Peter Backman, foodservice expert and managing director of Horizons, the UK-based analyst and specialist information consultant for the foodservice and hospitality sector, discusses the current state of the UK eating-out market, the latest trends and how operators can adapt to the present challenges
While many are talking of the continued boom in the eating-out market fuelled by the fact consumers are dining outside the home more often, it’s worth weighing this up against the evidence that suggests it’s not all rosy in the foodservice garden.
Overcapacity in the sector is one of the biggest issues faced by eating-out operators and it’s a fact that consumers are now spoilt for choice when it comes to dining out – something that is likely to keep menu prices fairly stable because of the intense competition amongst operators.
This overcapacity in the UK’s eating-out market is likely to slow growth in the sector in the longer term by putting downward pressure on like-for-like sales, while competition amongst operators for new sites will continue to intensify.
Over the past decade growth in the number of food-serving outlets has been strongest in the pub sector where operators have moved primarily from wet-led sales to food-led. Horizons figures show the number of pub restaurants in the UK whose food sales exceed their wet sales has grown from 2,600 in 2001 to 6,100 in 2014 – a 135% increase.
The number of chain restaurants has also shown strong growth; rising from 7,700 outlets in 2001 to some 11,900 in 2014, up 55%. Meanwhile, quick service restaurants [primarily takeaways, home delivery and counter-order outlets] have seen a 78% growth, from 7,600 outlets in 2001 to 13,500 in 2014. This growth in chain operators is largely at the expense of independent outlets, who still struggle to compete.
It is difficult to see how this level growth in food outlets can be sustained in the longer term and the competition amongst operators means menu prices will remain fairly flat and margins tight. Our recent Menu Trends report shows the price of an average adult non-meal deal dish has only risen 0.3% since last summer and, in fact, has gone down by 1.3% year-on-year, now standing at £6.88.
While operators have kept main course dishes at pretty much the same price over the past 12 months, they have adjusted prices of other courses to cover increasing costs. Starters, for example, have gone up 10.6% since last summer and desserts have risen by 3.8% but this is off-set by the fact that many more dishes are being included as part of meal deals than last winter, with 71% of eating-out brands offering meal deals as part of their winter menu.
Coping with competition
But we have seen UK foodservice operators cope with tough competition already. The blurring of eating-out formats is evident as operators seek to differentiate themselves along with the move into new locations such as shopping malls, leisure outlets and transport hubs.
Businesses are successfully broadening their offer to appeal to a wider audience at different times of the day. Pret a Manger, for example, has developed a sit-down evening food offer; Starbucks has turned its London Covent Garden site into a high-tech, wine bar offering platters of food in the evening; and Costa, as well as Starbucks, has joined forces with a healthy food brand, while Pizza Hut is trialling alcohol sales in some units.
Most restaurants have extended their opening hours to maximise return on the space they have and many are offering all-day opening hours to catch consumers as they eat at increasingly varying times.
Consumers are looking for a good quality eating experience wherever they are. This, and the pressure on sites means that operators are having to be extremely innovative and change their offer to adapt.
The impact of the National Living Wage, which, although an informal benchmark, will also be significant in the short-term as employers seek to hold on to good staff by paying the recommended hourly minimum wage. Competition for staff will inevitably push wages to this level across the sector.
But operators don’t stand still, they adapt in a surprising number of ways. Our Menu Trends research has revealed that kitchens are continuing to modernise cheaper dishes by giving them a new twist and a trendy name.
The popularity of humble macaroni cheese, for example, continues as ‘mac ‘n’ cheese’ clocks growth of over 550% on British restaurant menus since 2010. Mac ‘n’ cheese has become a firm favourite on British menus, served in a variety of ways such as inside a burger or calzone, or as a side dish.
Likewise the pulled pork phenomenon is far from over, with 20% more menus featuring the dish year-on-year – with explosive growth since 2010 when pulled pork was virtually unheard of.
Hash potato dishes are another revamped dish growing in popularity, listed on 18% more menus this year than last. Hash is being served with ingredients such as halloumi and beetroot, duck confit, eggs or chorizo.
Like macaroni cheese, coleslaw has undergone a similar makeover and re-emerged as ‘slaw made with ingredients as varied as bacon and cranberry, fennel and beetroot, or simply as a chilli slaw. The popularity of ribs continues too – up 11% year-on-year – appearing as a main course or on sharing platters topped with a variety of sauces.
It’s this kind of innovation that will boost margins and keep menus fresh and contemporary and it’s worth knowing that while beef burgers and pizzas are still the nation’s more frequently listed dishes, burgers showed a decrease of 12% on menus since summer 2015, and a 4% decrease year-on-year. At the same time, rump steak is becoming a more popular with steady growth over the past two years at the expense of ribeye and sirloin, which both showed a slight decline.
So, this year operators face many pressures – not least the issue of keeping their menus fresh and their like-for-like sales buoyant. And when it comes to food trends we think they’ll be a strong influence from South America and Brazil, inspired by the 2016 Olympic Games in Rio de Janeiro. Home delivery will also benefit from the Games as consumers opt to stay at home to watch the major events and dishes appearing on many menus will get ever hotter and spicier.
It’s a challenging time for operators with competition at its most intense. Those that maintain their quality, keep their menus fresh, their prices competitive and think of new ways to adapt the old will emerge the winners.
Superfoods emerging on British menus
- Avocado – in salads, sandwiches, burgers or ‘avo’ on toast for breakfast.
- Quinoa – used in a similar way to rice or in cake or salad.
- Samphire – seeing a resurgence as an accompaniment to fish.
- Chia seeds – served in yoghurt or with porridge.
Source: Horizons Menu Trends February 2016
Developing menu trends
- Eastern Mediterranean and Middle Eastern influences – such as khobez (flatbread), halloumi and pomegranate.
- Miso and dashi – in soups and broths.
- Korean influences – such as vegetable-based kimchi and Korean-style BBQ ribs.
- Popping candy – still growing as a novelty ingredient.
- Lentils – growing in usage for salads, ragus and other vegetarian dishes.
Source: Horizons Menu Trends February 2016