This Arena Autumn event rang the changes, with a new venue in the shape of the imposing Banking Hall in the heart of the City of London. The line-up included a talk on the market from Simon Stenning of MCA and the headline interview hosted by Mark Lewis of Hospitality Action with Frank Gleeson, CEO and Regional President of Northern Europe Aramark and Jon Knight, CEO of Jamie Oliver Restaurant Group. With the day billed as ‘When contract catering meets the high street’ for obvious reasons, Simon took to the stage to take us through an overview of the eating out market and then onto the dynamics affecting the branded restaurant and contract catering world. Some of the key take-outs included:
• Consumer confidence is negative in these uncertain times of Brexit, which has led to a drop in frequency of visits and whilst spend may be up, this is driven by menu inflation caused by increased costs from exchange rate issues and increased inflation.
• Despite this the eating out market is set to grow at 1.5% which is above GDP, but with a drop in total outlet numbers.
• Food to go is of course hugely important to contract caterers and is out-performing the wider eating out market.
• Its success has been driven by convenience, value for money, healthy choices, hot food, sustainability and improved technology.
• Despite the headlines branded restaurants are predicted to grow by 3.7% this year, while independent restaurants shrink by 3% as they face the same challenges (business rates, National Living Wage, increased costs etc.) but independents are more exposed with less scale and resources to weather the head winds.
• The branded restaurant market is seeing a Darwinian survival of the fittest, with over supply and under demand weeding out the weak, as consumers become more discerning than ever. With headlines highlighting closures and sell-offs across big brands like Byron, Strada, Prezzo and Carluccios, as well as complete closures of CAU and Chimichanga.
• Looking back on previous MCA reports the signs have been there…2015 warned of increased competition from emerging brands, 2016 urged brands to contemporise to keep up with competition, and 2017 stressed that despite turbulent times restaurants could grow if only they improved their offer and differentiated to align themselves with consumer demand.
• Contract catering has seen negative underlying volume, but on the positive side employment levels are at a record high, our aging population is good for the healthcare sector and population growth in general is driving numbers in education. In addition UK tourism has seen an uplift from the weakened pound, which has been good for leisure and of course as consumers look to spend less often, partly-subsidised staff restaurants can become more attractive than the high street.
• On the down side, much like the rest of hospitality, recruitment is an issue in these days of Brexit concerns for EU workers, whilst in general more and more people are working remotely from home, there is more competition per se, the pace of food trends is breakneck and contract catered sites still have to overcome a negative perception as inferior to their high street counterparts.
• However, there are strong opportunities around delivering against special diets and food to go and contract catering certainly ticks the convenience box for those working on-site.
• Food to go is a hugely crowded market though with both foodservice and retailers continually innovating, although research has shown that their mission varies, with consumers choosing foodservice food to go for a treat, versus retail food to go as a more functional routine purchase. Equally those in B&I sites often will use getting lunch to get some fresh air, therefore preferring to venture off-site.
• There have been a number of interesting developments where contract catering has looked to cross-over with the high street e.g. Benugo WSH, CH&Co with Apostrophe and Elior with Vita Mojo etc. some more successful than others. But it is fair to say there is a hunger for innovation and to be able to tap into consumer demand for strong brands, which led us nicely onto the main interview of the day…
…Where we heard from Aramark and Jamie’s – two big names in their respective fields, who have come together to shake up the world of contract catering. It is fair to say that some proprietary brands created by contract caterers work well, others less so. It is a tough task to compete with high street brands who have built up loyalty over many years. You can certainly see why partnering with Jamie’s stable of restaurants including Jamie’s Italian, Diner, Deli and Pizzeria would appeal to Aramark (despite Jamie’s recent troubles and closures on the high street) and they seem to be leveraging Jamie’s brand and the weight his personality can bring, including personal messages from the man himself for tender presentations. However, it is fair to say that Jamie’s also see the benefits and teams from both sides have been learning from each other and looking to innovate in the contract catering space to drive sales in B&I and even look to bring in new customers into high street operations as a knock-on effect.
Both were at pains to stress that this was more than just badging up sites and that the ethos and principles that Jamie stands for remain true across the Aramark sites, from IP, branding and service standard to nutrition, sustainability and sourcing. Both parties are keen to ensure they implement innovation and remain agile to ensure they are relevant to their millennials and Gen Z consumers and even hinted at the possibility of developing a Jamie’s concept within the Aramark estate which could then possibly jump across into the High Street if the demand was there. With both parties keen to exploit technology to improve customer experience and with three new sites planned for a prestigious university, a business complex in London and one in Ireland things seem to be progressing well with both committed to the fact that in order to do good business it has to be good food.
Speaking of good food, with the interview at an end it was time to enjoy an excellent lunch prepared by the team at Banking Hall and catch-up with friends and contacts new and old. Well done to Lorraine and her team on another great event.