Clearly, the UK has a lot to learn from the other side of the Atlantic - or does it? Read our report to find out.

The survey, which quizzed people on their eating out habits over a two-week period at the end of 2011, showed a marked decline in the frequency consumers ate out – down to 2.1 occasions in December 2011 from 3.3 times last year. Over a quarter (27%) said they had not eaten out at all in the previous two weeks, with cost being the most commonly
cited reason.

However, while consumers may be cutting back on the number of times they eat out, they continue to spend more when they do – up from £10.29 a year ago to £13.80.

“We have noted the tendency of consumers to eat out less, but spend more for sometime and this appears to be an ongoing trend. It also seems consumers now need a good reason to eat out – such as a special occasion – and are less inclined to eat out as a matter of course or on impulse,” commented Emma Read, Horizons’ Director of Marketing and Business Development. “Heavy snowfall last year makes it a bad year to compare with, but even so the frequency of eating out shows a significant decline, something we don’t expect to change throughout 2012. It is also clear from this research that cost is the key reason behind this fall.”

The QuickBite survey also reveals the emergence of a more discerning diner with the quality of food (79%) being the most mentioned factor when deciding where to eat out. Price came second (70%), followed by cleanliness (64%), standard of service (55%) and ambience (51%). An interesting and varied menu was important for 47% of respondents, while 41% choose a venue that won’t rush them.

Pub restaurants are the most common places to visit, accounting for 18% of all meals eaten out – up from 17% last year. Takeaway and delivery are the second most popular option, accounting for 14% of all eating out. But it seems that habit remains the strongest factor when choosing an eating out venue with 35% of respondents opting for a familiar venue, up from 31% in July 2011. For 17% the decision on where to eat out is an impulsive one.

Recommendations proved important in the choice of dining venue. Some 16% of respondents’ venue choices were influenced by recommendations and of those, 86% were from a friend or family member. Reviews or websites were mentioned as influential to 7% of respondents.

Average spend through the restaurant sector (including drinks) was £17 per head with pub restaurants coming in slightly cheaper at £15.80 per head. Average spend in a takeaway or delivery outlet is £11.

“Pub restaurants are slowly taking market share from other restaurants as consumers seek good value for money, a convenient location and a more casual eating out experience. We have also seen a huge improvement in the food offering of many pubs, particularly the big brands, which is proving popular with consumers. What’s clear in this market is that diners are becoming more demanding, but are loyal to their favourite outlets,” added Emma Read.

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Many things are unknown – the numbers of visitors, the behaviour of Londoners, the impact of world and local events and many more.

Horizons have produced a report which comments on the known factors and speculates on the unknown. It attempts to bring some clarity to the outcomes as far as the eating out market is concerned and it lays out the ground for updates that Horizons plan to provide as the Olympics approach.

Download the full report.

Since the downturn began many eating out establishments have boosted customer levels by extending opening hours and offering new services such as breakfast, mid-morning coffee, afternoon tea - and even home delivery. Others have provided free wi-fi for customers, revamped their interior design, invested in staff training and introduced new styles of dishes such as sharing plates, smaller portions and healthier options.
 

A raft of new concepts have also emerged on the high street, as small, fledgling chains fill gaps in the market and create new areas of business, many taking advantage of cheaper high street rents. A common theme amongst the new brands is good quality, healthy food-to-go with Mexican and Japanese cuisines proving particularly popular. As a result the foodservice sector overall has proved remarkably resilient, with just a handful of high profile business failures since 2008.
 

However, as the downturn continues, Horizons warns that 2012 is likely to be a worse trading year for eating out than 2011, despite the influx of visitors generated by the Olympic Games in London and the Golden Jubilee.
 

“Although the number of corporate failures in the UK eating out sector has been fairly small, balance sheets have been stretched during 2011 and it will not take much to see the rate of failures rise, probably as early as the first quarter,” said Horizons’ managing director Peter Backman. “High street restaurant operators will continue offering customers discounts, meal deals and moneyoff vouchers to improve traffic, which will depress their profit margins, although the anticipated fall in food costs this year will help counteract the cost of discounts."
 

“The Olympic Games are likely to bring an uplift in sales for some foodservice outlets – most notably those with contracts at Olympic venues. However, operators outside the Olympic venues could see visitor numbers drop. If the UK sees 10% fewer visitors this year, compared to a normal year, the UK eating out market will be £100m worse off,” added Backman.
 

