Allegra Strategies’ Project Restaurant 2013 report on the branded restaurant market has just been released and – as revealed in Allegra’s valuable Restaurant leaders Summit just last week – not only forecasts significant growth leading up to 2018, but also identifies the significant trends and market changes that underpin the growth.
The UK’s Branded Restaurant Market is set for encouraging growth as branded chains continue to win market share from independents. This authoritative report covers all sub-sectors of the branded restaurant market including Fast Food, Pub Restaurants and Casual Dining Restaurants. With an expected turnover of £16.4bn in 2013, this market is set for accelerated growth through physical expansion and positive like-for-like performance, including modest underlying volume growth.
Eating out habits are changing
Consumers’ eating out habits are, however, becoming less structured and more informal, and a defining core capability that will influence the changing dynamic of the market is the capacity for restaurants to trade all day.
Changing market dynamics: highlights
- Branded/managed pubs, forecast at £7.6 billion turnover (for 2013) across 8,488 establishments with annual growth of 6.0% in sales and 3.1% in outlets, are well placed to benefit from this propensity to eat out informally throughout the day. Foremost here is JD Wetherspoon, leading the way with differentiated, quality, value breakfast options
- Branded fast food, valued at £4.5billion turnover across 5,343 outlets, delivering annual growth of 5.7% in sales and 4.1% in outlets, is also in a strong position to benefit from all-day dining. Leading brand McDonald’s continues to go from strength to strength, not least due to its all-encompassing menu available all-day and, in many cases, through the night
- Branded full-service/casual restaurants are at a relative disadvantage. Growth in 2013 is robust with turnover of £4.3 billion across 3,896 establishments, representing annual growth of 6.3% in value and 3.7% in outlets. However, it will be harder to maintain growth and win consumer share as the market evolves
- Breakfast: the inability to successfully offer a fast, quality breakfast menu will hamstring many of the leading casual brands. Casual brands are already under pressure as their key day-parts, particularly lunch, face intense competition from the widening eating out market
- Branded casual restaurants: Giraffe is one of a few good examples of branded casual restaurants catering to the all-day trend, influencing the strategic investment by Tesco. However, in a fragmented segment the branded casual chains must re-evaluate their offer in order to enhance relevance
Brands are winning market share
- Branded chains are winning market share from independents. Since 2007 branded outlet share has grown by 2.4 points to 14% by 2013, and by 7.3 points to 35% in share of total turnover value.
- Allegra Strategies estimates that the branded restaurant market will continue to take share from independents in the next five years to hold 16.4% of outlets and an impressive 43% of value by 2018
- Branded/managed pub restaurants are significantly out-performing the wider pub market, driving the increasing branded market share. Independent/Tenanted pubs face more closures, pressure from off-trade and declining consumer engagement with wet-led formats. Branded pubs have increased outlet share by 3.1 percent points to reach 16% by 2013. Value share has increased by 8.8 percent points to 48% since 2007, driven by the significant increase in food sales
- Allegra Strategies estimates that branded/managed pubs will grow overall market share of the total branded restaurant market to 50% by 2020 – as stronger food focus, greater expertise and the supportive ageing demographic trends, all play in their favour.
New entrants, new owners
- Consumers passionate about food, demanding higher quality, better value and more diversity, will shape the future branded restaurant marketplace. The street food revolution is bringing exciting new authentic cuisines, and this low-cost market entry model is gathering momentum, encouraging fast growth and is poised to directly influence strong operators and challenge weaker small brands and independents.
- Allegra’s forecast of 5 year 6.1% CAGR in the value of the branded restaurant market will comfortably out-perform the wider hospitality and retail markets, and will attract growing interest from a wide spectrum of parties including food retailers, private equity, large corporates and contract caterers, all looking to invest in a robust, growing market
Eating out is the new normal
Anya Marco, Director of Insight, Allegra Strategies commented:
“Eating out is the new normal for UK consumers. The ability to eat out at any time of day is leading to a change in day-part frequency as consumer visits at breakfast are growing, while lunch and dinner are under pressure. The slow economic growth is less impactful than feared, though consumers are employing various money saving tactics in order to maintain their eating out habits. The Pub Restaurants channel is the most frequently visited by UK consumers, and JD Wetherspoon’s is the nation’s favourite restaurant brand for the first time. Make no mistake, pub restaurants will become an increasing force to be reckoned with!”
Allegra Strategies’ Project Restaurant 2013 report
Allegra’s report is on the UK Branded Restaurant industry, including casual dining, pub restaurants and fast food, and used over 125 in-depth interviews with key industry decision-makers; 2,000 in-depth online interviews with a nationally representative sample of UK restaurant goers; 18,000 online surveys with Allegra’s UK Eating Out Panellists; 2,000 online surveys with UK consumers regarding healthier eating out habits; analysis of 120 restaurant brand profiles.
The 300+ page detailed report in hard copy and PDF formats covers:
- Detailed executive summary
- Industry leader ‘Top of Mind’ report
- Market size and growth forecasts
- Market drivers and inhibitors
- Key segment opportunities and trends
- Comprehensive brand profiles
- Pricing and profitability analysis
- Business challenges and competencies
- In-depth restaurant consumer research examining purchasing behaviour, brand perceptions and future trends
- Future market outlook
The full, final report was launched at Allegra’s Restaurant Leader Summit on 19 June 2013.
About Allegra Strategies
Allegra Strategies is a London-based strategic research consultancy recognised as a global leader in the foodservice and coffee shop sector. Allegra Strategies’ leading-edge research and thinking assists growing companies to develop and improve performance.
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