The eating out sector in the UK is now worth a colossal £42 billion a year —but restaurants and food outlets will have to “work harder” for their money in 2012, a leading analyst house has warned.
Horizons says the foodservice sector has proved remarkably resilient over the last four years, with just a handful of high profile business failures, but it predicts trading conditions will test even the strongest businesses over the next 12 months.
“Although the number of corporate failures in the UK eating out sector has been fairly small, balance sheets have been stretched during 2011 and it will not take much to see the rate of failures rise, probably as early as the first quarter,” said Horizons’ managing director Peter Backman.
“High street restaurant operators will continue offering customers discounts, meal deals and money-off vouchers to improve traffic, which will depress their profit margins, although the anticipated fall in food costs this year will help counteract the cost of discounts.”
Horizons estimates that the foodservice sector was down 3%-5% in volume for 2011, with the average price paid by consumers falling as a result of discounting and consumers selecting cheaper menu options and foregoing starters, desserts or side dishes.
Since the downturn began, many eating out establishments have boosted customer levels by extending opening hours and offering new services such as breakfast, mid-morning coffee, and even home delivery.
Others have provided free Wi-Fi for customers, revamped their interior design, invested in staff training and introduced new styles of dishes such as sharing plates, smaller portions and healthier options.
Backman said the UK foodservice industry’s track record of reinventing itself and adapting to change meant that many of the country’s 260,000 food establishment would likely rise to the challenge.
“The businesses that don’t embrace change are those that will suffer this year, but outlets that adapt to the demands of the new consumer by offering something different, focusing on good quality for a reasonable price, are those that will survive the year ready to focus on growth when consumer demand improves,” he concluded.