takeaways n the provson of fast-food n Jnja town. Ths study on the determnants of fast-food consumpton n Kampala dstrct s the frst of ts knd n Uganda. The man objectve of ths study was to assess factors nfluencng the consumpton of fast-food n Kampala dstrct. The specfc objectves of the study were to assess the factors nfluencng the probablty of consumng fast-food; and to determne the level of expendture on fast-food. METHODOLOGY Study area, sample and data Kampala dstrct, the captal cty of Uganda s bordered by Wakso and Mukono dstrcts. It s dvded nto fve dvsons namely; Central, Nakawa, Kawempe, Makndye and Rubaga. Prmary data were collected from a sample of 300 respondents usng a mult-stage samplng procedure from three dvsons namely Central, Kawempe and Nakawa. Data collected through face-to-face ntervews by use of pretested questonnares ncluded respondents age, gender, occupaton, educaton level, ncome, tme spent away from home, dstance from work place to restaurant, household sze, martal status, types of fast-food and reasons for consumpton and non-consumpton of fast-food. Model Specfcaton and Estmaton The Heckman s two-step estmaton (Heckt) procedure was appled n ths study as suggested by Heckman [9, 0]. Step one s where the probt regresson was computed to gve the estmated probablty that a gven household partcpates n fastfood consumpton. Ths regresson was used to estmate the Inverse Mlls Rato (IMR) for each household, whch was then used n the second (expendture) regresson. The probt model used to study data wth bnomal dstrbutons s as follows: Assumng the decson to consume fast-food or not depends on unobserved utlty ndex I (latent varable) that s determned by explanatory varables x such that the larger the value of the ndex the greater the probablty of the household consumng fast-food. The ndex can be expressed as: I = x β, where x s a vector of exogenous varables. Let Y = f the household consumes fast-food and Y = 0 f t doesn t. Assume there s a threshold level of the ndex say; I such that f; I > I then the household consumes fast-food, otherwse t wll not. I lke I s not observable. However, assumng that t s normally dstrbuted wth the same mean and varance, the parameters of the ndex can be estmated as: 6570

5 ( = / x) = P( I I ) = P( Z x β ) P = P Y, thus P = F β... () ( x ) Where P P( Y = / x) varables x = s the probablty of partcpaton gven the explanatory Z s the standard normal varable and s normally dstrbuted as ~ N ( 0, σ ) F s the standard normal CDF (Cumulatve Dstrbuton Functon) Step two nvolved estmaton of expendture levels on fast-food expressed as: E( Y / Y > 0) = αw + f ( β x ) F( βx )... () Where E = Levels of expendture on fast-food n Uganda shllng (UG) α = vector of varable coeffcents to be estmated w = vector of ndependent varables f s the densty probablty functon and F s the cumulatve normal probablty dstrbuton functon. The rato f ( x ) F( β ) β s the IMR ( λ ). x The underlyng assumpton under the two-stage model s that the error terms of the two-equatons are jontly normally dstrbuted [9], and thus should be estmated wth some explanatory varables appearng only n the bnary response equaton (the probt) to mprove the dentfcaton of the model []. However, theory provdes no gudance as to whch explanatory varables are ncluded n the frst and second equatons, thus excluson restrctons were mposed [7]. In ths case the varables wth correlatons due to the spurous effect were dropped from the second equaton. In addton, the model s dentfed by the functonal form basng on a pror nformaton. Income squared was ncluded n the analyss to capture the possblty of a non-lnear relatonshp between ncome and expendture on fast-food. The probt (partcpaton) model estmated was specfed as: Y = β0 + β + β + β3 3 + β + β5 5 + β6 6 + β7 7 + β8 8 + β9 9 + e... (3) Where Y = Probablty of consumng fast-food (= fast-food consumpton and 0 = otherwse) β 0 = Intercept = Dsposable monthly ncome (UG) = Age (Years) 3 = Household sze (Number of famly members) = Educaton level (Years spent n school) 5 = Occupaton ( = Formally employed, 0 = Otherwse) 6 = Dstance from work place to restaurant (Klometres) 7 = Gender ( = Female, 0 = Male) 8 = Tme spent away from home (Hours) 9 = Martal status ( = Marred, 0 = Otherwse) β 9 = Coeffcents assocated wth the ndependent varables e = Error term 657