Horizons notes that consumer spend fell in 2009 and 2010 and last year was worse, with signs that the market fell in both nominal and real terms. Horizons estimates that the foodservice sector was down 3-5% in volume for 2011. The average price paid by consumers fell as a result of discounting and consumers selecting cheaper menu options and foregoing starters, desserts or side dishes.
 

“However, the UK’s foodservice industry is particularly good at reinventing itself and adapting to change,” said Backman. “The businesses that don’t embrace change are those that will suffer this year, but outlets that adapt to the demands of the new consumer by offering something different, focussing on good quality for a reasonable price, are those that will survive the year ready to focus on growth when consumer demand improves.”

Download the full Review of the Year 2011 report.

In its recently launched Ones to Watch service, Horizons charts the progress of small chains of between five and 25 units which have shown at least 20% growth over the past three years combined. Ones to Watch details the rate of growth of these high street restaurant, quick service and pub restaurant brands and identifies the sectors in which they operate. It also includes Bubbling Under brands which fall below these criteria, but which show potential as trendsetters. The Ones to Watch service is designed to assist food and equipment suppliers in tailoring new product development in line with current demand, as well as to provide foodservice operators with detailed information on market activity and eating out trends.

“Following the progress of these fledgling brands gives us a snapshot of the way eating out is changing in the UK and highlights the high street brands of the future,” said Horizons’ director of services Paul Backman. The first Ones to Watch analysis identifies a clear growth in Mexican and Japanese cuisine-to-go, meeting consumers’ demand for something healthy and different. “While advantageous rent agreements will be an incentive for operators to expand, adding units in a difficult climate demonstrates confidence in their food offer and profitability. The size criteria for Ones to Watch means that these brands now have an outlet base significantly large enough to suggest that various launch and initial growth phase challenges have been overcome and that the offer has customer appeal significant enough to suggest long-term survival and growth,” added Backman.

Adding the most outlets to its portfolio since 2008 is gourmet burger brand Byron, which in 2007 had just one outlet rising to 19 by the end of 2011. Currently all are in London but brand owner Gondola is likely to expand outside the capital in its stated quest to create a nation of ‘proper’ hamburger lovers. Average spend at Byron is £16.

The growth of Mexican foodservice brands suggests that the cuisine is finally finding a mass audience in the UK. Tex-Mex specialist Chimichanga has added seven restaurants to its portfolio since 2008, while Tortilla Mexican Grill has opened a further two outlets since 2008 giving it six restaurants in the capital. Burrito specialist Barburrito now has six units in the North West, Yorkshire and Humberside and bubbling under is Mexican burrito outlet Chilango, which has grown from one outlet in 2008 to four in 2011, albeit with a recent closure.Japanese chains – both restaurant and quick service – are also on the march, reflecting consumers’ growing preoccupation with eating healthily, particularly at lunchtime. Sushi and bento specialist Wasabi, for example, now has 23 units in London – up from 11 in 2008, while Feng Sushi and Hi Sushi now have seven outlets each.

Delivery and retail chain Itsu, which sells Japanese-style food boxes as well as hot dishes, has now gone beyond the remit of Horizons’ Ones to Watch with 35 stores in London as well as two flagship restaurants.

Meanwhile healthy food-to-go deli and café Bill’s Produce now has five outlets in London and the South East, up from two in 2008, healthy fast food chain Pod is up from seven to 12 units, Chop’d has six and Food To Go has five.

“We are seeing a growth in on-the-go concepts that offer consumers an alternative to a lunchtime sandwich, particularly those selling freshly prepared, quality food with an emphasis on healthy eating. Japanese sushi takeaways are a good example as are the growth of outlets specialising in wraps – such as Wrapid, which now has 16 outlets, and Wrap it Up, which has six. Bagel stores are another growth area, with Bagel Nash now having 11 units in the North of England and Ixxy’s Bagels having five,” said Paul Backman.

Frozen yogurt has also staged a come-back, with self-serve specialist Yoomoo operating 10 stores across the UK, up from four in 2008, international brand Snog with six units in London and Yog, which sells probiotic frozen yogurts, running six outlets and a take-home product available through Waitrose.

