The results of Allegra Foodservice’s Top of Mind survey of senior industry executives has revealed the key challenges for the eating and drinking out sector in 2015, from ensuring breakfast opportunities are maximised to meeting the increasing demands of customers. Simon Stenning, executive director of Allegra Foodservice, reveals some of the key findings from the research.
The 2015 eating out market will be “turbulent, tricky, but tremendous” – this is the key message from Allegra Foodservice’s Top of Mind report.
The annual Top of Mind survey, conducted among senior industry executives, found 73% were excited about the eating-out market in 2015, compared to 14% who were cautious.
The most important long-term key trend from the report was identified as being ‘convenience’, with 43% of senior executives saying it was likely to be the most important factor. This was followed by ‘eating on the move and a more mobile lifestyle’, which 35% thought was the most significant long-term trend.
Allegra’s latest analysis of the UK out-of-home market showed that total revenue growth for 2014 was 2.7%, down from a previous forecast of 2.8% due to a slight drop of consumers’ eating-out spend in Q4. Consumer insight from the eating-out panel from Q4 showed a 4% increase in participation and the average number of meals eaten out per month increasing up to 9.2 per average consumer, but spend decreasing by £9.25.
Participation levels at lunch were seen to be higher than at any quarter since early 2012 and have now become the most important part of the day, highlighting the importance of convenience and food on the move. With breakfast also increasing in frequency, both parts of the day are now on par with frequency of eating dinner out. Breakfast is becoming a vital opportunity for operators and is highlighted in the rise of all-day dining. As a result, operators are looking to open earlier to provide consumers with more choice and to make sure that their premises are earning their keep.
Despite this, Allegra’s report also analysed the macro-economic situation and notes that consumers are still cautious and their confidence actually decreased in December. This was reflected in the amounts spent while eating out, because the average spend across all visits was £9.25, down by 13% year-on-year. So, consumers are careful with their spending and are continually in search of an experience delivering greater value as a legacy from the recession.
This trend is highlighted with the continued growth of branded operators expanding their estates and taking market share at the expense of independents. As consumers seek greater value they are placing their trust and their hard-earned money in a branded experience. Analysis from Allegra’s Restaurant Brand Portal forecasts considerable physical growth in branded outlets by those c130 operators profiled on the portal. More than 800 outlets are expected to be added during the year, up from 625 last year, which has increased to c16 new openings each week. While Subway leads the way, and is set to add an impressive c230 new sites this year in the UK, it is brands like all-day dining concept Bill’s, which is set to grow by 36% and open c24 sites this year, and Five Guys, which is set to open c18 sites this year, where significant growth is being seen.
Allegra’s forecast for the UK eating-out market for 2015 is growth of 2.9%, although this is going to be hard fought for, which some of the points above have shown.
Consumer confidence still needs to increase, and the macro-economic situation needs to continue improving, but hopefully 2015 will see wage inflation, which will provide consumers with more money in their pockets, in conjunction with the decrease in inflation.
Allegra’s description of “turbulent” for the year ahead incorporates this wider picture, and the description of “tricky” is drawn from consumers’ need for greater value coupled with the need for improved experiences; they want more for less. While the message from Allegra’s UK Restaurant Market report of ‘premiumised informality, driven by food pleasure seekers’ still holds firm, there is pressure on operators not to increase menu pricing too far as consumers still seek value. The art is encouraging consumers to spend more through delivering real food experiences.
A further point from the Top of Mind survey that confirms this perspective is that ‘discount-driven consumers’ are seen as the biggest challenge that the industry faces, rising up to first place this year, from fourth place last year. The Lidl and Aldi effect is rubbing off on the eating-out market.
If operators can get it right and meet these heightened consumer demands then the opportunity is tremendous because consumers will continue to eat out more often. The Top of Mind survey asks respondents to agree or disagree with the statement that consumers will eat out more frequently in five years’ time, and 2015 saw the greatest number of respondents – 81% – agreeing.
Brands will continue to take market share from independents, although the pub sector is forecast to show growth during the next three years through the independent and tenanted part, as they start to rise up again through improvements to their food offer, and through experienced operators taking more leases from pubcos.
If the offer is improved, more consumers will participate again in the pub sector because it is close to their hearts, both mentally and physically.
The major driver of growth for 2015 through to 2017 though, will be convenience, with coffee shops, cafés, sandwich chains and retail grab-and-go all outperforming the rest of the market.
Allegra’s forecast is for these sectors to grow by c6.0% on a compound-annualgrowth-rate (CAGR) basis.
