While the overall restaurant market could struggle to rebound from the effects of the pandemic, there is better news for the branded restaurant sector, Katherine Prowse, Lumina Intelligence’s senior insight manager, told MCA’s Restaurant Conference this week.
Lumina Intelligence has forecast that the branded restaurant sector, which represents about a third of the total restaurant market, is “expected to exceed its 2019 value by 2022”. Branded restaurant growth contrasts with the larger independent sector which - despite public support for local businesses being one of the legacies of the pandemic - will likely continue to decline.
Valued at £5.9 billion in 2019, branded restaurants are anticipated to grow to £6.2 billion by 2022, in part, supported by outlet expansion. Looking ahead to 2024, the branded restaurant market is forecast to be almost 10% bigger compared to 2019, reaching £6.4 billion in sales, said Prowse.
Currently, rising costs and weakening consumer confidence represent a difficult backdrop for operators when competing for consumer spend, “despite restaurants having doubled their share of channel occasions since April,” Prowse said.
Prowse highlighted several tactics that could help maximise customer loyalty and spend, including greater use of technology such as digital menus, supporting local suppliers and community, as well as diversifying and developing omnichannel trading opportunities such as branded ready meals and meal kits.
Half of shoppers have bought some form of foodservice brand related product, she said, and over one in three would purchase a branded ready meal, branded product or an at home kit.
In addition, “restaurants should focus energy into staff development to distinguish on-site experiences from at-home occasions,” she said. With delivery still proving popular among consumers, and likely to grow during autumn and winter, a focus on experience will help drive spend and satisfaction and will help overcome the “real challenge for restaurants of tempting consumers out”.
Standardised and rigorous staff training has a positive direct impact on consumer spend, Prowse said, with friendly and confident staff able to make a significant difference to customer satisfaction, recommendation and spend. “Spend is +8.7% higher than the total average spend for those very satisfied with friendly service,” she said.
With a growing need for operators to keep costs under control Prowse highlighted some key trends around dish counts and food waste.
Chain restaurant dish counts remain almost a quarter below their levels in 2019 according to Lumina’s research, with a smaller menu allowing operators “to manage costs around ingredients more effectively, minimise the risk of a dish being unavailable due to availability problems, whilst also enabling a smaller team [of staff] to ensure quality and consistency”
Linked to rising sustainability concerns is the growing focus on food waste. Prowse mentioned that by using AI powered cameras, which helped identify the main product categories that were being thrown out, IKEA was able to reduce its food waste by 50%.
The other obvious way of managing costs is to increase prices, said Prowse. Chain restaurant food menu inflation reached 2.0% in Spring/Summer 2021, with inflation remaining in-line with CPI across the past two menu seasons, but it is expected that inflation will increase more considerably in the next season as VAT has now increased to 12.5%, with the figure planned to rise again in April 2022.
Menu price inflation is something that is often a concern for operators, but Prowse highlighted that 4 in 5 consumers are very satisfied with value for money when visiting restaurants, particularly if the in-restaurant experience is perceived as offering good value for money.
