Bakeries compete for bigger slice of £22.5bn food-to-go market and get into click & collect and delivery

Global information company The NPD Group says data from its new Bakery Trends Tracker report show bakery outlets have over the past year (YE April 2019) seen the strongest growth in on-premise business among major British quick-service restaurant (QSR) channels, with sales and visits up more than 19% and nearly 18% respectively in the past year. The NPD Group says Britain’s bakery chains and independents are now in a strong position to increase their off-premise business and challenge the well-known sandwich retailers, supermarkets and quick-service restaurants for a larger share of the food-to-go, click & collect as well as delivery channels.

Targeting food-to-go

Recent figures for the British out-of-home (OOH) or eat-out foodservice industry show that bakery outlets are already a popular option for food-to-go customers with eight out of 10 bakery purchases consumed on the move. But with bakeries only accounting for just £1.2 billion (5%) of Britain’s £22.5 billion food-to-go business annually, up from £1 billion five years ago, there is clearly room to grow. Bakeries also only service 3% of total click & collect but sales are already increasing from this low base. While delivery business for bakeries is also still at a very low level, delivery volume is up nearly 63% in the past year and the value of delivery sales has increased by over 47%.

Peter Linden, insight manager foodservice UK, The NPD Group, said: “Bakeries and patisseries are an important part of Britain’s £57 billion ‘out of home’ or eat-out foodservice industry. Many businesses – small and large – are moving away from their traditional bakery offering to a sharper food-to-go focus. This involves putting on good coffee, offering new food choices such as pizza, salads, pasta, hot sandwiches, croissants, pasties and much more, and meeting the demand for click & collect and delivery. Bakeries by their very nature focus on food-to-go and this is where the growth is, with sales in this part of Britain’s total OOH market having grown by 8% in the year to April 2019. Bakeries can secure more growth by increasing their share of the food-to-go market from their current level of just 5%, and by bringing their food-to-go appeal to dayparts they don’t normally service, such as dinner. They also have scope to provide delivery, especially at breakfast time and at weekends.”

Bakery is hot

Britain’s bakers and patisseries are in good shape based on their recent performance in total sales, visits and servings. Bakery outlets boosted sales by 6% in the year ending (YE) April 2019 and increased visits by 2.2%, outperforming pizza and chicken outlets, which saw visits drop. The best evidence for success is in servings, with bakery outlets recording a 9% jump to 1.17 billion servings – the strongest servings growth in the past year of any other quick-service-restaurant (QSR) channel.

Bakeries also satisfy part of the British demand for snacking (a market including confectionery and soft drinks worth some £9 billion YE April 2019) with a 10% increase in snack sales in the past year, the strongest total sales growth in any QSR segment. They have enjoyed the strongest growth in coffee servings of any QSR channel YE April 2019, with servings of coffee up nearly 19%. Around 1.46 billion visits to bakeries for YE April 2019 involved a deal or promotion, up 16% over the past year.

Appealing to young and old

The attraction of bakeries is broad-based. In the past year, among the 16-to-24 age group, bakeries have achieved a 15% growth in visits and a 5% growth in the 50+ age group. Bakeries were the fastest-growing segment among the 50+ age group and the second fastest for 16-to-24s.

Linden added: “Say the word ‘bakery’ and some might think of a traditional ‘old school’ family-run business that sets to work each day well before dawn turning out bread, savoury bakes, pastries and cakes for sale across the counter. Those outlets still exist throughout Britain. But there are many other ambitious outlets already competing head-on with the big high street names. We believe competition will heat up. Bakery chains are ideally suited to riding some of the big trends in British foodservice and have responded imaginatively to consumer demand for convenience.”