WINNING AT DINING

The UK Foodservice Landscape

2014-15

: INSIGHTS

Report Menu

2014 – LandscapeTrendsInnovationFlavoursCuisine2014 and Beyond

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Introduction

Despite testing economic times the UK foodservice market continues toexpand. Now worth close to £83bn 88% of consumers are eating out ofhome on average 13 times per month. With over 325,000 eatingestablishments the foodservice arena continues to grow its reach andwith predictions that economic recovery will continue this sector offers ahost of opportunities for Scottish food and drink companies.

With a further £10 billion of growth estimated for the UK over the next 5years there is a huge opportunity for operators and suppliers to prosperby tapping into the trends that will inspire chefs, channel and outletdevelopment, be it Michelin starred restaurants or high street coffeeshops.

This report, from Scotland Food & Drink’s INSIGHTS team, supported byScottish Enterprise, aims to deliver some of this insight, looking at thelandscape, trends, innovation and cuisines that will be the keyingredients for 2015.

If you are keen to find out more or would like an in-depth analysis of aparticular area (whether foodservice, retail, shopper or category)please contact us using the details at the end of this report.

Kenny Martin

INSIGHTS

Key sources for this report; Foodwatching, Allegra Strategies Dining Trends 2013-14

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Dining Landscape 2014

The total UK Eating Out market in 2014 is estimated to be worth £83billion. Consumers are slowly “loosening their belts” and spending moreof their cash dining outside of their homes, leading to the strongest YoYgrowth, 2.8%, since the start of the recession. However many consumersare still feeling the pressure on their wallets and spending power .

The 329,402 outlet Eating Out market saw net new space growth of 1%2013-14, but the legacy of the economic slowdown has been evident withlower value segments, such as Retail Grab & Go, Coffee Shops and FastFood, seeing the strongest value growth over recent years.

Consumers have adapted their behaviour in order to sustain eating outhabits by being more value-conscious. Low to mid-value establishmentshave tended to perform well with 37% of consumers increasingly visitingplaces that charge less than £10.

There has been a noticeable trend towards new “Fast Casual” diningoutlets. This is working its way north of London with diners increasinglyvisiting this channel as it provides good value for money and matchesmany peoples’ lifestyle needs. Six out of the top ten casual restaurantbrands (by number of outlets) have a pizza or pasta focus.

This market is currently dominated by chains that have becomehousehold names such as Pizza Express, Nando's and Wagamama butthese are being joined by the likes of Leon and Wahaca.

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Establishments charging more than £20 per head continue to bechallenged by reduced long-term consumer confidence, with asignificant number of us, 49%, stating we are eating out less in theserestaurants.

• With 91.7% of consumers now claiming to have eaten out in thelast quarter (Q2 2014), the UK foodservice industry remainsbuoyant.

• 1 in 3 consumers ensure they have enough money every month toeat out, indicating that eating out is the new normal.

• On average, consumers eat out 13 times per month, equating to 1in 8.5 meals every week.

• 54% of ‘young and carefree’ (no children) adults under the age of34, eat out at least once per week compared with 46% of theaverage sample surveyed.

• Eating out frequency is down from mid-2012 across all day-partsyet spend is up across the occasions. Many consumers still vieweating out as an indulgence worth paying for.

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• The trend in breakfasting out hasgrown steadily with 4 in 10 (41%)British employees now grabbingbreakfast on the way to work.

• The average breakfast spend is£4.80, with growth driven by Pubs,Coffee Shops and Hotel visits.

• The bacon sandwich is ourfavourite out-of-home breakfastchoice.

• Margins can be strong. A simplebuttered toast and tea combinationcosts, on average, under 20p whenmade at home but rises to anaverage cost of £2.49 if bought onthe go!*

* Warburtons Great British Breakfast Report

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• Lunch spend rose YoY to £8.00 from £7.39 in the first half of 2014.Average dinner spend has also increased, now £18.79 from £17.89last year.

• The number of consumers who prefer to visit an establishment witha wide choice of healthy options has fallen considerably from 56%to 36%. When considering brands with the healthiest choicesavailable, YO! Sushi and Wagamama are the top mentioned brands,followed by PizzaExpress and Pret A Manger.

