In a debrief which provided analysis of the annual industry survey, Allegra’s director of Insight Anya Marco outlined the corporate competencies that winners will demonstrate in order to defeat the difficult times ahead.
“Building loyalty through excellence means that differentiated offers with dedicated and passionate staff will benefit despite the sluggish economy.”
Food Strategy Forum members who attended the debrief, held at the Churchill War Rooms in Whitehall, included representatives from operators such as Mitchells & Butlers, Debenhams, Sodexo, Waitrose and Heathrow, as well as representatives from distributors and manufacturers such as Coca-Cola, Brakes, Unilever, 3663 and Atlantic Creative.
Marco said the key messages from the report included:
· Continued like-for-like growth was evident for the last half of 2012 for strong foodservice operators, but subdued predictions were made for the first quarter of 2013
· Challenging performance expectations were stated for 2013 due to tough comparatives on the success of an events-led 2012, as well as the continuing difficult economic climate
· Economic trends dominate the challenges faced by the industry, translating into consumers discretionary spending being stretched, and consumer confidence continuing to be fragile
· Allegra believes that operators in the eating out market face a divided UK in terms of a twin track economy with performance differences between London and key urban centres compared with the regions
· Of critical concern is the challenge of rising food costs, which will squeeze consumer budgets for in-home grocery shopping and impact on eating out market operators as well. Flexible menu design will be the key to success as operators face difficulties in passing increased costs onto the cash-strapped consumer
· Success will come to those operators who can rise to the challenge of delivering good value for money, quality, and great customer service
· Building loyalty and adding value, instead of discounting, will be the key to long term future success. However there are concerns regarding the difficulties of weaning both the industry and consumer off discount driven eating out
· The importance of successful marketing is key to attract loyal consumers, with social media now recognised unilaterally as increasingly important. ‘Connecting with consumers’ is outweighing the traditional direct selling focused techniques. However, foodservice remains woefully behind other industries in effectively harnessing this critical communication channel
· Brands remain vitally important in the future of the eating out landscape; consumers require reassurance, consistency and familiarity. However, there is a rising influence of high quality independents, particularly from the street food segment, which are challenging brands to consider a more authentic, local approach to expansion
· Recognised for its consistent delivery of quality, fresh food, authentic experience and ethical standing within foodservice, Pret A Manger is the most admired brand for the fourth year in a row. McDonald’s and Costa are also admired for strong consistent branding and adaptability to changing economic landscape and consumer demands
Added Marco: “Growth will continue in the market over the next five years, through outlet expansion and increasing eating out frequency as consumers refuse to give up on habitual eating out occasions.
“M&A activity is expected as stronger groups look to reach further regional distribution and smaller chains find it harder to grow in the current climate.
“Strong brands will continue to thrive as will the best independents and innovative small chains. Weaker, undifferentiated operators will decline and entrepreneurs will increasingly look to enter the market, filling the void of those who have failed and left.
“While this will contribute to overall long term growth and offer consumers far more choice than ever before, existing operators must focus on strengthening their offer in the face of intensifying competition.
“Ultimately the British eating out landscape will be shaped by the demanding, sophisticated consumer and the embedded value legacy.”