Arena’s Christmas lunch event is always a key date in the diary and never more so than this year with Horizons presenting their seasonal digest and Luke Johnson as guest speaker. As the leading foodservice agency we pride ourselves on keeping up to date with the latest market trends and insight. Therefore we were there with pad at the ready (not to mention Twitter open) as Peter Backman ran us through the highs and lows of the past year, as well as what might be on the horizon (excuse the pun).
So what’s been going on OOH, for those who missed out here are a few key takeouts from the day:
– Overall the OOH market saw a decline of -1/1.5% but allowing for inflation this is around 1.5-2% nominal growth.
– 2012 OOH sales are likely to be around £43.5bil.
– Its been a ‘tentative’ year OOH with the Diamond Jubilee and Olympics taking centre stage as highlights in the calendar.
– The British weather however did nothing to help!
– Vouchers continued, but with much more savvy focused discounting.
– Food costs continued to rise, while prices remained sticky, putting pressure on margins for operators.
– Adding value and cost cutting offered a way to keep ahead.
– Delivered distribution has been growing, while cash and carry saw a decline.
– As far as temperature distribution, fresh is growing mainly due to the fact that this is where most added value can be gained and it’s what consumers have come to expect.
– There have been a fair share of failures in the distribution sector DBC, Waverley and Makro to name a few and they are not alone as operators such as Barracuda also faced difficult times and re-structuring/branding.
– Business models have had to be re-evaluated in the light of pressured margins, fickle customers and less government spending in the era of recession.
– Operators are heading to high footfall areas over the traditional high street, with shopping centres and travel hubs proving a mecca, whilst street food and pub food continued to grow in influence.
– With a rough guide for pubs dining at around <£20 per meal and restaurants £10-20 there has been a trend for pubs to move into the restaurant market at the same time as premium QSRs move up into this space as well. A fact that which may store up issues for the next few years as operators fight for the fast casual £10-20 meal occasion worth £4.6bil. After all, casual dining accounts for <15% of the total market and 8% of food purchased, so there seems to be a disproportionate focus on this sector with a large number of new entrants and a growing list of ‘ones to watch.
– Peter sees a tipping point in the future where operators start to pay too much for sites they want and that’s when trouble may hit.
– His colleague then took us through consumer insights OOH…
– The good news is >70% continue to eat out despite the recessions indicating that is habitual
– The average meal spend is £12.30
– 80% of meas are in the QSR and restaurant sector
– Consumers are eating out for the ‘experience’ with food numbering amongst atmosphere, service, convenience etc.
– Home delivery and online operators are doing well
– Health aware consumers are catered for with calories on menus, whist ethical issues are coming through in a number of ways including sourcing and accreditations.
– After years of it being heralded as the untapped day part, breakfast is growing at 13.6%! worth £3.2bil and accounting for 7% of the market.
– Lunch equally is growing, if at a slightly less impressive 3.3%, but is worth £14.9bil and accounts for 35% of the total market, so is not to be sniffed at.
– The type of offer that consumers choose varies depending on a number of factors – general/environmental, life stage, time of day and money in their pocket.
– As far as price brackets they can be generalised as QSR <£5, Fast casual £5-10, Casual £10-20 and Fine Dining £20+
– Menurama shows that prices are edging slightly up with old favourites such as Beef Burger, Pizza and Chicken Burger still occupying the top spots. But that’s not to say that there isn’t huge choice and varied international cuisine available.
– Sharing, sliders and co-production/personalisation (where you help create the dish) are on the up, as is general menu innovation and the importance of smartphone menu browsing and booking.
– As far as the wider picture over the last 10 years the OOH market has grown at on average 0.6%per annum and based on this, in Peter’s view, any future growth OOH will be less than 2%. London as ever is it’s own world!
– Comparisons between 2012 and 2013 will be difficult due to the unique factors of 2012.
The way to succeed? Sell service and experience.
– What should we plan for? – Instability – is the realistic if slightly worrying answer.
– How can operators succeed? Get as much as possible from budgets, spread your fixed costs by extending service into more day parts, use space wisely and make it work for you (back and front of house), train well and get the best out of staff, up-sell customers, extend your brand where the opportunities are (street food, retail, concessions- whatever it may be).
– In summary for 2013…beware the weather, manage costs & raise standards! Easy!
After a networking interlude where foodservice professionals caught up on the gossip and met new and old friends, we move though to enjoy a fabulous lunch from the team at the Mandarin Oriental (wonderful as always). This was followed by the key speaker for the day Luke Johnson (Founder and Chairman of Risk Capital Partners) who has managed to fit into his 32 years in the industry more than pretty much anyone I can think of. A spritely 50, he urged the industry to look to the young in their organisations to ensure they stay ahead, referencing his ‘young-board’ which acts as a sounding board of young advisors to the main board, specifically to ensure they remain in-touch and in-tune with the younger generation. The old guard of foodservice will only go on for so long and as the world we operate in moves at breakneck pace, powered in the main by technology, its the young who can navigate these tricky waters.
He also feels passionately about reducing the rate of VAT for the industry, helping to make it more competitive and to even the playing field against the power of the supermarkets, who don’t pay VAT on their food sales. He looked not only to the government but also to landlords, rightly stating that any operator is by default playing in the property game and as such landlords can be a huge factor in the success of a business. The need for fairer lease agreements and flexibility is apparent across the industry and is something he has had first hand experience of and feels strongly about.
What else did Luke has to say? Well, he’d rather see Google than Starbucks in the stalls for ‘tax management’ taking into account other revenue streams they provide to the UK such as national insurance etc. He would like to see less discounting (I’m sure he’s not alone there in the industry) and even as an ex-medic he’d prefer less ‘big brother’ regulations around food and more focus on individual responsibility.
From his early days organising parties at Oxford for his fellow students, to making Pizza Express what it is today and now the casual dining success story that is Giraffe (not to mention the hundreds of other projects including even a dentistry chain!) there’s not much Luke Johnson hasn’t seen in the foodservice world and it was both entertaining and enjoyable to hear about his journey through it. Little wonder the day was a sell-out! Congratulations of course go to Loraine and new chair Jan Matthews
– a great note to end the year on and doubtless the first of many great events as we head into 2013!
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