THE UK’s eating out sector is forecast to grow 3% in value over the next 12 months to £82.5bn, the highest level of growth since the recession began.
Allegra Foodservice has found that emerging fast food concepts, coffee shops and the further proliferation of the street food movement will be the sales growth pace-setters within the UK’s eating out sector in 2014, with the market forecast to grow 3% in value over the next 12 months to £82.5bn. This will be the highest level of growth since the recession began.
The growth will be supported by an improving economic outlook, strengthening consumer spending power and increasing physical expansion from 4.5% in 2013 to 5.5% in 2014 of branded restaurant and managed pub chains.
The Allegra Foodservice Market Outlook report, which features online, in-depth interviews with senior executives across the sector, finds that the industry is positive about current trading conditions and that three-quarters expect to see trade improve further during 2014. However, the majority of survey respondents believe that full economic recovery will not take hold until the second half of 2015.
Executives identified intensifying competition as a core business challenge overtaking concerns around rising food costs, and that building stronger customer loyalty will be a critical success factor.
They also said they had long-term growing confidence around increasing eating out activity – despite ageing demographic trends.
The research highlighted that the pub market continues to polarise, between premium operators with valued points of difference and outmoded pubs with “non-descript” food offers.
Simon Stenning, Allegra Foodservice strategy director, said: “Eating out market value growth of 3% in 2014 will be the highest since the recession began and is clearly welcome news. This will come from a combination of increasing consumer eating out participation, an uptick in visit frequency and some average spend gains as consumers start to feel more confident about their personal finances and spending power.
“However, the growth will be hard fought for in an increasingly competitive trading environment and gains will be patchy across the market. The onus on operators will remain innovating on product, refining menu price architectures and adding greater value across the consumer experience to build stronger customer loyalty.”
Stenning said that the key consumer trends that operators need to embrace include the enduring recessionary legacy and a growing requirement for informality, and these need to be reflected in skilful menu engineering, with selective premiumisation.