One of the latest Bubbling Under offers are the Brazilian all-you-can-east churrascaria steakhouses – a new wave lead by brands such as Rodizio Rico and Tropeiro with four outlets each.

Backman told the audience of industry executives that the outlook for foodservice was at best one of limited growth, but more realistically one of no growth for the foreseeable future. “The foodservice market is still in the doldrums, foodservice share of food spend has dipped below 30% and although consumers are spending more money when they eat out they have cut down on the frequency of eating out occasions. This situation is likely to continue well into 2012 and beyond as the economic outlook is unlikely to improve, although I am confident this will start to grow in the longer term,” he said. “Sales of food and beverage for out of home consumption have shown a rise since 2003 but that rise has now reached a plateau and if you take into account the impact of inflation, this represents a decline. The value of sales in the UK’s foodservice sector is currently £42bn – a figure that has remained the same in real terms since 2008.” Backman said that the first half of 2011 had shown some sales growth with a total value of £20.7 bn, up from £19.9 bn in 2010, but this was largely accountable by the rise in inflation and the VAT hike and comparison with a snow-stricken January the previous year.

Economist Philip Shaw of Investec painted a slightly more upbeat picture of the economy as a whole and the fact it had shown 2.5% growth over the past year, employment was rising and corporate profits were up. “This was a nasty recession as it was triggered by a banking collapse and therefore the recovery will tend to be more fragile,” he said. “I don’t think there is going to be a double dip recession in the UK, but more likely will be a period of slow growth over the next year or so after which the recovery will then gain more momentum.”

Backman identified the key issues that are creating a massive margin squeeze for foodservice operators – that selling price to the consumer were dropping due to the prevalence of special offers and meal deals, and the fact that the cost of food was continuing to rise. “The economy is causing patterns of divergence with a split between the trading results of chains and the independents. This is happening most notably in the pub sector and the restaurant sector,” he said. “What we are also seeing is operators concentrating on doing what they do well and so some are pulling away from things they didn’t do that well. This is creating gaps in the market which have opened up opportunities for smaller, more entrepreneurial companies that are better placed to grab those opportunities.” Backman said that QSR (quick service restaurant) chains had converged on a price point concentrating at the lower end, which had created an opportunity for operators to offer more upmarket QSR concepts, prompting the emergence of a fast casual sector within QSR with healthy, Mexican and Japanese themes doing particularly well. This emerging sector, with average spend of £5-10, saw sales worth £6.8bn in 2010.

Director of Services Paul Backman outlined some of the new concepts and brands coming into the market. “Most of the new concepts are quick service operations merging contemporary styling and healthy food with a fast, fun and young feel. They are appealing to a new urban, health-conscious, budget-conscious consumer who would rather eat out than cook at home but doesn’t want to spend too much doing so,” he said. “Health-based convenience concepts such as Bill’s, Chop’d, Pod and Tossed are showing strong growth as are quick service Japanese outlets such as Itsu, Wasabi and Samurai. Mexican is another area of growth with food to go brands such as Chilango, Tortilla Mexican Grill and Barburrito,” added Backman. “Despite the fact that foodservice sales overall have plateaued we are still seeing a high degree of innovation in the sector and this is helping to keep customers interested. Many of the large operators are keeping their offer fresh by changing their menus on a more frequent basis and revamping their interiors. Some are introducing designated areas in their restaurants such as somewhere to sit if you want just a coffee or breakfast, somewhere to meet friends or hold a meeting – it’s all about tailoring your offer to meet whatever your customer needs at whatever time of day,” added Paul Backman.

Consumers have cut back on the number of times they dine out, but despite the on-going economic gloom the British still love eating out and do so at least once every couple of weeks.

In Horizons' latest QuickBite survey on eating out habits 70% of consumers say they had eaten out* at least once in the previous two weeks with 48% doing so at least twice. Some 32% of respondents considered it more convenient to eat out and 25% said they would rather not prepare food at home.

Over a quarter (28%) of consumers who have eaten out in the last two weeks say they did so to be sociable, 23% did so for a special occasion and 17% because it represented good value for money.

The survey quizzed over 1,400 people about their eating out habits in the last two weeks. The results reveal that while consumers still dine out regularly, there has been a 26% year-on-year decline in the number of times people eat out. On average consumers now eat out just once a week compared with last year** when they were eating out 1.4 times a week (June 2010).

