Leading analyst Douglas Jack of Numis Securities says he expects eating out to continue to grow in value with volumes remaining flat, but that the sector will experience a growing challenge from the value and convenience of supermarket ready-to-eat meals.
He says that drinking out volumes look set to continue to decline, but a change in the duty accelerator or an introduction of minimum pricing could slow the rate of decline, in his view.
Jack says: “The improved quality, value and convenience of supermarket ready-to-eat meals are a direct challenge to eating out. This off trade competition is only going to become stronger.
“Since 2000, the value of eating out has grown by 4.4% pa on average, but by just 0.4% pa in volume terms, below a 0.8% pa average increase in household disposable income (at constant prices) in that time. Growth in eating out has exceeded growth in eating in (up 3.4% pa since 2000), but the market remains highly competitive with supermarkets fighting back: in the six months to June 2012, the value of eating in grew 4.8% compared with 2.7% for eating out. This has resulted in out of home’s share of food spend falling to 36.7% from 37.4% in H2 2012.”
Jacks says that the growth in eating out is being helped by the increasing availability of value food in the on trade, a trend that is being supported by growth in the number of food pubs, quick service restaurants and coffee shops.
He says: “Drinking in (up 9.8% in H1 2012) is exceeding drinking out (up 2.2% in H1 2012) due to an increasing gap between on and off trade pricing, which has been exacerbated by high taxation and regulation in the on trade. The pace of regulatory change has slowed and campaigns relating to reducing the pricing gap are gaining momentum.”
