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What’s on the Horizon

Posted on 2nd May 2013 in Industry News
Written by: Susan Bolam

For those of you who weren’t fortunate enough to be invited, or just didn’t fancy an early start this morning, here’s the edited highlights from today’s Horizons Annual Briefing – ‘Success in Challenging Times’…

The Economic Outlook from Chris Watling of Long View Economics

  • Slow recovery but the worst years are behind us! (yay!)
    Currently the UK is trying to deleverage and in order to do so we need to: deflate the housing bubble, deleverage household debt, sort the financial sector and consolidate our fiscal position (not much then!).
  • We also need to ensure we print just the right amount of money to avoid ‘ugly deflationary deleveraging’ or equally ‘hyper inflation’, aiming to hit ‘beautiful deleveraging’ the holy grail! (terms referenced from Ray Dalio of Bridgewater). In Chris’ opinion we are nearly there but erring towards the hyper inflation side.
  • At the moment we are making slow progress on closing the deficit gap with £620bil spend and £550bil revenue, leaving a £70bil gap.
  • The good news is that things are picking up a little and the rebalance is happening, with modest cyclical improvements. Indeed, manufacturing employment is the best it has been for 30 years, the private sector are creating jobs, ¾ of the job cuts in the public sector now complete, car sales are increasing, consumer credit is ‘perkier’ and household spare cash-flow is in grow by 1% – so things are looking up!
  • There’s likely to be 4-5 more challenging years, but the European economy should grow in the second half of this year (which will help) and interest rates are not likely to go up in the short term.
  • All-in-all it’s not all roses, but much like British Rail once said – we’re getting there!

The Foodservice/Hospitality Market from Peter Backman of Horizons

  • Over the last year food and bev sales accounted for £44.1bil with 2.1% nominal growth, which when adjusted for inflation sadly works out at a nominal decline in growth.
  • The future is likely to hold slow growth and we may take a long time to return to pre-recession levels.
  • Consumers are not confident, but confidence levels are improving at least.
  • Over the last year 6.7bil meals were served (66% by group operators).
  • Workplace meals are declining, but contract caterers are diversifying to minimise the impact of the downturn in catering revenues.
  • In the route to market, as far as temperature split is concerned fresh continues to grow (with ambient, chilled and frozen declining) reflecting the demand of outlets which are currently driving the market. Whilst delivered and contract distribution is growing, but other retail and cash and carry is in decline.
  • Horizons ‘Voucher Tracker’ programme has identified that operators are still discounting, but they are using vouchers more tactically to drive slower day parts and target specific demographics.
  • Despite the slight increase in menu prices seen recently margin is still being squeezed, which weakens operators.
  • Day part opportunities are focused on snacking (outside of standard meal-time hours), lunch and breakfast, with dinner declining.
  • The big issues for 2013 are securing the right location, focusing on day part opportunities/the right consumers (who spend), ensuring operators meet consumers expectations of quality, convenience and lifestyle, protecting margin, menu engineering, creative pricing and the use of technology.
  • Importantly it will be difficult to compare this year with 2012 due to the unique events of last year (Olympics, Jubilee) and the terrible weather! (Here’s hoping we’re in for a hot summer eh!)
  • Losers for 2013: those financially stretched, zombie companies, those dependent on the public sector, those unprepared, and those failing to offer value for money. Specifically the sectors that will face the most challenges will be healthcare and education.
  • Winners for 2013: Tesco with its purchase of Harris and Hoole, Giraffe and Euphorium and of course Ed’s Easy Diner, which has a great brand, great offer and can do it all often for less than £10! As for what will make a winner…focus on value, being financially sound, flexible and able to react quickly are all key. Specifically those in the casual dining, coffee shops, pub restaurants and managed food led pubs are all likely to do best in the current climate.

Menus and Trends from Emma Reed of Horizons.

  • The average price of dishes is rising slightly as operator confidence increases, however this is focused in the south and is matched with an increase in meal deals. Thereby tactically raising prices whilst still offering value for money through the deals.
  • As far as innovation and trends, well there’s premiumisation (which has been around for a while), British revival (with a modern twist), Mexican (which seems to have been heralded as the next big thing for a while now), sharing concepts (extending to desserts as well as savoury), world cuisine (reflecting our multi-cultural society) and provenance.
  • Interestingly enough homemade, local and free-range are on the up, whilst organic and fair-trade seem to be declining in importance and prevalence.

New Operator Concepts from Nicola Knight of Horizons

  • Ones to watch (with 5-25 sites and growing at 20% over 3 years) include: Chipotle Mexican Grill, Bill’s, Moodog, Ed’s Easy Diner, Go Pizza and Miss Ellie’s Coffee and Subs.
  • Highest ranking for new openings include: Pod, Auntie Annie’s, Brasserie Blanc, Bill’s, Ed’s Easy Diner and Harris Hoole. · New operator trends to watch out for are: coffee shops, juice bars and artisan bakeries / deli’s.
  • Key operator trends include: health, Mexican (again), Italian casual, street food, pop-ups, gourmet fast food, entertainment food concepts and successfully locating at travel and shopping hubs.
  • It seems diffusion brands are not just for clothes these days either. Having a fast and flexible diffusion brand to build on the core brand values and offer has worked incredibly well for Wildwood Kitchen, Ed’s Outside and Giraffe Stop. Flexible and quick to implement, they are becoming increasingly popular with restaurants also opening up pop-ups such as Wahaca on the Southbank.

In a Nutshell from Peter!

When asked why the foodservice market hasn’t collapsed Peter had these sage words – ‘Hope Springs Eternal!’ and he’s right as one operator is swiftly replaced by another convinced they can make things work and continuing the momentum in the market on a micro-scale. Equally Jan Matthews asserted that, quite simply, however bad the economy and our finances people will always want to eat-out and enjoy themselves – a sentiment I’m sure we can all agree with.

But in summary, although we are indeed in ‘Challenging Times’ and recovery may be slow, there is a light at the end of the tunnel, which is in sight. There are still opportunities for success if operators and suppliers can look to the future and secure the bottom line. Sound advice from a man who knows a thing or two about this market. Indeed our current recession was accurately predicted by Horizons back in 2005, so ignore Peter’s words and forecasts at your peril! But joking aside, as always it was a great event and full of interesting facts and insights. So well done to Peter and the team! To find out more about Horizons visit

Jellybean Creative is a leading food service public relations agency. We help top brands with foodservice pr, foodservice marketing, digital and design. If you feel we could help you with your marcomms, strategy, public relations, creative or digital then drop us a line today.