This was the message from Horizons MD, Peter Backman, speaking to an audience of FMCG investors at a conference in London today [9 March], organised by the Consumer Analyst Group Europe (CAGE).
Horizons values food and drink purchases made by the catering sector at £10.3bn, but is critical of the fact that many food and drink manufacturers are focussed almost entirely on the retail sector.
“FMCG manufacturers often view foodservice as a poor relation to retail sales, merely repackaging their products into larger pack sizes. But the foodservice sector is growing at a faster rate than food retail as people eat more and more of their meals out of the home – and we will continue to see further growth over the next decade,” said Backman. “Many restaurant and pub menus now feature specific brand names on their menus, while other restaurant products have successfully transferred to the retail market, where they usually command premium prices.
“Foodservice is a good place to launch products – manufacturers can test the market, gauge customer response and, with the help of restaurant operators, build successful brands. It’s also far cheaper to build a brand through the catering sector than it is through the retail trade. The catering market is currently suffering from a real lack of new product development, at a time when pubs and restaurants are desperate to keep their menus fresh and interesting for customers. This is a great opportunity for food manufacturers.”
Horizons’ latest QuickBite survey, of over 1,000 consumers, puts the value of sales through the catering sector at £36.6bn, a figure that has shown an impressive 12.5% increase year-on-year. While the economy has slowed the market, consumers have opted to reduce their spend rather than not go out.
Average spend per head including drinks currently stands at £11.69, a 7.5% fall year-on-year from £12.64. This year the UK eating out sector is likely to be boosted by a strengthened tourist trade, with visitors attracted to the UK by a weak pound against the US dollar and Euro. British holidaymakers are also likely to stay at home again this year, given the high cost of holidaying abroad.
Horizons’ QuickBite survey, conducted in December 2009, reveals that price is becoming less of an influencing factor on eating out and that consumers are becoming less pessimistic about how often they thought they would eat out in the future. Some 5% of respondents predict they would eat out more often in 2010 than they had in 2009, while 73% feel they would eat out just as often in the coming year.
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The restaurant sector has suffered far less during this recession than many expected. This is partly because eating out is now so entrenched in the British way of life that consumers are reluctant to give it up, but money-off vouchers have also helped to keep them spending.
While consumers continue to eat out, they have changed the way they spend in restaurants. A survey conducted late last year by the consultancy Horizons revealed that 40 per cent of consumers ordered a starter less often when they ate out than they did a year earlier. The same percentage had cut out desserts and a third of diners shared dishes to save money. Also, ordering wine by the glass rather than the bottle had become commonplace. But price promotions carve margin from the bottom line and reduce profitability. Furthermore, when all the chains started discounting last year, the impact on trade was diminished.
During 2009 we have seen the style of promotion change from two-for-the-price-of-one to more targeted meal-deal offers. On-menu offers have complemented this, allowing operators to use meal deals as a tactical weapon to cope with local competition and demands. Some estimate that it will take at least 18 months for the sector to move away from discounting. I suspect that, as the economy improves, the consumer will no longer expect to find such deep discounting.
Operators have also learnt that promotions are of limited marketing value unless customer data is gained as a result. So I suspect that, rather than drop promotions altogether, restaurant chains will switch to a far more targeted form of customer incentive as they start to realise the benefit of enhancing brand loyalty and building a stronger customer relationship.
The recession has taught us all to be more demanding — food must be good quality, service must be efficient and friendly and value for money is paramount. Restaurateurs need to accept the new consumer, ensure their operations are consistently good and adapt their menus to reflect these changes. Targeted promotions can then be used to enhance customer loyalty rather than to get people through the door in the first place.
Source: The Times 22/02/10
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Food spend went up in pubs in December – but not as much as in previous years.
That’s one of the key statistics to emerge from the latest quarterly QuickBite survey from pub food research specialist Horizons.
Based on a regular survey of more than 1,000 consumers, the quarterly survey offers a fascinating barometer of the foodservice trends, and where people are choosing to eat out.
