As a leading food and drink agency, the eating out market is our bread and butter (so to speak) which is why we are MCA Insight’s Forum members. One of the benefits of membership is access to their regular debriefs ensuring we are completely up to date on market trends and dynamics, so here are our top ten take-outs from the latest on the eating out market from MCA:
1) With Brexit looming consumer confidence is at an all-time low of -14, despite wage growth at 3.4%, Asda Income Tracker up £11 and food inflation easing at 1.5%. This is also reflected amongst key decision makers in the eating out market with 76% viewing trading as challenging. Despite these tough times there are pockets of growth, specifically food to go, coffee shops and delivery – which appeal to cost conscious consumers.
2) Overall total eating out visits are down by 0.9% to 9.5bn and participation is at its lowest level in four years at 92.2%, due to low consumer confidence linked to Brexit uncertainty. Out of home market value growth is expected to be around 1.8% for 2019 and 2020 subject to an orderly Brexit (although anything less than 2% implies negative underlying volume growth with visit frequency under pressure). This limited growth is set to be driven by lower ticket channels including contemporary fast food and street food, delivery and food to go.
3) Breakfast is the winning day part and the only one not in decline, with 17% of eating out breakfast occasions being work-led by time poor workers. The biggest frequency drop is at lunch. Snacking has seen a drop in visit frequency -1.4% and average spend down -2.4% with consumers looking for food quality and taste as their top driver at 33% – the highest ever, which is also the top driver across all day parts. While the no. 1 mission for snacking is a treat.
4) Coffee shops are the top channel for breakfast accounting for a 28% share of breakfast (and are 2nd for snacking and 3rd for lunch). 44.2% of breakfasts are food to go occasions, up 1.8%. Lunch is more social led with less routine visits as consumers bring food in from home in a driver to be healthier and save money.
5) Promotions are up across all day parts led predominately via apps and in the case of coffee sustainability, incentives like Costa’s clever cup.
6) Looking to the future, consumers are pessimistic about how often they will eat out next year. The picture with 18-24-year olds is brighter however with this demographic feeling more positive about eating out in 2019. An orderly Brexit is likely to see participation and frequency set to decline at a slower pace while average spend increases. While a no deal Brexit will lead to considerable issues and possibly even recession!
7) Healthier eating has been a mega trend for some time now with 87% of UK adults saying the healthiness of their food is important to them. However, healthy means different things to different age groups with under 35s driving the vegan/veggie shift and tending to be motivated by lower calorie counts to aid weight loss for holidays/social media. Over 35s are looking to reduce sugar (along with salt for over 65s) they are concerned with aging and weight loss. Over 55s are motivated by health concerns and government advice. Eating more vegetables is top of the agenda for 2019, as well as 31% looking to eat more fruit. So as far as key take-outs, your health claims should be tailored to your audience and veggie / vegan options are now an essential with 16% considering becoming veggie or vegan in the future (although those looking to reduce their meat in-take seem to have peaked – so perhaps those who want to already have).
9) Leading casual dining brands are set to see an outlet decline of -0.1% in 2019, following a decline of -0.3% in the previous period. Although the big three dominate the fast food market, contemporary fast food concepts are leading growth with variations in model, strong value and speed credentials. Branded restaurant and pub/bar restaurant segments are under pressure in the current market. However, casual dining operators like Rosa’s Thai, Loungers and German Donna are notable success stories.
10) What do out of home operators need do to thrive in these challenging times? Well according to the business leaders interviewed for the conference, being nimble, customer-centric, sustainable and putting care and decency at the heart of what we do will be key. As well as customer service excellence and greater scrutiny on cost control and pricing.
So not a great picture in the current economic climate, but there are certainly some key areas worth focusing on and some useful take-outs for brands and operators alike. Thank you to MCA for another informative morning. We look forward to the next one!