The catering market struggled during the recession but has experienced a rising trend in expenditure since 2010 and has proved to be a successful sector, outperforming most other areas of consumer spending over the last 5 years, according to AMA Research.
The research firm has now published the second edition of its Non-Domestic Catering Equipment Market Report – UK 2015-2019 Analysis, which says that in 2014, the non-domestic catering equipment market was estimated to be worth £765m. This represents a growth rate of around 4% on 2013.
The market is considered to be mature across all sectors. As a result, there is limited potential for growth through increased penetration, making the market subject to performance of the overall economy and food industry.
The catering equipment market has experienced difficult trading conditions in recent years, especially in 2009 and 2010 when it declined by over 15% in total. This reflected the poor economy and struggling leisure and hospitality sectors. Whilst the government remains committed to public sector cutbacks affecting some demand, particularly in government office catering due to staff reductions, the budgets for the NHS remain secure, along with educational catering which has been singled out and budgeted for future growth in catering needs including the extension of free school meals.
The main factor supporting market growth of the catering equipment market since 2010 has been the overall improvement in the economy and the strong resilience of the restaurant sector. Innovative concepts and new restaurant brands, along with an improvement in household spending on eating out has helped grow the catering sector – and therefore demand for catering equipment.
Factors supporting market growth include product development creating added value features; higher hygiene standards; the requirement for smaller and more environmentally friendly, sustainable products, often of higher value, in response to tightening legislation; and the development of restaurant and hotel chains. Factors negatively affecting market growth are increased price competition particularly from lower value imports; and longer life-spans of products reducing replacement cycles.
Cooking equipment represents over 50% of market value, and is the largest sector, due in part to the high cost of these products. Refrigeration accounts for around a quarter, with steel fabrication, warewashing and other products making up the remaining market value.
The leading end user is the hospitality sector, with restaurants, cafes and bars accounting for around 54% of the market. The remainder is accounted for by health and education, with a reasonable share, hotels, and other sectors such as offices, leisure and retail.
The outlook for the UK economy is good, although somewhat still cautious, while the hospitality industry continues to grow with the restaurant sector particularly a factor influencing growth in catering equipment demand. Consumers are eating out more often and business investors have renewed confidence and are once again investing in future new business.
The government has committed to reducing the level of public sector debt, resulting in reduced levels of expenditure across many government departments. This will continue to depress demand for catering equipment within these departments, but other sectors continue to show ongoing sustained budgets, for example in healthcare with education receiving an extra boost of over £1 billion in funding in 2014-15 for the free school meals programme.