The early hot competition

Out of home breakfasts are growing much faster than lunch.

If catering equipment distributors and manufacturers want to know what sectors they should be focusing their efforts on, they could do a lot worse than checking out the latest data released from the NPD Group.

This shows that both the lunch and breakfast eating out markets are hugely competitive. There is competition between branded operators and independents as well as added pressure for all players from the growing trend to spend money on out of home (OOH) breakfasts, with this day part growing much faster than lunch.

With high-street restaurant chains having invested vigorously in their lunch products since the 2008/2009 downturn, the well-known branded foodservice chains are successfully building business at the expense of independent operators. NPD Group figures show that as of the year ending (YE) June 2008, there were 13 chains with a 1%+ share of the OOH lunch market. By YE June 2016 this had grown to 17 chains.

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NPD data also shows that the average bill for eating an OOH breakfast is 31% higher (at £3.30) than it was 8 years earlier. In contrast, the average bill for lunch is only 6.5% higher over the same period (£4.57 versus £4.29). While people still spend more at lunchtime, the gap is closing. As of YE 2008, the price of an eat-out breakfast was 59% that of lunch; fast forward to YE 2016 and it is 13 percentage points higher at 72% the price of lunch. It’s the same story when viewed in terms of visits. Since YE June 2008, lunch has lost over 80m visits, while breakfast has added an extra 107m, and dinner is flat.

The research group says that more people are having breakfast out because they don’t have the time to focus on that meal at home. Breakfast offerings on the high street – both food and drink – are also more numerous than before and offer wider choice. With operators opening much earlier too, breakfast out amounts to a much better option than anything prepared at home.

Cyril Lavenant, NPD’s director of foodservice UK, said: “Foodservice operators providing lunches of all kinds are working in an intensively competitive marketplace. The well-known brands are succeeding at the expense of independent operators.

“But the bigger story is that it’s easier than ever before to buy a good breakfast on the high street. In addition, some 16% of breakfast occasions away from home occur at the relatively late time of between 10am and 11am, meaning that lunch for some might then become just a quick bite of something light that people bring from home. In that case, they would skip buying their lunch from outside. So as breakfast away from home grows, especially if this happens later in the morning, there is a danger breakfast will cannibalise lunch business. That’s a trend foodservice operators should watch.”

Lunch has declined during the week in visit terms but is seeing strong growth at weekends, with 8% more visits than 8 years ago. Breakfast though is doing even better with over 20% more weekend visits. For YE June 16 versus YE June 08, on-premise visits were up 5.8%, while off-premise (‘lunch on the go’) visits were down 6.3%. However, lunch on-the-go visits have recently picked up, increasing in the past year to June 2016 by 3.9% versus a slower growth of 1.7% for on-premise visits.

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