Strength of delivery to bring home bacon in UK foodservice industry over next two years, NPD Group reports


Global information company The NPD Group says the British foodservice industry should grow by an additional 83 million visits in 2018 (up +0.7% on 2017), despite stagnant wage growth and high inflation. In 2019, visits in the eat-out or out-of-home (OOH) market could grow by a further 93 million (up +0.8% on 2018). Delivery services will continue to expand rapidly and are projected to grow an additional 101m visits by 2019 (+16% on 2017). In addition, the thriving dayparts of breakfast and lunch, alongside the popularity of burgers and the continuing casual dining boom, will help drive the increases.

Delivery still expanding rapidly
Delivery has risen quickly to become a significant catalyst in the British foodservice industry. Its rapid rate of expansion looks set to continue as the likes of Just Eat, UberEATS and Deliveroo expand their reach across the country. This will encourage more foodservice operators to adopt delivery as a route to market, and NPD is predicting an additional spend of £656m (+17%) by consumers on delivery occasions by 2019.

Breakfast and lunch will support growth
Much of the growth in visits will come from specific dayparts. Breakfast currently represents more than one in eight of the 11.36 billion OOH visits expected by the end of 2017. NPD is forecasting breakfast visits will grow by +5.7% in 2018 and +4.8% in 2019. Meanwhile, lunch will remain the largest daypart and is forecast to grow steadily, by +2.2% and +1.9% respectively in the same two years.

Dinner to decline despite delivery trend
In terms of the average bill, dinner is the most expensive daypart but pressure on consumer spending will drive a continuing decline in dinner visits during 2018 and 2019. By the end of 2019, there could be 5% fewer dinner visits compared to 2016, a decline of over 134 million. However, the rapid rise of delivery, providing a more affordable way of ordering from restaurants in a manner that resembles eating out, will provide some relief. Without delivery’s success, dinner visits would register a much sharper decline.

Soft Brexit or hard Brexit?
The NPD Group’s forecasts assume a ‘soft Brexit’ scenario. However, a ‘hard Brexit’ scenario would see lower visits growth at +0.5% for both 2018 and 2019. The difference between ‘soft Brexit’ growth (+1.5% over both years) and ‘hard’ Brexit’ growth (+1.0% over both years) is the equivalent of 60 million visits, or £497 million.


Boost from burgers and casual dining brands
The popularity of burgers and the continuing appeal of Britain’s casual dining brands will also spur growth in Britain’s foodservice industry. Burgers are likely to retain their popularity and enjoy a boost from the delivery boom. The NPD Group expects burgers to lead growth in both visits and consumer spend. Outlets serving quick-service burgers will see visits grow by +5.1% in 2018 and +4.5% in 2019. Casual dining chains are forecast to increase visits by +2.8% in 2018 and +2.7% in 2019. Full-service restaurants serving chicken will benefit from its ongoing popularity and from brand loyalty among millennials and other consumers: such restaurants could grow visits by +4.2% in 2018 and +4.0% in 2019.


Saving on snacks
Snacking visits are also forecast to decline, as more consumers forego this discretionary eating-out occasion. Cutting back on snacks is an established consumer tactic for spending less on eating out, and in 2018 snacking visits could decline -1.2%, followed by a further decline of -1.1% in 2019.

Cyril Lavenant, foodservice director UK at the NPD Group, said: “Delivery shows no signs of running out of steam over the next two years and will help to bring home the bacon in Britain’s £55 billion foodservice industry. Burgers, casual dining, breakfast and lunch are also thriving and should help operators shrug off fragile consumer confidence, as well as inflation and stagnant wages, to achieve growth. We are especially bullish about burger chains and casual dining as these restaurants are meeting the consumer’s appetite for a contemporary experience that also offers a family-oriented treat. Regardless of a soft Brexit or a hard Brexit, any foodservice operator that invests for the future, and gives consumers the value, product quality and service quality they want, can look forward to growing their business in 2018 and 2019.”