Unsurprisingly, the foodservice sector as a whole saw consumers tighten their belts this Christmas.
Over the festive period, on average, pub consumers spend 63p more per meal than they do during September. In 2007 the pub market saw an uplift in meal spending during December of nearly 14 per cent. By the following year consumers were spending only 6.5 per cent more on pub meals during December than they did earlier in the year.
Last December that figure was just 0.9 per cent, as pub diners spent an average of £12.23 on a pub meal (including alcohol) – a figure that has been falling slowly since 2007, when the average diner would spend over £13.35. It’s worth noting, however, that this still compares favourably with general average spend per head on eating out at £11.69 per meal.
Paul Backman, Development Executive, says it’s clear that all foodservice sectors suffered in the period, not just pubs. “Economic uncertainty, especially unemployment rises and continuing corporate failures, meant December’s uplift was less than trends from previous years would have predicted,” he says. “As families spent precious extra pounds on presents or travelling to visit relatives, foodservice spend, especially in pubs, seemed less essential than in earlier years.”
Backman also suggests that widespread snow in the days before Christmas also had a clear negative effect on out-of-home eating spend.
More worrying is the fact that when asked where they last ate out, only 16 per cent of people said they had eaten out in a pub, compared with 39 per cent of consumers who said they’d eaten at a fast-food outlet, and 32 per cent who had dined at a restaurant.
Horizons says pubs’ share of the eating-out sector has been falling since 2007, when the industry captured 21 per cent of the market and served 1.2 billion meals a year.
Pubs now serve one billion meals a year or 19 million a week, while the restaurant and fast-food sector serves a combined 2.7 billion meals a year, or 52 million a week.
Backman believes tenanted and leased pubs have been particularly slow to react to the downturn, and have struggled to compete with managed pubs, restaurants, fast-food outlets and takeaways in a market which at the best of times is oversupplied, and right now is hugely competitive. “Independent operators in all sectors have been finding conditions extremely tough – and tenanted and leased pubs especially so,” he says. “It is not enough just to lower prices and adjust quality accordingly, which is what lots of these pubs have been doing. Customers want better quality for less money – and that’s what the likes of Gourmet Burger Kitchen, McDonald’s and Wetherspoons have been offering.”
Backman also believes the 2007 smoking ban is still having a residual effect on pub food spend. He suggests the following strategies, based on the research, to increase consumer food spend in the months ahead:
• focus on your core offer by providing affordable meals in social settings, with amenities other outlets struggle to provide, such as satellite TV or games consoles
• develop your food offer intelligently to focus customers’ spending on high-margin lines, such as starters and desserts
• continue to improve customer service, engendering loyalty and repeat business
• target promotional offers to their demographics – take advantage of the internet and social media to target advertising to customers.
Data on types of foodservice outlet visited, spend per head and frequency of visit is based on the two weeks preceding December 12.
Source: The Publican, February 2 2010
]]>Daniel Galmiche, head chef of the Vineyard at Stockcross, knows this only too well, having perfected his soup-making when working at L’Aigle d’Or in Singapore, where he was expected to create two different soups for the menu each day. “There was no room for error,” he says. “The soups had to be perfect because there was such a demand for them.” French-born Galmiche also credits his mother’s consistent soup-cooking as an influence on him, and cites France’s brasseries as thriving soup hubs. “Brasseries usually have a soup of the day or speciality of the region, like soup de poisson in the South of France, or soups in Brittany made with different bouillons,” he explains.
But on this side of the Channel, soup has traditionally been considered more of a winter warmer, or comfort food; its puréed vegetable bases seeming somewhat prosaic in contrast to the fragrantly infused broths of its eastern cousins. And while we may occasionally see the odd gazpacho rear its chilly head come summer, a year-round soup offering has been limited in the UK.