6 The expendture model was specfed as: E = α 0 + αw + α w + α 3w3 + α w + α 5w5 + α 6w6 + α λ λ + ε... () Where E = Level of expendture on fast-food (UG) α 0 w w w 3 w w w = Intercept = Dstance from work place to restaurant (Klometres) = Household sze (Number of famly members) = Educaton Level (Years spent n school) = Dsposable monthly ncome (UG) = Income squared (UG) = Gender ( = Female, 0 = Male) α = Coeffcents assocated wth the ndependent varables α λ = Coeffcent assocated wth the IMR ( λ ) ε = Error term λ = Inverse Mlls Rato calculated from the probt results of the frst step Usng data from consumers only, the Ordnary Least Square (OLS) model wth IMR ncluded as a regressor was estmated to determne the mpact of the ndependent varables on the level of fast-food expendture. Data analyss Prmary data was analyzed usng STATA statstcal package. Test for normalty was carred out to ensure that the varables were normally dstrbuted. The Heckman model was appled to analyze both the probabltes and levels of expendture on fastfood. Correlaton matrx (Table ) was generated and a p ath analyss carred out to demonstrate the effect of nteracton of varables. e 3 e 3 e Fgure : Path Analyss In the calculaton of path coeffcents (whch are equvalent to beta weghts) the varables and ther respectve error terms follow the standard normal dstrbuton E and s uncorrelated wth ts assumpton, hence each varable has a mean of ( ) 657

7 error term mplyng that ( ) E, e = 0. Where and e are varables- and ther respectve error terms. Takng an example of varable wth a structural equaton; = β + e. Multplyng both sdes of the structural equaton by gves the normal equaton = β + e. Multplyng the normal equaton by the expectatons ( E ) gves: E ( ) = β E( ) + E( e ) r = β x + 0 = β The equatons for the four varables are: r = β. = P = 0.5 (see correlaton matrx, Table ), where P s the path coeffcent (path to from ). Thus, the assocaton between (age) and (martal status) s causal. r s due to a sngle path that ndcates a drect effect. Followng the above procedure for 3 and : r3 = β 3 + β 3β = 0.5 ndcatng two causes of correlaton between and 3 e a drect effect of on 3 represented by β 3 and an ndrect effect of operatng through represented by β 3β. Smlarly; ) r3 = β 3β + β 3 = T he correlaton between and 3 s due to a drect effect of on 3 represented by β 3 and a spurous effect e correlaton due to a common cause represented by β 3β. ) r β + β r + β = β β β + β ( β + β ) = -7, The = 3r β sources of correlaton between and s due to a drect effect of on ( β ) and an ndrect effect of on represented by β β, ( β 3β 3 ) and β 3β 3β. ) r β r + β + β = β β + β + β β + β ) = -5, The = 3r3 3 ( 3 3β sources of correlaton between and s due to a drect effect of on ( β ), an ndrect (spurous) effect represented by β 3β 3, β β and β 3β 3β. v) r 3 = β r3 + β r3 + β 3 = β ( β 3 + β 3β ) + β ( β 3 + β 3β ) + β 3 = -, The sources of correlaton between 3 and s due to a spurous effect represented by β β 3, β β 3β, β β 3, β β 3β and the drect effect represented by β 3. Let,, 3, as dscussed above represent; () age, martal status, household sze and fast-food expendture respectvely as the frst set of varables. Followng the same procedure wth other sets of varables such as: ) Martal status, household sze, educaton and fast-food expendture, respectvely. ) Occupaton, educaton, ncome and fast-food expendture, respectvely. v) Tme, household sze, ncome and fast-food expendture, respectvely. Most of the correlatons n each of the varable set were due to the spurous effect of varable whch n ths case s age, martal status, occupaton and tme spent away from home, thus, were dropped from the second equaton. 6573

8 RESULTS Types of fast-food consumed Fgure shows the types of fast-food manly consumed by people n Kampala dstrct. These ncluded; chps, deep fred chcken, meat, fsh, sausages, chaps, pzzas, kebabs, lver, hot dogs, egg rolls, hamburgers, barbecue steaks, sandwches and ce cream. Results show that chps (9.%), deep fred chcken (.5%), sausages (.%), deep fred meat (0.%) and chaps (0.0%) were the man fast-food consumed. Type of Fast-food Percentage Fgure : Types of fast-food consumed n Kampala Dstrct Reasons for consumng fast-food The study revealed that 90% of the respondents ntervewed consumed fast-food compared to non-consumers (0%). Results n Table shows that people consumed fast-food for the followng reasons: tasty nature (3.5%), convenence (33.%), occasons/socal events (7.8%), chldren s preferences (7.3%) and exstence of fastfood n a wde varety (7.3%). 657

