Where is the next saturation point?

With the number of food to go outlets in the UK set to reach almost 150,000 this year, is the segment approaching a saturation point? And if so, what can the channel learn from the oversupply issues faced by the pub sector and, more recently, casual dining? James Wallin discusses with leading operators, as well as with MCA’s contributing editor, Peter Martin

MCA’s Food To Go Conference last week celebrated one of the most vibrant and rapidly evolving segments of the eating out market.

The data from the latest Food To Go Report paints a picture of a robust channel, with turnover growth of 3% expected this year and outlet numbers set to climb 1.4%.

Yet the question hung in the air throughout the day – is the food to go market reaching saturation point? Taking the topic one step further, if this point is on the horizon, what can food to go learn from the oversupply issues faced by the pub sector and, more recently, casual dining?

Over the past five years alone, 12,000 new food to go outlets have entered the market, reacting to shifting eating habits and increasing demand for quality food, served quickly and on the go.

By the end of this year there are predicted to be c149,000 food to go outlets, with six out of the top 10 brands growing, bringing over 400 net new sites into the mix. Clearly competitive pressures are not set to ease any time soon. The parallels with the casual dining boom are hard to ignore, but is food to go heading in the same direction?

Opinions at the Food To Go Conference varied. For EAT’s Andrew Walker, that point has already arrived, driven both by established chains pushing their rollout plans but also by a new breed of contemporary operators jostling for space on the high street.

However, other speakers pointed out that talk of a saturation point overlooked the breadth and diversity of food to go, often forming just one part of a wider consumer offer. Travel hubs alone offer a wealth of opportunities for the best brands to flourish further.

Jill Livesey, managing director of MCA and HIM Insight said: “The rate of outlet growth we’re seeing at the moment is still phenomenal but it’s certainly fair to say we are at saturation point in certain areas, and these tend to be urban locations, particularly the major city centres. But a major strength of food to go is how it can adapt to different formats and different environments. As long as operators keep coming along who can do that then opportunities for growth will still exist.”

For Chopstix’s Jon Lake the key point is that established brands keep innovating from within, not simply chasing growth for the sake of it.

He said: “It’s about retaining a level of fitness in the business. A focus on what you’re about and listening appropriately to external factors but also looking at opportunities within your business.”

Perhaps then, the better parallel is with the pub sector, which over the past 20 years has met the challenges facing it head on and invested in re-shaping its offer to modern consumers with a focus on service, atmosphere and a broader food offer.

MCA’s contributing editor Peter Martin said: “On a broad level there is definitely a sense that we have reached peak food. It was the driving force for the managed pub sector but the growth is now largely wet-led. That’s not to say it isn’t still an important part of the mix but that rapid growth we saw for many years has certainly levelled off.

“In food to go I still see plenty more opportunities for growth. It’s a market with so many different types of offers and operators of different scales.

“Even if you look at a single operator like Greggs – the evolution of that company shows you everything about the different directions food to go can take.

“Ultimately markets need competition and so it’s no-one’s interest for growth to stall. The innovation comes from new players entering the market and forcing more established brands to evolve to keep up. The lessons that can be learnt from casual dining are for those leading brands to remain fresh. There’s plenty of evidence that is happening.”

Not fast enough though for YO! Sushi chief executive Richard Hodgson, who told the conference: “We should probably be a little bit ashamed that when people are asked what brands they admire, they are still saying Pret A Manger. I remember saying the same thing 20 years ago.

“There are some great operators out there but why haven’t we created something else to really take on Pret?

“We all know it’s about service, great quality, the environment but I don’t want us to be sitting here in another 20 years still talking about Pret as the standout brand.”