Not so anymore. The recession and subsequent drive towards economy, as well as increased travel and influences from international cuisines, has brought a wave of more interesting soups to the table. According to market analyst Horizons' Menurama survey: "More and more establishments are putting soup on their menus - presumably because it's cheap to produce and the margin on it can be fairly high. We know from research that customers are also looking for value for money through the recession, so to choose soup from the menu would suit their needs too."
But while pricing is a key factor, there's no doubt that flavours are becoming more exciting. Healthy casual dining chain Leon has two fresh soups available every day - a vegetarian option (such as lentil Masala) and a meaty option (like bacon and chilli bean), while at Moro in London's Clerkenwell, spicy chorizo and chestnut soup is on offer for £7.50 a bowl.
Horizons' Menurama survey also revealed a colourful selection of soups such as wild mushroom and Masala at restaurant chain Ask and white onion and pesto at Marriott hotels, with gastropubs using British produce such as haddock, celeriac, butternut squash, cheese, chicken and lamb.
Extract from Soup Opera by Rosie Birkett, Caterer and Hotelkeeper, 15/01/10
The research, based on data from over 400 menus from the UK’s top 100 leading chain and independent pubs, restaurants and hotels, shows that the average cost of a three-course meal across all eating-out establishments, excluding drink, has risen from £17.40 to £18.45 over the past year – up 6%. An average starter now costs £5.24 – up from £4.70 last year. A main course costs an average of £8.86 – up from £8.73, while a dessert now costs £4.36, up from £3.97 in 2008.
Paul Backman, Horizons’ development executive, said: “The discounts and meal deals currently evident in the market have kept the prices charged for main courses fairly stable - in many cases they are lower than they were last year. But some operators, particularly in the pub sector, have made up for discounting on main courses by increasing the price of other dishes.”
The pub sector has increased the cost of starters and desserts the most, with a starter costing 10.6% more this year than in 2008, from £3.68 to £4.07. A pub dessert now costs 6% more, rising from £3.46 to £3.68.
However, a main course in a pub is now cheaper than it was a year ago with the average price falling from £7.19 to £7.17. The research also revealed that pubs dropped their main course prices by a huge 32p from January-July this year in a bid to boost trade.
The average cost of a restaurant main course has also fallen, from £10.06 to £10.01 year-on-year, largely due to promotional activities such as ‘two-for-the-price-of-one’ and money-off vouchers. Restaurant starters, at £5.48 this year, are 2p more than they were a year ago, although desserts are now cheaper at £4.34, compared with £4.42 in 2008.
Over the same period the price charged for a starter in a hotel rose 9% from £7.42 to £8.09 year-on-year, while main course prices have increased 1.5% from £12.47 to £12.67. The cost of a dessert in a hotel has risen 51p from £6.69 to £7.20.
“Operators can use starters and desserts to improve their margins as they are relatively cheap to produce,” added Paul Backman. “However, customers are very observant when it comes to price increases and could opt for just a main course if the price of starters and desserts rises too high compared to the cost of a main course.
“We would expect these pricing changes to level out if promotional activity lessens as the economy picks up. However, it could take at least 18 months for establishments to phase out price promotions altogether.”
Aggressive price increases for starters have been seen by some of the major high street restaurant brands over the past five years including Hard Rock Café and PizzaExpress. Others, such as ASK, Bella Italia, Café Rouge, Caffè Uno and Nando’s, have show more subdued increases. More gradual price increases on main courses have been observed from operators such as ASK, Bella Italia, PizzaExpress and Wagamama, while the past year has seen some shorter term price cuts from operators such as Caffè Uno and Pizza Hut.
Further findings from Menurama:
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New statistics from Horizons show that on average consumers spent £189.61 on eating out in the high street during the first six months of 2009, compared with £200.26 in the first six months of 2008. A decrease of 6% year-on-year.
This year consumers are spending an average of £6.45 per meal, compared with £6.62 in 2008. The figures also show that the QSR (quick service restaurant) share of spend has grown from 41.2% to 42.2%, demonstrating the growing popularity of fast food outlets and takeaways.
