Fast casual dining set for rapid growth in UK foodservice, reports The NPD Group

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Resurgence in out of home eating

Resurgence in out of home eating

Eating out of home is poised for a modest and slow recovery over the next three years of 1-2% per annum, according to the latest figures and forecast from global information company The NPD Group.

The trend for consumers to ‘trade back’ to eating out will be welcome news for a sector that lost 90m visits in 2011, and recovered only 14m last year, said researchers. NPD Group has looked at how the recession has changed people’s eating out habits, and who is set to take advantage of the resurgence.

What consumers eat out and where they consume it has changed over the past five years, The NPD Group found. New, smaller retail/supermarket food-to-go footprints are competing with established high street brands. There is an emerging fast casual sector, new-and-improved quick service offerings, new concepts and formats plus refreshed menus, healthy food options, updated décor and improved service. All these elements will help the sector deliver that all-important 1-2% growth this year, said researchers. 

One of the behaviour changes has been the rise of the deals and promotions. Last year just over 25% of all meals and snacks eaten out of the home were on a promotion. However, as operators and manufacturers take price increases in response to the expected food inflation, the focus will clearly need to shift away from price to value. Consumers have become more controlled spenders, but not afraid to spend when they find good value, quality, and trust the product, and its provider, said The NPD Group. So the way forward becomes clear. Winners will focus on ‘menu value’ not ‘value menu’. 

Eating breakfast out-of-home was a key trend last year, growing 8% in 2012 and biting into lunchtime sales, report researchers.

Guy Fielding, director of business development for The NPD Group, said: “The away-from-home morning meal is seen as more acceptable, and a necessity, and with our increasingly busy lives, starting the day with a takeaway porridge or toasted Panini is more desirable – and affordable – than buying lunch out.”

More operators are set to move into this growing market as it continues to expand in 2013.

Another growth area is family dining, where socialising over a meal to celebrate a special occasion is on the rise. Premium quick service restaurants are attracted to this family audience. According to The NPD Group, with an existing 6% market share, premium quick service (fast casual) in the UK is bigger than the US market where it sits at 4%.

Fielding states this sector of the foodservice market is poised for rapid growth as new concepts open up rapidly and consumers respond favourably to the offering.

One trend that doesn’t seem to be a trend at all is for healthy eating when dining out. Research by NPD Group found very few people in the UK said wanting something light/healthy was a primary motivation for eating meals and snacks outside the home; just under 3% of respondents reported this as a primary motivation (up 0.5 ppts since 2008). In fact people tended to equate healthy dining with words like fresh and natural – rather than worrying about the calorie count that has appeared recently on menus in the UK. 

While there are winners, there are losers. The UK’s eating out-of-home sector is no exception. NPD Group predicts independently-owned pubs that don’t offer food, and ethnic takeaways and restaurants that aren’t able to adapt their offer to compete with the supermarket meal deal won’t benefit from this year’s predicted growth as their business continues to suffer. 

Fielding said: “If there is one thing the recession has taught operators in the foodservice sector, it is you need to adapt constantly to survive – the old ways are gone for good. The British consumer eats out more than any other in Europe – 142 times per person in 2012 – but their eating out habits have changed forever. From the breakfast, to family dining, to the rise of the fast casual sector, the message is know your customer, monitor your competitors and build on your strengths. In 2013 value and differentiation will be vital to enjoy any of the low and slow recovery we’re predicting.”