"The results of the survey demonstrate that while consumers may have cut back on their eating out spend, it is still a very strong habit for reasons of convenience, sociability and value for money. The fact diners are still eating out at least once a week demonstrates that eating out is entrenched in our way of life and is no longer necessarily seen as a treat," commented Emma Read, director of marketing and business development at Horizons.

While 70% of people eat out at least once every two weeks, 28% do so more than twice and 11% ate out three times in the previous two weeks. Some 2% of respondents admit to eating out six times in the past two weeks.

Nor is the choice of dining venue dependent on clever marketing or money-off vouchers. A third (31%) of consumers said they chose a venue out of habit and 22% said their choice was spontaneous rather than planned.

Recommendation was the main factor in choosing a venue for 14% of consumers, while 11% were influenced by vouchers or special offers.

"This is an important finding for those operators currently caught in a price war of money-off vouchers and special offers. While 11% of respondents to our survey were influenced by offers, loyalty to a particular venue and recommendations seem more important in their choice of venue," added Read.

Reflecting a rise in food prices the QuickBite survey found that consumer spending on eating out had risen 9% year-on-year** with an average meal in the last two weeks now costing £12.69 (including drinks) up from £11.53 in last year's QuickBite survey. Men were more likely to spend more than women at £13.77 per head compared to £11.70 although 18% of consumers spend a fiver or less on a meal out. At the other end of the scale 8% of consumers spend up to £25 when they eat out.

Pub restaurants proved to be the most popular places to eat with almost a fifth of respondents choosing to dine out in pubs. Takeaways and home delivery were the second most popular choices, with quick service restaurants and Indian and Chinese restaurants coming equal third.

The younger generation eats out most often, with 82% of 18-24 year olds eating out at least once in the previous two weeks, spending an average of £12.67. However, it is the 25-34 year old age group that spends the most per head at £13.35 with 74% of this age group eating out at least once in the previous two weeks.

*Eating out is defined as food prepared away from home, including fast food, takeaways, food eaten in restaurants, hotels and meals in a work canteen; but excluding crisps and confectionery, and meals eaten in other people's homes.

**QuickBite survey 2010

Further information on QuickBite

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After two and a half years of decline, foodservice sales seem to have bottomed out and, according to industry watchers, turnover is showing some growth this year.

But operators and suppliers are not rejoicing. But people are somewhat more optimistic than they were a year ago even if there is less exuberance than in better times. Now is a time to be careful and to continue to watch expenditure.

No doubt the natural energy of the US market will return but this is not yet the time for cost-hungry creative marketing and product innovation.

Read more including comments on new concepts, healthy eating, ethical considerations and technology in foodservice.

Foodservice consultant Peter Backman says the trend could take off in the UK as the image of mobile catering starts to undergo a much-needed revamp. “Mobile units have the benefit of being relatively cheap to set up and run and are able to move to meet consumer demand. This new type of food truck is a far cry from the old-style greasy spoon mobile catering unit – these are smart, sassy, innovative and serve great food,” he said.

While the majority of US food trucks are independently-owned single units, some are becoming small chains with up to 10 trucks. National brands such as Taco Bell and Dunkin' Donuts are also moving into the market.

Mobile catering is far from new, but the revamped and improved food trucks have brought a new lease of life to the American catering sector, with units serving several hundred customers a day and specialising in anything from chicken dishes, pizza, burgers, tacos, Indian, and even cupcakes. Many offer innovative, quality food while others carry an environmental or sustainability message or design eye-catching trucks. Food trucks are found in large urban areas, although some authorities do prohibit them. Trucks typically park for around 90 minutes over lunch and then move on. Locations change daily so that customers are offered a choice of new concepts.

Read more.

Further information about the report.

Operators in sectors - such as hospitals and schools - that depend heavily on government expenditure started to see the outlines of the government cutbacks on their foodservice business in the last few months of the year.

By the end of the year we expect meal numbers to be down slightly on 2009 - at about -1% - but sales to be up by a modest +0.5%

But suppliers of food, drink and other consumables will have seen a slight drop in their sales to operators - perhaps just under -1%; although suppliers of capital goods will have seen the dramatic sales decline that started in 2009 bottoming out at the end of 2010.

