Eating-out market forecast to rise to £65bn by 2017
Allegra predicts that consumer spending will rise alongside increased average earnings and a further drop in inflation, in the short term, will fuel sales growth of the sector in 2013 of 3.6%.
The study said that growth of the informal eating out market (with 226,350 outlets) outperformed growth of the rest of the foodservice market and the wider retail market. The total UK foodservice market is estimated to reach £75bn in 2012.
It said that value growth was being driven by increased eating out frequency, physical expansion of outlets, as well as price inflation.
The report found that fast food is dominating market growth, with Subway the main driver of expansion growth in absolute terms, adding 134 stores to its estate to reach 1,557 outlets, followed by Domino’s adding an additional 102 outlets.
The leading group in terms of turnover is McDonald’s, followed by restaurant group Yum! Brands, with brands, KFC and Pizza Hut.
Jamie’s Italian stands out term of sales per outlet, with average weekly sales at £50,000 - a figure the report said which surpasses other brands’ performance in the market.
However, it found that margins remain under pressure, with operators having to work harder for consumer spend and the focus continues to be on cost efficiencies, in order to bolster profitability.
It said that consumer confidence was fragile with 45% of consumers stating they do not feel confident about their future income levels. This lack of confidence influences 62% to spend cautiously when eating out.
Despite this, it said that eating out is ingrained in consumer lifestyles with one in three ensuring they have enough money every month to eat out, with many trading down for this affordable discretionary spend.
Allegra said that there had been a change in spend in eating out, with lunchtime spend down to £7.07 in 2012, from £7.34 in 2011; however, evening dining out spend had increased to £14.37 from £13.11 previously.
It also found that the average number of visits by customers per month had risen from 4.1 lunches in 2011 to 4.5 in 2012; dinner had increased from 2.4 to 2.7 visits per month and breakfast from 1.0 to 1.7 meals.
The rise in breakfast being eaten out of home has been fuelled by a greater number of operators improving their breakfast range and offer.
Allegra said that it expects new/emerging fast food to be the winning business model in the next three-five years in terms of growth.
It said that foodservice leaders and operators such as Leon, Chipotle and Pod are showing signs of robust sales and expansion growth as the consumer positively responds to newer, healthier fast food offerings.