The eating out market is unlikely to improve into 2010. The cost-conscious consumer is here to stay and that consumer is looking for value-for-money and attractive offers. That's not likely to change in the short-term and most operators - particularly the high street restaurant chains and pub operators - are doing a great job of adapting to this.
Horizons' predictions follow recent results from the major pub chains. Greene King announced that like-for-like sales across its food-led pub estate were 8.1% up on last year. Whitbread's pub-restaurant chains showed a 2.1% increase in like-for-like sales in the first half of this year, with its value-for-money focus attracting 7.2% more customers. And last week J D Wetherspoon announced a record year for sales with like-for-likes in the six weeks to 6 September up 1.2%, and total sales up 5.8%.
The consumer of 2010 will be paying off more debt, taking on less borrowing and tightening the purse strings when it comes to discretionary spend. Average spend is likely to drop further still so the challenge for foodservice operators going forward is to keep people coming through the door with innovative deals and interesting menus without jeopardising margins.
]]>QuickBite, Horizons’ eating out quarterly tracker, has found encouraging signs that consumers are prepared to spend their money again with 68% of respondents to the survey saying they intended to eat out as often in the coming 12 months as they had in the past.
But the survey demonstrates how consumers are increasingly price-conscious when it comes to eating out. More than half of respondents (54%) take price into consideration more often than they did six months ago as they seek better value dishes and look to reduce their overall meal spend. Females are particularly cost conscious (57%) compared with men (50%) when choosing their meal.
Spending on alcohol is an early casualty of this more frugal era, with 51% saying they now spend less on alcohol when eating out, with women (54%) more likely than men (49%) to reduce their spending in this way. Some 28% of respondents say they are ordering wine by the glass rather than the bottle to reduce costs, with women (32%) reporting this at a much higher level than males (24%).
"The results of the latest QuickBite survey show the changing nature of consumer spending. While it seems people are continuing to eat out, they are looking for ways to reduce the cost, taking advantage of money-off vouchers and the heavy discounting going on amongst restaurant operators. They have also changed the things they are ordering in restaurants - sharing more, drinking wine by the glass and cutting out starters and desserts," commented Paul Backman, Horizons' development executive.
The survey results also show that 39% of consumers are ordering fewer starters and desserts and more are sharing dishes. "It is difficult to attribute this shift to healthier eating habits and is more likely a result of consumers trying to reduce their meal spend," added Backman.
Sharing dishes is an increasingly popular way to save money, with 29% opting for this more often. Women (31%) lead the way compared with men (27%), while Northerners (33%) report a higher incidence of dish-sharing than those living in the South (26%).
The survey also found:
Meals in pub restaurants were 30% more expensive in 2008 than they were in 2004 as ingredient costs rose and customers increasingly chose costlier items from the menus. The average price paid for a pub restaurant meal rose from £10.61 to £13.76 in this period.
Spend in European-style restaurants, those with Italian, Spanish, British and French menus, rose 19%, with the average price paid rising from £17.20 in 2004 to £20.51 in 2008. Spend in Chinese and Indian restaurants rose 16%, with consumers paying an average of £12.66 for an ethnic meal.
Spend has risen this much over the four-year period largely because customers have been willing to spend more and because restaurant operators have put up prices as a result of the hikes they have seen in food and overheads such as rent, staffing and fuel. But in this recession higher prices cannot be sustained so in order to maintain sales restaurants need to reconsider their pricing strategies.
The rise in food prices is now slowing, with the level of food inflation at 9.7% in April 2009 from its peak last September at 13%.
We are beginning to see menu prices falling, particularly with the number of special deals and offers currently in the market. The cost of eating out is likely to continue falling, at least until the end of 2009. Indeed, restaurant bills could fall back to 2006 levels.
Spend in restaurants and pub restaurants reached a high in 2008 when demand was at its peak and operators could afford to raise prices. The situation has now changed considerably with competition for customers extremely tough.