• Most consumers perceive eating out as a treat and do notnecessarily want to be reminded of the number of calories they areconsuming.

• Independent restaurants could be the hardest hit by the growth ofbranded concepts and risk losing significant share of the market,by 3.4 percent points of turnover and 1 percent points in outletsover the next five years.

• Despite consumer confidence stabilising, 56% of consumers tendto look for a meal deal in order to get good value when eating out.

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1 Independent Restaurants (£15.8bn)2 Hotels (£12.5bn)3 Branded and Managed Pubs (£9.0bn)4 Coffee Shops/Sandwich Bars (£8.0bn)

5Tenanted/Independent Pubs & Clubs (£6.9bn)

6 Retail Grab & Go (£5.9bn)7 Independent Fast Food/Take-away (£5.6bn)8 Branded Fast Food (£4.5bn)9 Branded Restaurant Chains (£4.3bn)

10 Workplace B&I (£2.5bn)11 Leisure and Travel (£2.4bn)12 Cost Catering Government (£1.5bn)

1 Independent Restaurants (£15.8bn)

2 Hotels (£12.5bn)

3 Branded and Managed Pubs (£9.0bn)

4 Coffee Shops/Sandwich Bars (£8.0bn)

5 Tenanted/Independent Pubs & Clubs (£6.9bn)

6 Retail Grab & Go (£5.9bn)

7 Independent Fast Food/Take-away (£5.6bn)

8 Branded Fast Food (£4.5bn)

9 Branded Restaurant Chains (£4.3bn)

10 Workplace B&I (£2.5bn)

11 Leisure and Travel (£2.4bn)

12 Cost Catering Government (£1.5bn)

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Out-of-home dining trends

The growing food culture among UK consumers is giving rise toincreased adventurism and the desire to broaden our tasteexperiences by eating out as often as possible. With a further £10billion of growth estimated over the next 5 years foodserviceoperators, in partnership with their supply base, can alignthemselves for success by embracing current food and broaderconsumer trends.

• 69% of restaurant brands surveyedby Allegra Strategies follow aclassic menu segmentationstructure consisting of; starters,mains, sides and desserts.

• All pub restaurant brands segmenttheir menus in this way, as do 3 in 4casual restaurants. The exceptionsin casual restaurant brands areWahaca, Wagamama and YO! Sushi.No fast food operators choose tofollow the classic segmentationstructure.

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Eating establishments are payinggreater attention to the breakfastoccasion and snacking, with manyplayers becoming increasinglysophisticated in rotating their offeringsby day-part and eating missions.

The rise in popularity of street food eating and outdoor festivalsis influencing new outlet concepts and menu product development.Burger, ribs and “pulled” meat offerings, Vietnamese themedeateries and even KFC are all getting in on this act.

Many restaurants arechanging their menus atleast monthly to keepthem interesting andappealing to consumers.

American Style BBQ foodrestaurant sales have jumpedby 35 % in the UK since 2010.According to Kantar, Londonalone has seen a 40% increasein American themed eateriesopening on its streets since2012.

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A proliferation of ‘thought leaders’,bloggers, and cultural commentatorsensures that food and counter trendsare broad in number, inspired byincreased interest in ‘food culture’and partly influenced by ourglobalised marketplace.

Allegra Strategies has identifiedthe key influencers of foodserviceoffering and diner choice,summarising them into five keyfood trends.

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The mega trends of healthy eating, indulgence, informality,premiumisation, provenance and value are by now firmlyestablished in shaping the casual dining sector, creating theframework for the established, emerging, hot and even short livedtrends.

The UK is in an era of premiumised informality, the influence of thegrowing importance of provenance, sustainability and indulgence.Examples of this can be found right across the foodservice sectorwith the addition of more premium lines from the mass marketleaders McDonald’s and KFC, to smaller players offering enhancedinformal experiences, such as Franco Manca.

“Pizza made from slow rising sourdough, baked in a woodburning “Tufae” brick oven made on site by specialisedartisans from Naples”

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Health

Although not necessarily the primary driver of venue or meal choicehealth continues to be important when eating out-of-home. Howeverthe term has moved on from dieting towards the need to live well.

