The Future Foodservice report outlines the growth that it expects to see in 2025 and beyond. Simon Stenning, founder of Future Foodservice, says it may have ‘surprising outcomes’ as the report does not forecast a seismic collapse from the tax and cost increases in April.
It suggests growth will come from consumers having a greater ability to spend and from operators meeting their demands with new and exciting concepts. The report predicts contract catering to grow in 2025 by +4.1%, a higher rate than the rest of the foodservice market.
The report forecasts total market growth of +2.4% in 2025. This will take the eating & drinking out of home market (excluding accommodation) to a total valuation of £105.3bn, a £2.4bn increase on the size of the market at the end of 2024.
Stenning said: “The hospitality/foodservice industry continues to face enormous challenges with increasing costs of labour and higher costs of doing business. We have to be cautious with our positive message in this report, as we recognise that not all businesses will survive the challenging conditions.
“It is easy to point out the opportunities from being creative, innovative and from investing in new concepts, however there are many operators who struggle to see what the future looks like after April. What we forecast is that attracting consumers is the key to success, and that there will be many operators who do, and will continue to do so over the course of the next five years.
“There are significant concerns within the industry as to the impacts that tax and cost increases will have on profitability and viability of hospitality businesses, quite understandably, and this report details how independent operators will struggle to continue, leading to losses of Pub & Restaurant outlets. And yet, our forecasts in this report are for the market to grow in 2025 and onwards to 2029.”
The key points from the report include:
- Revenue growth will come from some price increases, but also from some volume increases as areas such as city centres, offices, travel and even retail gain more traction & footfall.
- Growth for the market comes despite significant numbers of independent businesses closing, especially in the Restaurant and Pub sectors; these are offset by increases in outlets in Fast Food and in Retail Cafes, Coffee Shops and Sandwich & Bakery shops.
- The economy is expected to see some growth in 2025, driven by the fiscal stimulus from Government spending, which will find some way of dripping through in disposable spend into foodservice/hospitality, and this period should also see Bank of England slowly reducing the base rate to improve the economic situation for many consumers.