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In my 2008 report on the NRA show, I pointed out forcefully that the US foodservice sector was learning to cope with two huge issues. First there was slackening demand and second was the major cost increases from rapidly rising inflation. What a difference a year makes. The operators, distributors and manufacturers I spoke to all agreed that inflation is no longer a current issue – although it may come back like a Vampire from the grave (and more on this theme later). But slackening demand is here – right now – and with a vengeance.
1. The foodservice sector in the US is looking like the foodservice sector in the UK - sales are down. And while input cost inflation is low, large rises last year extracted profit from the sector and current operator pricing activity is eroding margins even further.
2. My view - and probably yours too when you read what follows - is that there is very little difference between what is happening to the market, and how it is responding, whether you are in Manchester, Connecticut or Manchester, the home of Man U.
3. On the plus side, operators are fully aware of these issues; most have taken action to ameliorate margin pressures and reduced turnover by reducing costs - primarily labour.
4. While there have been operator failures, these have been heavily concentrated in the cashstrapped, under-capitalised independent sector.
5. Of course the picture is a bit more nuanced than this bald view. Some segments, most notably quick service, have been doing well recently recording growth well into positive
territory.
Some numbers and facts help tell the story:
6. Overall foodservice sales in the US are flagging right now and the NRA say that they expect real (inflation adjusted) sales to dip in 2009, by -1%. The market also fell last year, so that makes two years of consecutive decline - which is the first time that's happened since records began in 1971.
7. As in the UK, eating out on a whim is no longer the order of the day, and the corporate expense account sector has gone into hibernation. The result is reduced demand from Monday to Thursday, possibly extending into Friday. But weekend trading looks OK.
8. Of course, some regions are really suffering - such as those where the automobile sector is a major employer or where the finance sector used to boom.
9. Since the start of this year, quick service has grown - on the back of its overall "value" (for which read "low price") proposition. The next segment up - casual dining which is roughly equivalent to much of the UK's pub sector - has fallen and its problems are exacerbated by massive overcapacity (unit numbers have doubled since 2001). Higher up the expenditure scale, the market has also fallen but by not as much as the casual segment.
10. These movements demonstrate that the so-called "down trading effect" is leading to more sales in the lowest cost sectors - but down trading is not universal, with evidence that customers are still remaining loyal to their traditional mid- and upper-spend haunts.
11. And today, customers are reported to respect value for money - which doesn't always mean lower cost. Operators reported to me that consumers frequent places that offer "value" - if there is a real reason for visiting, customers will visit - but if it's just "lower prices" then they are much less likely to.
12. Staff feeding (much less important in the US than in the UK as a proportion of overall market activity) has suffered from rising unemployment - 8.9% in April and set to rise to 10%. But the rest of the non-commercial sector has, thus far, been broadly unaffected by the downturn.
For the rest of Peter's report, click here.
]]>- salt reduction
- collecting full nutritional data for products and recipes to aid recipe reformulation and to provide more information to customers
- looking at children’s menus to make them healthier (for example by using more ‘hidden’ vegetables and providing more fruit options)
- working with suppliers to identify core products lower in saturated fat
- increasing the range of healthy menu options (such as more salads, soups, fish dishes, grilled foods and fruit-based desserts)
“The fact that some of the UK’s biggest restaurant chains – PizzaExpress, Pizza Hut, The Restaurant Group, Tragus and Domino’s – have all agreed to commit to providing a range of healthier options on their menus shows the seriousness with which the foodservice industry now has to view healthy eating,” commented Peter Backman, Horizons' MD.
“For many years it was argued that it was the consumer’s right to eat whatever they liked when they were out, but as eating out has moved from being an occasional treat to something that most people do several times a month, so its contribution to the health of the nation becomes more vital.”
Some of the measures announced by the FSA today include salt reduction, providing nutritional data for recipes, making children’s menus more healthy, working with suppliers to lower saturated fat in particular ingredients, and increasing the range of healthier options on offer.
