The UK’s branded market is to report turnover of £16.4bn in 2013, and is set for accelerated growth through physical expansion and positive like-for-like performance, including modest underlying volume growth, according to Allegra’s Project Restaurant 2013 report.
Allegra said that its forecast of five year 6.1% CAGR in the value of the branded restaurant market will mean that the sector will comfortably out-perform the wider hospitality and retail markets, and will attract growing interest from a wide spectrum of parties including food retailers, private equity, large corporates and contract caterers, all looking to invest in a robust, growing market.
It said that consumers’ eating out habits are, however, becoming less structured and more informal, and that a defining core capability that will influence the changing dynamic of the market is the capacity for restaurants to trade all day.
The report, which included results from over 22,000 consumers about their eating out habits and over 120 industry leaders about their expectations for the industry, showed that branded/managed pubs, forecast at £7.6bn turnover (for 2013) across 8,488 establishments with annual growth of 6.0% in sales and 3.1% in outlets, are well placed to benefit from this propensity to eat out informally throughout the day. It said that JD Wetherspoon will lead the way with differentiated, quality, value breakfast options.
Branded fast food, valued at £4.5billion turnover across 5,343 outlets, delivering annual growth of 5.7% in sales and 4.1% in outlets, is also in a strong position to benefit from all-day dining. Leading brand McDonald’s continues to go from strength to strength, not least due to its all-encompassing menu available all-day and, in many cases, through the night.
Branded full-service/casual restaurants are at a relative disadvantage. Growth in 2013 is robust with turnover of £4.3 billion across 3,896 establishments, representing annual growth of 6.3% in value and 3.7% in outlets. However, it will be harder to maintain growth and win consumer share as the market evolves.
The report said that the inability to successfully offer a fast, quality breakfast menu will hamstring many of the leading casual brands. Casual brands are already under pressure as their key day-parts, particularly lunch, face intense competition from the widening eating out market
It said: “Giraffe is one of a few good examples of branded casual restaurants catering to the all-day trend, influencing the strategic investment by Tesco. However, in a fragmented segment the branded casual chains must re-evaluate their offer in order to enhance relevance.”
It said that the low-cost street food market entry model is gathering momentum, encouraging fast growth and is poised to directly influence strong operators and challenge weaker small brands and independents.
Anya Marco, director of insight, Allegra Strategies said: “Eating out is the new normal for UK consumers. The ability to eat out at any time of day is leading to a change in day-part frequency as consumer visits at breakfast are growing, while lunch and dinner are under pressure. The slow economic growth is less impactful than feared, though consumers are employing various money saving tactics in order to maintain their eating out habits. The Pub Restaurants channel is the most frequently visited by UK consumers, and JD Wetherspoon’s is the nation’s favourite restaurant brand for the first time. Make no mistake, pub restaurants will become an increasing force to be reckoned with! ”