9 Factors nfluencng the probablty of consumng fast-food The results of the probt model explanng the decson to consume fast-food are presented n Table. Of the nne varables hypotheszed, fve were sgnfcant determnants of the probablty of consumng fast-food. These ncluded tme spent away from home, educaton level, dsposable monthly ncome, household sze and age. Occupaton, dstance from work place to restaurant, gender and martal status of respondents were not sgnfcant. The effect of tme spent away from home and dsposable monthly ncome on f ast-food consumpton was postve. Age, educaton level and household sze of the consumer were negatvely related to fast-food consumpton. Factors nfluencng the level of expendture on fast-food Results of the second step of the Heckman model (the expendture equaton) are presented n Table 3. Of the fve varables hypotheszed to nfluence expendture on fast-food, four were sgnfcant. These ncluded dstance from work place to restaurant, household sze, educaton level and dsposable monthly ncome. Gender of the respondent was not sgnfcant. Results show that dsposable monthly ncome and nverse mlls rato were postve and sgnfcant whle dstance from the work-place to the restaurant, educaton level, household sze and ncome squared had sgnfcant and negatve effects on fast-food expendture. The negatve effect of ncome squared mples that ncome has a nonlnear relatonshp wth fast-food expendture (Table 3). DISCUSSION Types and reasons for consumpton of fast-food The many types of fast-food consumed by people n Kampala dstrct suggest greater avalablty and choce of fast-food products whch may also nfluence ther consumpton [7]. The taste and convenent nature of fast-food domnated reasons for ther consumpton. On the other hand, some people consumed fast-food as a way of socalzng wth frends and famly members or durng socal gatherngs whle others dd so because of ther chldren s preferences [7, 8, ]. Factors nfluencng the probablty of consumng fast-food The sgnfcant effect of tme spent away from home mples that as people spend more hours away from home, they are more lkely to dne out on fast-food so as to save tme (Table ). An ncrease n tme spent away from home by one hour ncreases the lkelhood of consumpton of fast-food by 0.5%. These results are consstent wth those of other researchers [, 6,, 3] who reported a postve and sgnfcant effect of tme spent away from home on the partcpaton and expendture level of FAFH. Age sgnfcantly affects the consumpton of fast-food. An ncrease n consumer s age by one year would decrease the probablty of consumng fast-food by 0.%. Ths could be due to a hgh preference for healther foods as consumers grow older. These results tally wth those of other researchers [8,, ] who ndcated a negatve 6575

10 relatonshp between age of the consumer and fast-food consumpton. Thus, consumpton of fast-food declnes wth age. Fast-food consumpton sgnfcantly ncreases wth dsposable monthly ncome mplyng that those wth hgher ncomes are more lkely to consume fast-food than those wth lower ncomes. An ncrease n dsposable monthly ncome has been reported to encourage both consumpton and expendture on fast-food and FAFH n general [8, 3, 5]. On the other hand, the negatve and sgnfcant coeffcent for the educaton varable mples that an ncrease n consumer s educaton by one year reduces the consumpton of fast-food by 0.5% (Table ). Thus, those who are hghly educated are less lkely to consume fast-food because educaton ncreases ther knowledge of nutrton aspects of fast-food, lmtng ts consumpton and shftng to healther food optons. Ths s consstent wth Fannng et al. [] who showed that educated households are more health conscous and thus have lower consumpton of fast-food. On the contrary, other researchers [6, 8] found that educaton had a postve effect on fast-food consumpton behavour; that s, consumpton of fast-food ncreased wth ther educaton level. Consstent wth other studes [6, 8, ], household sze had a negatve effect on the consumpton of fast-food mplyng that the bgger the household sze the lower the probablty of consumng fast-food. Ths means that t s convenent and cheaper for smaller households of fewer people to consume fast-food compared to bgger households. Factors nfluencng the level of expendture on fast-food Dstance from the work-place to the restaurant had a negatve and sgnfcant nfluence on expendture on fast-food. Ths means that consumers wll spend less on consumpton of fast-food f restaurants are located far away from ther respectve work places. The reason s that consumers ncreasngly value tme and thus wll spend on fast-food from convenently located restaurants [6]. Consstent wth prevous studes [], educaton level of consumers had a negatve and sgnfcant effect on fast-food expendture mplyng that an ncrease n educaton level leads to a reducton n the level of expendture on fast-food. Thus, ndvduals wth hgher educaton level ( 5 years spent n school) spend less on consumpton of fast-food lkely because they understand the mportance of health [6] and are more lkely to obtan, process, nterpret, and apply knowledge that shapes nutrtonal or detng practces [7]. Household sze negatvely affects expendture on fast-food mplyng that an ncrease n household sze by one member reduces expendture on fast-food by UG,7 or USD 0.77 ( USD =,785 UG as on th September, 0). Ths s expected because t s more expensve to take a bgger household to a fast-food jont than eatng at home. The results further show that dsposable monthly ncome had a postve effect on fastfood expendture. As expected, ths mples that those wth hgher ncomes spend 6576