“Today’s foodservice market is extremely competitive. If customers are demanding these changes on high street menus, then it makes sense for operators to listen. Most consumers will now keep a careful eye on what they are eating – perhaps opting for a light starter and avoiding the more calorie-laden desserts. Operators cannot afford to ignore this trend,” added Backman.
Some 13% of respondents to the survey, in which over 1,000 people were interviewed during two days last month, said that over the past two weeks they had opted to stay in with a supermarket meal deal rather than eating out.
The largest uptake of supermarket deals was in the 16-24 and 35-44 age groups, in line with the trend for young adults to be less inclined or have less time to cook meals from scratch and families with children who are often also time-poor. Men (15%) were also keener than women (11%) to spend their food pounds this way.
Supermarkets have responded to consumer reluctance to pay for food out of the home by offering a growing number of restaurant-style offers, some geared around traditional eating out occasions such as Valentine’s Day or Mother’s Day. Marks & Spencer’s ‘dine in for two for £10’ promotion kicked off the genre, extended this Mother’s Day with a ‘dine in for four’ promotion and currently a lunchtime meal deal offering a choice of sandwich, crisps and a drink for £2.
Last month Sainsbury’s trumped its rivals by offering a ‘dine in for a fiver’ deal with a choice of three gourmet main courses for two, a side dish and a choice of two desserts. A similar promotion from Waitrose offered consumers a ‘dine in for two for £10’ deal including an ‘Indian meal deal’ with two curries from a choice of five, rice, an accompaniment and a four-pack of drink for £10.
This week Tesco went even cheaper with a meal for two from its Finest range including main course from a choice of five, side dish, dessert and wine for just £9.
"There is no doubt these deals are aimed at people who may once have eaten out but who could now be persuaded to save money by buying a gourmet-style meal to eat at home instead," commented Horizons' managing director Peter Backman. "Many pubs, restaurants and takeaways are attempting to take the supermarkets on by marketing their own price promotions and meal deals, but perhaps they need to push the benefits of an eating out experience more by highlighting their atmosphere, facilities, menu choice or quality.
"It has never been as competitive on the high street as it is now - particularly when it comes to vying for consumers' food pound. While the supermarkets have always run strong price offers on food, the fact they are now putting together a menu means they are really competing head-to-head with high street restaurants, many of whom will be unable to compete. The recession has already seen casualties in this sector and we are bound to see more before the economy picks up."
The latest QuickBite research also showed that consumer spend in restaurants had fallen, down to £10.64 from £11.15 per head last year. There was also a fall in the number of consumers opting to eat at a table service restaurant (from 48% to 46%) although a rise in fast food restaurant spending (11% to 12%).
Chinese (-3.4%) and Indian (-1.3%) restaurants and takeaways saw their market share decline, although pubs (1.5%) and fish & chip restaurants (1.8%) saw an increase as consumers opt for traditional British foods over ethnic food.
“Our findings demonstrate that establishments have altered their menus to include cheaper items in response to financial pressures. Premium ingredients have been dropped in favour of more economical dishes and we are seeing the emergence of more traditional British recipes such as meatballs and stews. Fish is also making a stronger appearance on British menus along with vegetable-based starters,” commented Horizons’ managing director Peter Backman. “Dishes such as fajitas, mixed grills and some pasta dishes have declined in popularity due to the rising cost of raw ingredients and because operators are continuing to evolve their menus in an effort to give consumers something different, something that they wouldn’t cook at home. Spiralling meat costs have prompted operators to reduce the weights of their core meat dishes such as beef burgers and steaks.”
While vegetable starters are showing more prominence on menus, Menurama also notes the return of traditional and game meats such as mutton, rabbit and guinea fowl, although fish and seafood main course dishes are being featured more strongly with haddock, calamari and sea bass appearing in the top 10 fish-based ingredients used. Salmon, meatballs and chicken salad have appeared on the list for the first time this year.
