For dealers on the lookout for new restaurant fit-out projects, the latest analysis from research firm, the NPD Group, paints a mixed picture.
The group predicts that the British out-of-home (OOH) or eat-out foodservice market will slide in 2019 and 2020. The market peaked at 11.35bin visits in 2017 but dropped – 0.5% to 11.29bn in 2018. Despite population growth of +0.6% per annum, NPD analysed there will be a further drop of -0.5% in 2019 and another -0.1% in 2020 to reach 11.23bn visits.
However, it is predicting a +5.0% increase in spend to £59.47bn by end of 2020, against the £56.62bn for 2018. This will be mainly driven by operators increasing menu prices as they respond to cost pressures, including inflation. The average individual cheque reached £5.00 in 2018 and will rise an additional 5.6% by 2020 to £5.30.
NPD says a key trend in British foodservice is the decline of the on-premise sector (food and drinks consumed where purchased) versus off-premise (delivery, takeaway/grab ‘n’ go and drive-thru). This is the result of the long-term decline in retail footfall as more shoppers purchase online. The on-premise market peaked at 4.58bn visits in 2016 but dropped in the two years following. It is forecast to lose a further 8% by end 2020 (vs. 2018) to reach 4.02bn visits. On-premise spend should increase marginally – but mainly as a result of increasing menu prices.
The research firm is predicting a better performance in the off-premise sector. NPD forecasts off-premise visits will reach 7.21bn visits by end 2020 (4% higher than 2018), while spend is forecast to jump +10% to £27.87bn.
Because takeaway and grab ‘n’ go currently contributes such a high percentage of off-premise visits (83%) even low growth makes a difference. NPD’s forecast is for takeaway and grab ‘n’ go visits to increase by 1.6% and spend to go up 6% by end 2020. NPD says the industry will also ramp up delivery and invest in drive-thru as an additional way of responding to the decline on the high street.
NPD’s forecast is for consumers to spend 22% more on delivery by end 2020 to create a delivery market worth £5.8bn annually. The number of delivery visits is predicted to jump 17% by end 2020 to reach 882m. The delivery market currently accounts for 13% of all off-premise foodservice visits but by end of 2020 delivery’s share should have increased to 15%. By 2020, delivery could comprise almost 10% of spend in the total British out-of-home (OOH) or eat-out foodservice market.
The established trend of consumers trading down to cheaper eats when eating out is forecast to continue. The QSR channel that includes well-known burger and bakery chains is expected to attract 41m more visits each year by the end of 2020 to reach nearly 6bn visits annually, representing more than 53% of the British foodservice industry in visit terms. NPD’s forecast is for QSR to attract £1.53bn more spend by end 2020 to reach £24.6bn.
Casual dining is also predicted to see strong growth in visits and spend. By end 2020, it will be attracting an additional 43m visits to represent 5.5% of all OOH visits, while spend will jump +15.5% or some £960m. By contrast, full-service restaurants will continue to decline with a loss of 63m visits, a drop of -9.3%. Similar to their QSR cousins, casual dining operators have been quick to expand into delivery. All leading casual dining chains are benefiting from this move into delivery, as well as an emphasis on product and service quality.