Value of restaurant market to reach £52bn by 2017

The UK Restaurant Market 2014, a report released by market intelligence firm Allegra Foodservice, estimates that the growth rate for the sector will double from 1.3 per cent to 2.5 per cent over the next three years. The branded segment should reach £17.6bn, up 6.5 per cent, outperforming the wider eating out market, with annual growth of 2.8 per cent.

The report comes after pubs and restaurants posted a 4.4 per cent increase in collective like-for-like sales in April 2014, marking 13 consecutive months of growth​​, according to the Coffer Peach Tracker.

Total sales for April, including the impact of new openings, were up 7 per cent from last year – 4.7 per cent in London and 8 per cent in the rest of the country, fuelled by new restaurants openings.

“What will be especially pleasing is the fact that growth is not confined to London. During April businesses outside of the M25 performed in general better, with collective like-for-likes up 4.8 per cent,” said Peter Martin of CGA Peach.

“The underlying trend is upward. Looking at the long-term trend, year-on-year like-for-like sales were up 2.9 per cent for the 12 months to the end of April, with  total sales running 5.8 per cent ahead. The eating-out and drinking-out market may now be a more reliable barometer of the general health of the economy than retail,” he added.

Casual dining on the rise​

New and traditional fast food is forecast to be the strongest growing branded segment in with 12.4 per cent sales growth and 7.6 per cent outlet growth between 2013 and 2014. The increase is dominated by McDonald’s and KFC.

Branded restaurants channel continued to perform strongly, up 6.1 per cent. Leading brands by turnover and outlets are Pizza Hut, Nando’s and PizzaExpress.

The report also notices a rise in all-day dining, which helped boost casual restaurants’ performance.

Allegra Foodservice director Steve Gotham said: “The UK restaurant landscape is undergoing a period of significant change, with a renaissance of pubs, strong emergence of new fast food, and a plethora of street food markets nationwide. These concepts enable consumers to enjoy premium food in an informal setting.”

As an example, the report points out that fine dining has become more accessible and informal, with restaurants like Dinner by Heston Blumenthal and Union Street Café by Gordon Ramsay.

Allegra Foodservice explained that consumers are now looking for premium food at all price points and at every occasion, with foodie culture exceptionally strong in the UK. “Social media, blogs and review sites have increased consumer knowledge and made food trendy; consumers want to follow the foodie buzz,” the firm said. 

Consumers most active in the restaurant sector are aged 18 to 24, and Allegra encouraged operators to engage better with older consumers.

Despite income pressures and a decrease in disposable income, the report found that between 2012 and 2014, spend increased 3 per cent at breakfast, 6.6 per cent at lunch and 6.9 per cent at dinner. However, consumers expect value from every channel, and discounting is still prevalent among branded restaurants, with 46 per cent of consumers claiming to use discount vouchers more often in the last 12 months.”

Pubs: a food-based renaissance​

According to Allegra’s restaurant market report, UK pubs are experiencing a renaissance driven by branded pubs, which grew 6.1 per cent from 2013 to 2014, led by Wetherspoon, Hungry Horse and Harvester in sales and estate size.

With food sales forming an increasingly important part of pubs’ revenue​​, pubs are focusing on improving their menus, and group operators are picking up on that trend. Enterprise has launched a food club in partnership with foodservice supplier Brakes to offer menu design support for publicans, whether or not they already have a food offering. Members will also receive deals, discounts and promotions.

James Armitage, head of marketing at Enterprise said: “We’re committed to helping our publicans make a success of their business, and for many, food has become a really important part of running a profitable pub. This partnership with Brakes will ensure our publicans have access to high quality food at great prices, along with specialist advice that will help them keep customers happy and boost profitability.”