Retail intelligence experts Springboard have collaborated with The NPD Group to publish their second hospitality report, providing major insights on trends in the eating out market in the UK. The report explores the two year period from the Brexit referendum in June 2016 to June 2018, examining shifts in consumer activity, eating out demand and the degree of change that has occurred.
The period following the Brexit referendum has seen a challenging economic climate and while the eating out market has had to contend with declining visits, spending levels have risen. The on-going and future success of the eating out market is inextricably linked to that of the wider bricks and mortar trading landscape, where footfall has been declining approx. 1.3% per annum since 2008. Delivery is growing rapidly but still remains a small proportion of total spend; and so the majority of spend hinges upon visits to operators in bricks and mortar destinations, where consumers continue to seek out experience-led dining opportunities.
While some restaurant operators have struggled with rising costs, others have discovered pockets of growing demand such as quick-service restaurants, delivery, breakfast and particular population groups, and have enhanced their market share by exploiting these.
The uncertainty created by Brexit negotiations makes predicting the future impact on the UK consumer more difficult, but it is recognised that eating out visits will slow further. It can be challenging for hospitality operators to know which area to focus on for future trading success but the report sets out recommended responses to the changing business environment that include improved experiences, developing a strong brand, building loyalty and understanding the competition.
Diane Wehrle, insights director at Springboard, said: “The ever growing demand by consumers for experience when they visit bricks and mortar destinations means that the eating out market is increasing in scale and significance. This report, which is a follow up to our first eating out report published last year, is unique in examining the eating out market alongside other sectors of retail, establishing key trends and setting out how operators can respond to ever increasing consumer expectations in the midst of what is a challenging economic climate.”
Cyril Lavenant, head of foodservice UK, NPD Group, said: “Considering the tumultuous changes currently occurring not only in the high street but across all retail locations, it is more important than ever to have a holistic view of events. Many of the issues being experienced are common to retail and to the eating out market, so the release of this report is timely and critical to help people’s understanding.”
KEY TRENDS FROM THE EATING OUT REPORT
Increasing Appeal of Quick Service Restaurants: the quick service restaurant (QSR) sector is the largest segment of the eating out market, representing 53% of all visits and growing 5 times faster than total eating out market from YE June 2016 to YE June 2018. QSR operators have refurbished, opened new stores, broadened their menu and extended opening hours to increase their appeal to consumers looking to reduce their spending.
Delivery and Off-Premise Eating: delivery remains the most important growth channel for the entire eating out market. Spend per delivery transaction is more than 25% higher than overall average spend, and since YE June 2016, the increase in delivery visits has been over 3 times greater than the overall OOH market. While the entire market has been impacted by a decline in visits, delivery has continued to expand.
As well as delivery, off premise visits are up over 4% since YE June 2016, as workers experience longer commuting times, shorter lunch breaks and greater exposure to apps that allow ordering ahead for collection. In just two years, order-ahead visits have increased almost 75%. Part of the appeal of off premise visits – particularly on-the-go, non-delivery – is that they are perceived as good value with average cheque per eater approximately half the cost off the on premise equivalent.
The Rise of Breakfast and Decline of Dinner: over the two years to June 2018, breakfast has been the main contributor of visits growth in the eating out market, due to increased penetration and choice as well as frequency of use. Off-premise breakfast visits have experienced most significant growth of 9%, fuelled by a market-wide focus on coffee. 25% of coffee is consumed at breakfast and 16% as part of a morning snack, so many operators have introduced a credible coffee range as a way of maintaining customer loyalty.
While breakfast is strengthening, dinner has declined -2% since YE June 2016, as frequency of visit has fallen by -5%. The average cheque of a dinner occasion is high compared to breakfast, snack or lunch, so fragile consumer confidence and weak increases in disposable income have provided a difficult backdrop for growth in this area.
Key Population Groups in the Eating Out Market: The 16 – 34 year old age bracket is another area of weakness in the UK’s eating our market. 16 – 34 year olds represent 26% of the UK population yet visits among this important age group have declined by 3% since YE Jun 2016. This decline can be attributed to high debt levels and significant living costs. While spending by this group is down, in the two years since the EU referendum vote, eating out visits by families have grown almost 2% and visits by consumers aged +50 have grown 3%.