Whether as a result of allergens or sensitivities, or simply life-stylechoice health has re-positioned itself from the tasteless low/nopropositions of old.

This trend is all about feeling your best, looking your best and treatingyour body with respect, not counting calories.

“Change in allergen legislation in December 2014 will affect menuplanning for chefs. It’s very challenging.”

- Director of Food, Bar Restaurant

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Established trends are well ingrained in the UK foodservice market, but continue to evolve.

Chicken is the most popular protein withintraditional fast food and the emerging fast casualchannel, accounting for 31% of mains served. TheUK foodservice market is experiencing a newwave of “Chickenisation,” with this protein the“hero” of more dishes and chains.

Gluten-free offerings are becoming moreprevalent in the dining scene, with consumersseeking authentic, responsibly sourced diningofferings.

These trends will continue to form the basis of menus in the UK for the foreseeable future.

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Consumers want to know where their food comes from and how it hasbeen prepared and produced. Retailers and manufacturers arecoming “clean” and being honest about what’s in their products,using seasonal, sustainable and, where possible, local produce toserve the most nutritious food. This trend is about openness, honesty,providing abundant information and having a heart.

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Diners are willing to pay a premium for an authentic diningexperience, sourced in an appropriate manner.

Hyper-local sourcing is predicted to form more claims within theUK casual dining scene.

Hide & Seed restaurant, London,uses vegetables grown on thehotel’s own farm which results in amenu that revives forgotten oroverlooked ingredients.

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Emerging trends are those that are now coming to thefore across the foodservice sector and are forecast to transcend tothe wider, mass market. As consumers become more adventurous,many restaurants are matching craft beer to food menu offerings.Sauces and spices are being used as a way to differentiate andenhance the consumer eating-out experience.

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Barbeque has become the mostpopular sauce across casual, fast foodand pub restaurant dishes. The saucehas an enduring appeal in a variety ofdishes and is being rediscoveredthrough the growing trend of moreauthentic US barbeque dishes.

Chipotle and Peri-Peri sauces areboth found on the menus of sevendifferent operators showing how theUK market is becoming moreadventurous. This sauce profile isaligned to the cuisines that areappearing on menus acrossfoodservice,with American continuingto lead, driven by a plethora of high-end burger eateries.

Source; Allegra Strategies Foodservice Trends 2014

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Hot trends are those that are on trend right now and may growinto emerging and eventually established trends. Street food iscurrently very much “on-trend,” becoming a major influence onrestaurant menus across all channels. In the old days a young chefwith ambitions to write their own menu would have raised £1.5m tolaunch a shiny, marbled eatery. Now they are far more likely to buy athird hand American Silver Bullet caravan and get cooking in the rightlocation.

New fast foods, such as the rising popularity of Mexican cuisine arebridging premiumised informality, indulgence with convenience.Establishments are also starting to experiment more with cookingmethods, in particular barbequing and smoking.

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Short-lived trends: trending now but are unlikely to becomeestablished. These trends may have been ‘hot’ but are not expected tolast and evolve into emerging or established trends. However, small-scale concepts based around these trends may continue to exist inthe market.

Short-lived trends include bubble tea, gourmet hot dogs and cupcakes.

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Cuisines

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Established cuisines make up the majority of the UK

restaurant market, being part of our out-of-home eating repertoire fora number of years with no sign of our appetite diminishing. Despitethe slow recovery of both our personal finances and confidence, ahankering for familiar flavours and emotional security is not goingaway. Operators serving these dishes continue to innovate, offeringcontemporary twists aligned to established food trends.

American style food with a centre-of-plate “hero,” providingsimplicity and full-on flavours, has married well to our renewedappetite for eating meat whilst also wanting information on where oursteak has come from. Single theme outlets specialising in a centralprotein are also driving diner footfall.

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Emerging cuisines have seen significant growth over thelast few years, particularly popular with consumers who areinterested in new concepts of the established. Chinese, MiddleEastern and Spanish cuisines have all been around for a long time,but operators are emerging that serve a more authentic, oftenregional dish.

