M&C Allegra UK Eating Out Quarterly Market Report – Top Take-outs
Now in its seventh year the M&C Allegra ‘Eating Out in the UK Report’ quarterly debrief offers a great snapshot of the out of home market. Usually the sole domain of subscribers, we were lucky enough to be invited along to hear what’s what in the out of home market, hot off the proverbial presses. Held at The Royal Society, a rather fitting location for such an academic study of the foodservice market, the findings were derived from both top down and bottom up research, with a few assumptions thrown in for good measure to deliver insight across the market.
With a cram-packed agenda interspersed with some musical interludes handpicked to match the subject matter (yes, it was a new one on me but was, I have to say, rather endearing) the morning session covered: an overview of the market and its size, the competitive landscape, consumer trends and their journey from pre, during and post all through to the future outlook of the market. There was a lot to take in, but with some furious note taking I managed to get some handy take-outs…
- The out of home market (including retail on the go) is valued at £85.3bn with around 329,683 outlets, with retail, travel and leisure making up £18.8bn and 98,443 outlets, hotels, pubs and restaurants making up £62.4bn and 168,430 outlets, and contract catering (both B&I and public sector) making up the remaining £4.1bn and 62,900 outlets.
- Market growth – Good news! Current turnover growth is a healthy 2.8%.
- Market drivers – Are the 5A’s – affordability of eating out, absorption of foodie culture, adaptability of operators, accessibility across the UK, availability of a range of cuisines.
- Consumer spend on eating out – is running at 38.8p in the pound, bouncing back from recession times when it dipped to 37.7p.
- Eating out expenditure & frequency – Frequency is up 5% driven by 18-34 year olds, but average spend is down 3% (again as millennials tend to spend less and visit lower end outlets), however participation is up 1% (and expected to rise further) which means average spend per head per month is up 1% and total spend it up 2%. In general Londoners and millennials over-index when it comes to eating out, but interestingly there is life outside London and 18-24s in the North are increasing spend. Indeed with rents through the roof in capital the regions are increasingly key to growth.
- What’s growing and what’s not? – Branded new fast food and street food is growing (although from a low base) and in general branded and managed operators in pub, bakery and hotel segments are seeing growth (with smaller agile millennial brands nipping at the heels of the bigger boys and the danger of brand fatigue ever present). London and the East Midlands is growing, as far as foodservice outlets, whilst independent restaurants and tenanted pubs feel the squeeze.
- What do consumer want? Well from the consumer panel research undertaken it seems what they ‘really really want’ (as the spice girls put it) is a treat! (Don’t we all!). Generation Y tend to choose where to eat based on cuisine type and use vouchers regularly, while older consumers go for convenience, and women are of course the decision makers! (No surprises there). As far as branded concepts go, millennials are open to experimentation and newer brand like Chicken Shop, Friska, Red’s True BBQ, Dishoom, Pizzabuzz and Thaikhun are certainly ones to watch.
- The eating out journey – Younger consumers will tend to view menus online to decide on where to eat out. Food quality is important, but other factors such as service rank just as highly, especially when it comes to repeat visits, whilst recommendations and online reviews are hugely important for all age groups – as no man is an island.
- The future – On the up side this is a market sector set to grow by over £9bn by 2018 (a rise of 48% on the previous 3 years!). Eating out activity is expected to rise, driven by generation X and Y and consumers termed as ‘pleasure seekers’. Food culture has gained cool status, whilst the current price-led issues in the grocery sector benefit the out of home operators. Plus, more landlords recognise the benefits of foodservice outlets. However, on the downside, how the national living wage will impact on profitability is not yet known. There are rising property costs in London and across the country. In some areas there is concern over market saturation, whilst as operators try to be everything to everyone there is a danger of them losing their identity and competitive edge. And, of course, the rise in home delivery choice and quality may adversely impact the eating out market.
- In a nutshell however, MC Allegra put it this way ‘Tune In – Millennial Movers Making Waves in Upbeat Eating Out Market’.
All in all it was a great event, informative and entertaining in parts, so little wonder it attracted the likes of Five Guys, Wagamama, Pizza Express, McDonalds and of course the great and the good from supplier side brands. But if you weren’t there and these snippets have peaked your interest you can find out more at www.mcallegra-fs.com