Soft Brexit spend to reach £57.6 billion in 2018
Total OOH spend to YE November 2016 was £53.46 billion, in line with NPD Group’s prediction last year. For 2017, the NPD Group is predicting total OOH spend of £55.54 billion, up 3.9% on 2016 and then a further 3.7% increase in 2018 to £57.60 billion. The above figures assume a ‘soft Brexit’ environment; NPD’s ‘hard Brexit’ spend figures are £55.30 billion for 2017 (up 3.4% on 2016) and £57.17 billion for 2018 (also up 3.4% on 2017). The NPD Group believes foodservice operators will do well despite the challenges of lower consumer confidence, cost increases from wages, inflation, weaker sterling and growing business rents. The reasons they will do well include their track record of changing their menus, investing for the future and doing all they can to really understand their customers.
Cyril Lavenant, foodservice director UK at the NPD Group, said: “We have done ‘soft Brexit’ and ‘hard Brexit’ forecasts for 2017 and 2018. The good news is that there’s a relatively narrow difference between ‘soft’ and ‘hard’ visit estimates for the next two years, even though Brexit clearly began to slow the pace of growth in 2016. For 2017, the difference in visits is +0.4% (‘soft’) versus -0.2% (‘hard’) and there’s a similar story for 2018 with a variation of +1.6% versus +1.3%. So with many parts of the British foodservice market showing clear signs of strength and resilience, we don’t anticipate a sharp drop, either in a ‘soft Brexit’ or ‘hard Brexit’ environment.”
Quick Service Restaurants (QSR)
The NPD Group sees QSR visits rising to 5.96 billion in 2017 (on a ‘soft Brexit’ basis) and to 6.11 billion by end of 2018. There were 5.84 billion visits in the QSR sector in 2016. QSR has grown consistently in recent years, even through the 2008 recession, as this segment is more affordable, chain-driven and consistently injecting fresh investment. Within QSR, one of the strongest increases is likely in the QS Pizza/Italian channel, with visits rising 3.5% from 0.24 billion in 2016 to 0.25 billion in 2017, and a further 3.5% to 0.26 billion in 2018.
Casual dining operators enjoyed 0.51 billion visits in 2016. The NPD Group is predicting that visits will increase 3.4% to 0.53 billion in 2017 (on a ‘soft Brexit’ basis) and a further 3.4% in 2018 to 0.55 billion. The NPD Group says that with most of Britain’s casual dining business having taken root within the M25, there is abundant room to grow elsewhere in Britain and that capacity will support the sector well.
Cyril Lavenant added: “Foodservice operators throughout Britain are well aware of the challenges they face. Many are taking all the right steps to strengthen their businesses and profit from the expected growth in visits and spend.”