Southern and Eastern Mediterranean, Moroccan and Turkish cuisinesare on the rise, with Arab and Middle East tensions leading todisplaced people, providing another wave of culinary excitementexpected to hit the U.K.

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Hot trend cuisines such as premium burger and chickenhave been increasingly popular over the last few years with anumber of new concepts emerging. Mexican has been popular forsome time and now seeing a move towards street level influences.With the World Cup now passed and 2016 Olympics on the horizon,interest in South American food has grown through the year,although perhaps not as greatly as predicted.

New chef-led global food fusion and cuisine mash-ups are coming tothe fore, further blurring the traditional ethnic meal experience.Think “Korexican” cuisine, with Kimchinary a street food vendor inLondon serving burritos and tacos laced with Korean pickles &sauces.

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Short lived cuisines?

Despite a lot of media noise around Nordic Noir and its resultantcuisine influences there has not been a sufficient number ofScandinavian establishments to convince it will break into anythingbeyond that of a short lived or niche dining trend.

However many Nordic elements such as pickling and smoking arelikely to become more common within the more “mainstream”cuisines as they adopt more natural food offerings, boosted by abacklash to food scandals.

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2014 Half Year Review – foodpeople

The foodpeople recently took a look at a number of themes theyobserved in UK eateries during the first half of 2014 and a selection arepresented below;

trend: Menu of the day

What is it all about? - More daily menus centred on what's best, inseason and abundant.

Where ? - Primeur restaurant, London. Inspired by French groceryshops, the menu changes daily.

Seasonal | Fresh | Using only the best | Keeping it simple | Whatever isfarm fresh

trend: Better,‘foodier,’ fast food

What is it all about? - Fast and casual food gets even faster, better andfoodier than before, exploring new territories of tradition,provenance, origin and cuisine.

Where? - Hereford & Yorke @ Harvey Nichols, London. ‘fast food’roast dinner – large Yorkshire pudding fashioned as a wrap filled withrare roast beef, horseradish & watercress.

Better fast food| Provenance & Origin | Iconic ingredients | Better foryou | Fresher & faster

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trend: The Micro-staurant

What is it all about? - Small neighbourhood mini restaurants,often packed, with queues and less than 20 covers.

Where? - Patty & Bun’s second opening on Liverpool Street is only20 covers.

Small | No bookings | Queues | Neighbourhood | Limited choice| Intimate | Scarcity

trend: Casual & Fun but Fine

What is it all about? - Fine food but an increasingly casual andinformal context, larger open plan restaurants, relaxed servicestyle but still the same top notch food.

Where? - Tredwell’s, Covent Garden, London.

Wider appeal | Still great food | Larger open spaces | Focus on thefood | Relaxed

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trend: Gourmet everyday

What is it all about? - Everyday foods made gourmet by flavourcombinations, artisan materials, provenance and origin.

Where? - Ben’s Canteen, Earlsfield, London. Scotch eggs andsausage rolls.

Familiar | Good made great | Simple made better | Better ingredients | National classics

trend: Eastern authenticity

What is it all about? - More food outlets built around true easternauthenticity as well as authentic eastern ingredients in newcontexts.

Where? - The Noodle House, London. South East Asian street foodamongst the tranquillity of the teahouses.

Dim Sum | Hot Sauce | Noodles | Regional curry | Authentic condiments | Middle Eastern

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Adopt or follow the trends?

Early adoption has potentially higher rewards, but alsopresents great risks in terms of additional business costsaround product development and menu changes. Earlyadoption offers the scope to capture first mover advantage,however development and infrastructure costs can provecostly.

Following established trends presents less risk, being able tolearn from and refine the offering of successful players in themarket, and also avoid practices of those who have tried andfailed.

However the downside of being late to market is the loss ofpotential sales, leading to the brand lacking contemporaryappeal.

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Andrew Niven : INSIGHTS Manager andrew.niven@scotlandfoodanddrink.org

Kenny Martin : INSIGHTS Analyst kenny.martin@scotlandfoodanddrink.org

www.scotlandfoodanddrink.org/insights

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