“Consumer are eating out more often but spending less per meal, they are increasing the numbers of visits they make but funding that by choosing cheaper food, which means that grab & go, which is cheaper than eating in, is benefiting, and that is where the growth is,” says managing director of Horizons Peter Backman.
The consultancy’s consumer survey showed that while the number of respondents eating out in the previous two weeks had risen from 67% in June 2013 to 71% in July 2014, average spend had dropped year on year from £13.30 to £12.72. And branded restaurants and casual dining are doing better than independent outlets.
According to Backman, “People go to a branded restaurant because they get certainty over what they are buying. They don’t need the same security for grab & go.” And eating out will continue to increase in the UK, as it’s becomes more of an everyday occurrence.
At the heart of the success of the food to go sector is the ability of businesses to listen to their customers. A reflection of this is more flexible opening hours, partly because customers no longer want to eat at prescribed meal times but also due to changing working patterns: people on the road earlier or working through the night. Where in 2006, McDonald’s had 26 UK restaurants that traded 24/7, mainly in city centres, and now has 575 out of 1,250.
Horizons’ list of fastest growing Ones to Watch brands is another insight into where the industry is going: the most active sector during 2014 was healthy, quick service shops (107 new outlets), with Fuel Juice Bars taking the No.1 slot and Abokado joint second.
Founder of the latter Mark Lilley puts its success down to a greater awareness of health issues among consumers and healthy eating will continue to dominate the sector.
McDonald’s has also responded to this, adding porridge (breakfast), salad and side orders of carrot sticks and fruit bags to menus. “We have reduced salt, fat and sugar to keep in line with consumers’ changing health requirements,” says COO Richard Forte.
But thanks to the success of the Great British Bake-off, healthy eating is punctuated with indulgence, which explains the rise in bakeries, whose services increasingly overlap with coffee houses. Japanese and Asian food is growing in popularity and that is only the tip of the riceburg; similarly, South American cuisine is on the up.
Innovation is key and the next big thing is ordering in advance, picking up in a fast lane rather than having to queue, according to trendwatching.com. Starbucks has announced such a service in the US via an app, as has Taco Bell, for food to be picked up in a drive-through.
Allowing consumers to share costs for products, services and experiences through use of real-time tools and data will follow, predicts trendwatching.com, including the ability to split bills on mobiles, tablets or smart watches.
Many outlets already use mobile technology to communicate deals, menu changes, etc. and this will increase, as will the number of apps, whose potential functions are almost limitless – where there are free tables, deals, child- or dog-friendly, under a certain price per head.
Payment by app is on McDonald’s’ radar, as is ordering in advance, possibly with the facility to identify customers as they walk through the door. Meanwhile, the company is trialling kiosks that allow them to order on a touchscreen, pay by contactless card and pick up at a dedicated area. “This plays to the convenience trend and is critical,” says Richard Forte. Next on the menu is testing mobile wireless charging with aircharge. “We are very excited about that,” he says.
For the high street, the challenges will be growth, managing growth and making sure they are not overpaying for the site. “There is not much food inflation, labour costs are OK but the cost of the site is running away,” says Peter Backman. Watch this space could not be better applied.
Paul Ettinger, co founder of Caffe Nero…
1. How much food price inflation am I expecting this year?
This year is going to be even more complex than usual so even after turning to my ‘bible’ for food purchasing , the Prestige Purchasing 2014 Food and Drink report I am still not sure that it is possible to predict what is going to happen. The main inflation drivers in 2015 as I see them are the rates of currency exchange, the potential deflation and consequent recession in the Euro zone and the price of oil. Currencies and oil prices are likely to continue to be very volatile and these will impact on food prices in a number of ways. We import 40% of our food and I think on the whole these effects will be advantageous for the UK. Similarly if the Eurozone does fall into recession and Monetary Easing fails to have an immediate impact we can expect lower demand for food and hence lower inflation or even deflation. My view is that these effects will all lead to very low food price inflation in 2015 however set against these is the increasingly volatile weather patterns which can have a dramatic impact on prices. Who am I to predict these! Within this overall pattern of low inflation I would expect Cocoa demand to continue to outstrip supply and hence expect my hot chocolate to cost more this year.
2. Will consumer confidence rise and will it translate into more eating out and visiting coffee shops?
I think consumer purchasing power will finally outstrip inflation this year and lead to greater consumer purchasing power and I would expect much of this to end up in the hospitality sector. In addition, the younger generation (by which I mean anyone under 30) continues to see eating out as a normal everyday leisure activity and the proportion of their disposable income given over to eating and drink out will continue to rise. My ‘kids’ (ages 20 – 24) credit card statements seem to consist entirely of eating out and fashion! I think the UK economy is well placed to continue to grow at a good pace this year and of course the coffee bar industry will forge relentlessly ahead as our coffee consumption grows to match the Nordic countries which are still way ahead of the UK.
3. What current eating/drinking out trends will grow in importance next year?
The whole Street food movement will continue to grow and have an impact on more mainstream concepts. So originality, freshness, simplicity and focus will be the buzzwords and the ‘old’ worlds of McDonalds and the ilk will continue to decline. Gluten and dairy free will continue to grow in importance and sugar will become increasingly demonised. The new food rules for schools will have a big impact and the ‘in-drink’ will be water. Finally we will be providing our children with a healthy diet.
4. What are the opportunities and the challenges for the lunchtime/grab and go market?
As we move to a post-bread (or at least mainstream sandwiches) era the opportunities to provide better balanced meals, smaller but higher quality portions and really good fresh snacks are unlimited. The challenges for an operation like Caffe Nero with over 550 stores in the UK are substantial but with an efficient supply chain, great kitchens working for us and use of our in-store ovens we think we can respond to the changing demands of our customers. Panini are still the mainstay of our lunchtime offer but we are definitely seeing a demand for a broader, lighter and more varied offer.
5. What will be the outcome of the May General Election?
The campaigns have started in the worst possible way and the mainstream party politicians seem to continue to believe that the British public are happy to listen to the partisan bluster, blame and outright bull peddled by their representatives. The quality of the debate is even worse than normal and as such they are leaving the field wide open for the minority parties to grow their vote so we are almost certainly heading for a parliament where the balance of power will be held by the Scottish Nationalists and Independence Party. Maybe a few years without any major legislation will be for the benefit of everybody as we come to realise that the politicians are far less important than they would like to believe.