But despite a rising popularity for British-based main courses, desserts seem to be moving away from the traditional. British puds such as sticky toffee pudding, fruit crumble and sponge pudding, all of which made the top 10 most frequently listed dessert in January 2008, are now less popular on menus than cheesecake, brownie, and profiteroles. Topping the most frequently listed dessert, however, are still ice cream and sundaes, although ice cream now takes the number one slot.
When it comes to price trends, Menurama reveals it is now costing consumers around 3% more to eat out than it was a year ago, with average spend across all types of outlets at just over £6, up from £5.91 in January 2008.
A two-course meal in a pub restaurant costs an average of £10.99, compared with £10.95 in January 2008. Hotels have got slightly cheaper with an average two-course meal costing £18.48, compared with £19.67 a year ago. A two-course meal in a restaurant now costs just over £14.88, up from £14.30 in January 2008.
So far it's takeaways and fast food concepts that are emerging strongest as consumers who would once have gone out to a mid-spend high street restaurant, instead pick up the phone and dial for a takeout.
Despite the slump US-based Yum! Brands for example, which operates the Pizza Hut, Taco Bell and KFC restaurant chains, has seen sales and profit grow worldwide by an impressive 7%. How has it done this? Largely by strong overseas sales and a massive presence in China. But it's more than that. With an eye on the future this is a company that is refusing to stand still yet is maintaining its sales growth by keeping prices and overheads low. In the US Yum! has announced plans to re-energise its fried chicken KFC business by introducing a new grilled chicken option. A new value menu is also planned.
Earlier this year Domino's Pizza announced a rise in annual sales across the brand of 18.4% to £350.8m, with like-for-like sales showing a 10% increase. Again, this is impressive stuff. Domino's is another innovator and one that has spent time building its on-line ordering business. It seems to have hit the spot. Online sales have risen an impressive 74% to a value of £56m - helped by the timely sponsorship of Britain's Got Talent. Domino's has 553 stores in the UK but is aiming for 1,000 and, despite the economic doom and gloom, there seems no reason why it shouldn't achieve this.
Another US chain, Papa John's, which is now the world's third largest pizza company, is also beating the crunch. It has 118 outlets in the UK and recently announced that UK sales rose in January by 13%. Papa John's too, has plans to open more sites in the UK.
These are just some of the winners. So who might we consider to be the losers?
One of the first, and the most high profile, was perhaps the collapse in - and out of - administration of chef Tom Aikens' three restaurants last October. A deal which immediately took the company out of administration under new ownership incurred the wrath of several suppliers. The Food & Drink Group, which operates Henry J Bean's has gone, as has FishWorks, Duchy Catering and four restaurants owned by the celebrity chef Antony Worrall Thompson. Gourmet Restaurants, with four restaurants and seven takeaways, sent in the receivers after its Tiffinbites concept failed to catch on and after the perhaps miss-timed acquisition of the Bombay Bicycle Club and Varma businesses. Five French eateries in the north-west trading under the Le Frog Bistro name have gone into administration, while the Prezzo's management buyout failed to materialise, blaming current banking conditions. Sadly, there is bound to be more and the year has only just begun.
But what can we learn about who is likely to survive and who will not?
It would seem that success is largely aligned with individual companies and operations, rather than specific sectors and that a good business model is key - with strong cost controls, a well-marketing brand, and a forward thinking management team. It's also vital that operators - whatever sector they are in - continue to innovate - whether it be by changing their menu, adding something cheaper or healthier or novel, or developing a new avenue of sales such as on-line ordering. In this tough environment new customers are vitally important, but margins are paramount. Thus, successful operators will do all they can to attract custom with well-placed, value offers. But they will also modify their offer - perhaps by bundling the less expensive dishes on their menu with a bottle of wine at a slightly lower-than-normal margin and promote this as a "value deal for £10". Successful operators will take every opportunity to up-sell. While marketing their wares strongly, they will also be looking at costs, using less product, using cheaper - but still acceptable quality - products, by shopping around for the best suppliers. But lastly they will have one eye on the time when things will pick up, and will be well-placed to capitalise on growth once this happens.