The year got off to a most unpromising start with snow covering most of the UK for up to two weeks in the middle of January. Accordingly, customers were thin on the ground especially in rural areas. However, home delivery and takeaway chains reported large increases in sales as consumers opted to stay at home and order their food in. McDonald's and Yum! Brands, operator of KFC, Pizza Hut and Taco Bell all reported positive results. Operators also set about offering meal vouchers and meal deals with a vengeance - with the number of offers the highest for a year and more than 12% up on the summer peak in August.

February perked up and suppliers reported that the market was beginning to feel slightly expansive, probably because 2009 was in the past, the snow had cleared and spring was on the horizon. Valentine's day gave its usual mini boost to the market especially since it fell on a Sunday this year.

In March, improving weather and a feeling that maybe the worst is over - meant that consumers ventured out to lower-cost eating out places in larger numbers. All sectors moved forward - obviously some better than others - but consumers still showed a propensity to eat at home. Domino's and Papa Johns, among others, reported good home delivery sales figures. London continued to do well - and much better than the rest of the country.

With Easter at the start of April, the market once again started looking more positive. But in the middle of the month, the Icelandic volcano - Eyjafjallajokull - erupted and kept Britons at home in the UK - but also kept foreign visitors away. Sectors such as hotels, and areas, such as London, that are normally exposed to overseas travellers, felt the cold.

Economic clouds and the impending election put a dampener on activity in May when strikes by BA cabin crew had some very slight impact on travel related business.

Read the rest of the review.

Some 25% of diners who use discount deals say they would have eaten elsewhere had the deal not been available, while 20% would have stayed at home. 

“We have questioned the value of discount vouchers before and this research vindicates our belief,” said Horizons’ development executive Paul Backman. “Vouchers are untargeted in that while they persuade a percentage of consumers to dine somewhere they are also being used by more loyal customers who would dine in that restaurant anyway and don’t need to be persuaded with money-off vouchers.

“Deals in the eating out sector have become much more sophisticated over the past 18 months, but operators still need to work harder at attracting new customers, rather than purely rewarding existing ones.”

Two-for-one offers are the most common eating out vouchers used by diners, with money-off coupons and ‘meal deals’ ranking second. Women (19%) are more likely to use discount vouchers than men (12%) with those under 35 the most common age group to use them. 

PizzaExpress is the most popular place to redeem restaurant vouchers, although deals at McDonald’s (13%), Tesco (10%), Domino’s Pizza (9%) and Pizza Hut (7%) are also popular.

Some 44% of diners hear about vouchers from friends and acquaintances, with digital communication the second most important method, the majority of which come direct from the restaurant. Only a small number download their vouchers from websites such as Moneysavingexpert.com or Vouchercodes.co.uk, while others get them from smartphone applications such as vouchercloud or foursquare

Horizons’ quarterly QuickBite survey shows that overall the eating out sector has risen in both market volume and value over the past 12 months, although quarterly figures suggest a recent weakening in demand attributable to the impact of consumers staying at home during the World Cup in June.

The survey also shows how dining out is becoming more casual with a 9% decrease year-on-year in the number of people eating in a table service restaurant, with 5% more choosing takeaways and 7% more opting for fast food.

The value of the eating out market has increased 2.6% year-on-year from £31.4bn to £32.2bn while the total number of meals eaten out has risen by 3.2% from 2.84 billion to 2.93 billion to June 2010. However, while consumers are spending more per head when they do eat out – up 14.3% to £11.53 - they are eating out less often than previously, a year-on-year fall from 1.6 times to 1.4 times a week.

This is a solid set of results from a company that knows its business and despite the downturn, has stuck with its investment plans. Its stores are continuing to be refitted and new outlets have been opened. And this investment is paying off. Greggs now has over 1,437 sites in the UK, serving over six million customers each week.

Acknowledging that consumers now have far less money to spend, the company has also focused its promotions on value offers such as meal deals and breakfast promotions. All sensible stuff.

But Greggs acknowledges that there will be further inflationary pressures coming to bear over the next six months, including a rise in the cost of wheat and other basic raw materials. As foodservice and food retail operators will find it difficult to raise prices to maintain their margins, there's likely to be a hit on the bottom line for the sector as a whole.

Peter Backman
Managing Director
Horizons