Despite some market hinderances, brands are an area of the restaurant market really starting to forge improvements, according to Lumina Intelligence senior insight manager Katie Gallagher.

Speaking at MCA’s Restaurant Conference yesterday (November 9), Gallagher explained that after some consolidation across the board, the growth in branded restaurants is allowing them to “punch above their weight in terms of market share.”

She noted that the total restaurant channel lost share throughout the pandemic, and it has been “a real battle” to regain this share since.

“The first market hindrance is the continued volatile confidence and finance of consumers and where they choose to prioritise spending”, she said.

Lumina data shows that to the end of Q3 this year, restaurant market penetration increased just 0.3ppts with under 1 in 10 consumers having a restaurant occasion at least once a week.

The total eating out market on the other hand has seen an uptake of about 7 ppts, with Coffee shops and QSR far and away the biggest channels, due to a perceived uplift in commuting and high availability alongside low ticket price point.

A weak consumer outlook, paired with double digit inflation, energy costs and rising staff costs has contributed to unviable trading conditions for many, Gallagher added.

The restaurant market is one of the biggest subsections of the eating out market, by space.

However, the pandemic exacerbated market closures, which started to worsen in 2019.

More positively, data shows site closures are gradually easing, led by “more cautious and considered expansion, and stabilising economic conditions.”

“Overall, the picture is positive for brands this year.”

Acquisition activity, strategic portfolio restructurings and franchising models in the restaurant segment have led to expansion of brands including Wagamama, Banana Tree, and Slim Chickens.

“The key driver of improved branded performance is those remaining operators being in much better shape, post closures”, she added, with many trimming the fat of their estates over the last few years.

“These stronger estates, paired with the high inflation that we are still seeing means we will expect to see the branded restaurant segment grow by 9% this year.

Brands are utilising pricing strategies, operational efficiencies to improve margins, said Gallagher.

Among mainstream chains, price increases have sat at about 27% year-on-year, and this includes operators introducing higher price new dishes, as well as increasing prices on current listings.

“Other menu mechanics include engineering of dishes that align with consumer trends and also offer high profit margins”, said Gallagher, as menu size also increases year-on-year.

“We are starting to see operators increase menu size, right back to where they were pre-covid”, she added.

Much of the growth in menu counts is coming from main dishes, with Prezzo, Pizza Hut and ASK Italian all recently expanding these options.

Operators have also been focusing price increases on soft drinks ranges.

With premium soft drinks important to increase spend, according to Gallagher, Lumina panel data shows that consumers are choosing to have less alcohol at restaurants this year.

Outside of mainstream menus, more contemporary operators are really looking to drive engagement through innovative areas and switch out of just the service led channel to more lucrative growth areas.

Gallagher notes key moves in the space, such as Honest Burger’s launch of QSR concept ‘Smashed’, which focuses on convenience, speed and value.