11 more on fast-food than those wth lower ncomes. Ths s consstent wth past studes [6, 8, 3, 5] that show trends n ncome as havng a postve and sgnfcant mpact on FAFH expendtures. The non-lnear relatonshp between ncome and expendture on fast-food mples that an ncrease n ncome ntally leads to an ncrease n fastfood expendture; however, beyond a threshold of UG 0,000, further ncrease n ncome leads to a reducton n fast-food expendture. The sgnfcant effect of the IMR on fast-food consumpton mples that an estmaton bas would have occurred had the fast-food expendture been estmated wthout the consderaton of the step-wse decson to consume fast-food. CONCLUSION The man objectve of ths study was to establsh the determnants of consumer partcpaton n the fast-food market n Kampala dstrct. Specfcally, the objectves of the study were: to assess the factors nfluencng the probablty of consumng fastfood; and to determne the level of expendture on fast-food. Results showed that chps, deep fred chcken, sausages, deep fred meat and chaps were the man fast-food consumed n Kampala dstrct. Taste and convenent characterstcs of fast-food were the man reasons for consumng them. Results from the Probt model showed that tme spent away from home, educaton level, dsposable monthly ncome, household sze and age of the respondent sgnfcantly affect the probablty of fast-food consumpton whle the expendture model results ndcated that dstance from work place to restaurant, educaton level, dsposable monthly ncome, and household sze sgnfcantly nfluence consumer expendture on fast-food. RECOMMENDATIONS The study revealed that there s a hgh demand for fast-food n an urban settng and ths offers market opportuntes for Agrbusness frms. They (agrbusness frms) should, therefore, nvest n the fast-food sector and produce suffcently for ths market. In addton, fast-food frms should ensure proxmty of ther products and servces to the consumers as convenence greatly nfluences fast-food consumpton. The study concentrated on s oco-economc/demographc determnants of the probablty of consumpton and expendture on fast-food by consumers, but t dd not study the sources of agrcultural products used n the preparaton of fast-food. Future research should, therefore, nclude dentfcaton of sources of agrcultural products used by fast-food outlets to provde nformaton about the contrbuton of the fastfood sector to agrcultural marketng and farmers lvelhoods n Uganda. 6577

12 Table : Reasons for consumng fast-food Reasons Frequency* Percentage (n=38) Tasty Convenent or tme savng Occasons/socal events Chldren's preferences Wde varety *Multple responses Table : Probt model estmates of the determnants of fast-food consumpton Varable dy/dx Z ρ-value Occupaton Dstance from work place to restaurant Tme spent away from home * Educaton level * Dsposable monthly ncome * Gender Household sze * Age * Martal status *, Sgnfcant at 0% 6578

13 Table 3: OLS model estmates of the determnants of expendture on fast-food Varable Coeffcent Std. Err. t-value ρ-value Dstance from work * place to restaurant Household sze * Educaton level ** Gender Dsposable ncome *** Income *** Inverse mlls rato * *, **, *** Sgnfcant at 0%, 5% and % respectvely OLS Ordnary Least Squares Table : Correlaton Matrx Occup Age Dst MS Tme HH Educ Income Gend Occup.67** ** **.55**.39* Age.67**.08**.5** **.55** ** Dst MS.80**.5** ** ** Tme ** **.0 HH ** ** -.33** Educ.399**.55** Inc.5** ** Gend.39*.98**.03.0** ** Correlaton s sgnfcant at 0.0 level (-taled) * Correlaton s sgnfcant at 0.05 level (-taled) Occup, Dst, MS, HH, Educ, Inc and Gend represent respondent s occupaton, dstance from restaurant to work place, martal status, household sze, educaton level, monthly dsposable ncome and gender, respectvely 6579

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