(Originally pubished at www.eatoutmagazine.co.uk)
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Yesterday Greene King announced that its managed pub division had seen like-for-like sales up 2.4% in the eight weeks to January 25, with strong Christmas bookings through its 800-outlet chain. Today Mitchells & Butlers announced like-for-like sales in the nine weeks to 24 January up 1%, with a strong two week Christmas period. The company reported that like-for-like food sales remained robust at 2.6% in the 17 weeks to 24 January.
Both these companies operate largely at the value end of the sector: neither has been afraid of discounting, giving customers a reason to keep coming. While other sizeable pub operators have struggled, both Greene King and Mitchells & Butlers are utilising the benefits of their scale to buy better and reinvest this extra margin in further promotion, which in turn boosts turnover further.
In a market where pubs are said to be closing at a rate of 39 per week, the fact sales through these two companies are holding firm shows how vital it is to get a balance between offering value for money for customers yet remaining in a position to absorb rising costs. M&B is retaining a healthier level of capex than other pub operators. That will place the company well ahead of the competition when the upturn comes."
Horizons' most recent analysis of the foodservice market shows that after a promising start to 2008 when food sales in pubs actually grew, the second half was disastrous and as a result total food sales for the full year fell by -3% after inflation. Managed pub operators, like M&B, did better than this while food sales in pubcos were worse.
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The survey showed that establishments being hit the hardest by the current economic downturn are coffee shops, pubs, Indian and other takeaways, with sit-down restaurants in the mid and premium sectors being the main beneficiaries.
The consumers surveyed had eaten out an average of 2.7 times in the first two weeks of December, considerably less often than the average of 3.7 times during the same period the previous year.
“We are seeing a flight to quality with people eating out less but spending more. Spend per head at £12.46 is the highest ever recorded, demonstrating this new ‘save-it for something special’ approach,” comments Horizons’ managing director Peter Backman.
“The eating out market is polarising – it seems to be sliding away at the incidental sector such as coffee bars, sandwich shops and fast food takeaways where spend is under £5, and also the value sector where spend is £5-£11. A reduction in frequency of eating out is indicative of fewer ad hoc or unplanned meals out. Operators at the other end of the scale – the premium casual and premium restaurant sectors - where spend is above £17, are faring better,” says Backman.
Despite this, pubs are experiencing a drop in spend per head – a decline of 8.6% to £13.42, a level not seen since December 2003. This is partly due to price promotions in the sector because of intense competition.
However, pubs and pub restaurants are still the biggest providers of sit-down meals eaten outside the home – representing a third of the sector. Chinese takeaways are the most popular fast food, representing 26% of out-of-home convenience meals, with fish and chip shops accounting for 17.3% and Indian takeaways 15%.
One third of respondents to the QuickBite survey said they expected to eat out less often in the year ahead, while 57% expected to eat out at the same level as last year. Some 29% of respondents agreed with the statement that they were restricting meals out to special or planned occasions.
“This represents a substantial worsening of consumer sentiment compared with last December when 11% expected to eat out less and 75% expected to eat out at the same level as last year,” says Backman. “The outlook for 2009 is for continued decline, with volume most severely affected in the under-£11 sector.”
Geographically, dining out in the Midlands appears to be holding up better than the north or south, maintaining the same level of eating out as last year. AB’s also appear less affected, eating out slightly more than they did last year. In terms of age, 25-34 year olds increased their dining out on last year, perhaps indicating they are less concerned about the downturn than those who have experienced previous recessions.
QuickBite is a quarterly survey of 1,000 consumers examining the eating out sector and providing analysis by outlet and type as well as consumer attitudes to eating out, various food issues and preferences. The survey base is 1033 adults aged 16+, demographically representative of the British population. Fieldwork was conducted 12-14 December 2008 by Mori.