Eating Out in the UK 2009 - McDonald's UK

EatingOut inthe UK2009A ComprehensiveAnalysis of the InformalEating Out Market

EatingOut intheUK2009CONTENTSForewordBy Steve Easterbrook, Chief Executive, McDonald’sExecutive SummaryIntroduction & BackgroundMarket Definition and SegmentationChapter 1The Scale of the Informal Eating Out MarketChapter 2Market History and EvolutionChapter 3Consumer InsightChapter 4Eating Out Mega TrendsChapter 5The Future of the Informal Eating Out MarketBibliography13572131577388

EatingOut intheUK2009A ComprehensiveAnalysis of the InformalEating Out MarketForeword by Steve Easterbrook,Chief Executive, McDonald’sEating Out in the UK,2009 is a comprehensiveanalysis of the InformalEating Out market. Thesector is one of the bigcontributors to the UKeconomy, but one of theleast understood.From coffee shops to fast foodrestaurants, sandwich bars to pubs,the eating out market employs 1 in20 of the country’s workforce and atop ten industry – but its impact onour lifestyles, economic activity, jobcreation and future growthprospects are rarely considered.McDonald’s sponsored thisindependent research from AllegraStrategies’ Food Strategy Forum todo just that, and better understandcurrent trends and tradingconditions, as well as forecast futuremarket developments.The report is the first snapshot ofthe impact of the recession on themarket and consumer behaviour. Itreveals that the amount of spendingon eating out under £15 a head hasfallen for the first time in 40 years –contrary to a popular view that thesector is booming as customerstrade down from more expensivedining options.It also shows that the choices facingconsumers are wider than everbefore as the number of places toeat out continues to grow despitethe decline in footfall.The majorityof the industry leaders interviewedfor the report predicted that thesetoughening conditions will lead tocasualties, cut backs and closures,putting some of the 1.36m jobs inthe sector at risk.Through thousands of interviewswith consumers, the report findsthat habits learnt in this recessionwill be long-lasting. Only businessesthat can meet the demand for valueand quality in both food and servicewill survive and prosper when thelong-term growth in eating outreturns. Excellent service,innovations that build loyalty, morechoice, lighter options, quality,provenance and an experience thatcannot be recreated at home – theseare all things that customers willexpect and demand without payinga premium.The number of people employed inthe sector will also continue togrow. Customer service is set tobecome a more importantdifferentiator for operators and thequality of training anddevelopment opportunities offeredto the workforce will be essential inunderpinning this.As the market expands andthe number of attractive careeropportunities increase, it islikely we’ll see a wider reappraisalof attitudes towards working inthe sector.At McDonald’s, we’ve made massiveinvestments over the last threeyears – in our restaurants, our foodand our people – and we’ll invest afurther £90 million in 2009 toensure we continue to meet theseevolving consumer demands.The report emphasises that eatingout has become an ingrained partof life for people in the UK and onethat Government and policymakersshould take notice of. Long thoughtof as recession resistant, this mythabout the sector is now exposed.But whilst the market is in decline,the sector is not falling as fast asother industries and there are somebrands doing well despite currentconditions.With retail set to remainunder pressure, the Informal EatingOut sector will have an importantrole to play in helping pull the UKout of the recession throughgrowing employment and therevitalisation of the High Street, andthe market will bounce back.However, only those businesses thatmeet the conditions of the recessionlegacy – quality, value and a greatexperience – will shape the futureof the sector.1 Eating Out in the UK 2009

“Only businesses whichcan meet the demand forvalue and quality in bothfood and service willsurvive and prosper.”Steve Easterbrook

EatingOut intheUK2009A ComprehensiveAnalysis of the InformalEating Out MarketExecutive SummaryInformal eating out isworth in excess of £40bn• Informal eating out has become aningrained part of life for UKconsumers, who relish theopportunity to enjoy food anddrink, and dining and socialexperiences, that cannot berecreated at home. This is reflectedin estimated sales of £40.3bn in2009, equivalent to averageannual spending per household of£1,665• Allegra’s consumer research showsthat on average, 1 in 9 meals areeaten out of the home every week,equivalent to an estimated 148million meals in 2009• £40.3bn equates to £2.1bn spentat breakfast (5% of the total),£17.1bn at lunch (42%), £16.7bn atdinner (42%) and £1.4bn atsupper/late night dining (3%).Both mid-morning and afternoonsnacks account for £3.0bn (8% ofthe total)3 Eating Out in the UK 2009• Consumers will spend on average£12.75 per week or £663 per year oninformal eating out in 2009 – thiscompares with £4.44 per week or£230 per year in 1989• Over the last 40 years, the InformalEating Out market has taken anincreasing share of the totalexpenditure by consumers on foodand beverages – reaching 22% in2009. This compares with a 14%share in 1969• The sector is in the UK’s top 10 byGross Value Added, and is a majoremployer – accounting for asignificant share of the 1.36 millionfoodservice jobs across cafés,canteens, catering, pubs andrestaurants – equivalent to 5% oftotal UK employmentBut, for the first timesince it was properlyestablished, the eating outmarket has contracted• The current recession hasdampened consumers’ short-termappetite for eating out, and themarket is forecast to decline by0.5% in 2009• This negative growth is linkeddirectly to the recession, which isaffecting employment, jobprospects, household income,consumer confidence and, in turn,spending on eating out• Last year, 1 in 8 meals were eatenout of the home.This year, it will be1 in 9• 35% of consumers are eating outless now than they were a yearago, while 20% plan to cut backover the year ahead• Instead, 32% of people are cookingat home more, assisted by a wealthof supermarket offers and dine-inranges, and driven by a growingdesire to specify the ingredientsthey use and eat more healthily• The hardest hit establishments arethose charging over £10 per headas consumers seek out greateraffordability.This has meant thatcasual dining concepts have seennegative growth while the fastfood segment has been morebuoyant

The sector will bounceback, and play a key rolein the UK economicrecovery• The market will see a modestrecovery in 2010 with growth of0.5% - 1.0%• Over the medium-long term, theestablished underlying trends ofrising affluence, growing mobilityand ‘more youthful’ olderconsumers will support strongergrowth in eating out. Following anOlympics boost in 2012, the marketis forecast to reach £47.5bn by 2014– a five year increase of 18%• Over the next five years, anestimated 3% - 5% increase inemployment is predicted withinthe Informal Eating Out sector asthe market expands to cater forgrowing demand – raising theprospect of more favourableperceptions of foodservice careeropportunities• With retail set to remain underpressure, foodservice operators willplay a greater role in pulling theeconomy out of recession throughgrowing employment. This willcoincide with the revitalisation ofthe High Street as a more leisureorienteddestination. The pace ofthis transition will, however, bedetermined by landlords’ softeningin rental expectationsBut the recession will leavea lasting legacy, and not allbusinesses will survive• This recession will mark a watershedperiod and lead to a lasting recessionlegacy in which consumers demandbetter value and an enhancedexperience – but they won’t bewilling to pay more for it• Operators will face greater challengesto improve profitability than has beenthe case over the past decade. It willbe harder to increase prices, andimproved efficiency will be moreimportant.The marketplace willbecome more specialised andsegmented, with successful operatorsfocusing more on what they are goodat and key points of difference• Informal Eating Out market winnerswill be those operators and suppliersbetter equipped to tap intoconsumers’ rising demand for bettervalue, healthier eating, convenience,authenticity, local sourcing andadded-experience. The bestperforming eating outestablishments are forecast to bethose that specialise in fast casual,healthier, British, Oriental and hotfood-to-go categories• Growing competition will increasethe importance of building customerloyalty and strengthening consumerrelationships. Foodservice operatorswill learn more from grocery retailersabout developing sophisticatedloyalty schemes. However, the battlefor loyalty will be fought on severalfronts, including overall consumerexperience, customer recognition andalignment with their valuesThe future of informaleating out will be drivenby key mega trends• Healthy eating is a hugelyimportant consumer trend.While taste will remain ofparamount importance tocustomers when eating out, theyare only going to become morehealth conscious• ‘Buying British’, seasonality andauthenticity will continue to bepopular trends with consumers –already, 58% of people prefer toeat food which is sourced fromthe UK. Operators will respond tothis with more frequent changesto menus• Issues around sustainability andenvironmental impact will alsorise up the consumer agenda.More businesses will conductenvironmental and ethical auditsand produce detailed reports onthe progress being made againsta series of key performanceindicators and targetsEating Out in the UK 2009 4

Introduction & BackgroundMarket Definitionand SegmentationThe Informal EatingOut market comprisesa wide variety of eatingout establishments andlocations from whichfood and beverages arebought and consumedout of the home.SUB-CATEGORIES AND DESCRIPTIONSWITHIN THE INFORMAL EATING OUT MARKETSUB CATEGORYINFORMALRESTAURANTSCATEGORYDESCRIPTIONRestaurant that offers asit-down meal in a casualenvironment, typicallywith waited serviceOPERATOREXAMPLESCarluccio’s, Nando’s,Pizza Hut,WagamamaThis includes informalrestaurants; fast food andtakeaway outlets; coffee shopsand sandwich bars; retail grab &go and cafés; pubs; and cateringfacilities at leisure venues; travelsites and workplaces.What this market does notinclude is food consumed athome, food prepared at homefor consumption out of home,low level snacking and formaldining. There is clearly a blurrydefinition between theboundary of informal andformal dining – and this borderhas been set at an expenditureper head of £15 and over.Consequently, the InformalEating Out market can bedefined in terms of covering alleating out meal occasionsinvolving a transaction with aspend per person of £15 or less.The major sub categories of theInformal Eating Out market aresummarised right:FAST FOOD &TAKEAWAYSCOFFEE SHOPS,SANDWICH BARSAND CAFÉSRETAIL GRAB &GO, CAFÉSPUBSWORKPLACELEISUREOutlets serving food thatcan be prepared andserved very quickly, andwithout waited serviceCoffee and food-focusedcafés and bars, includingbranded andindependently managedestablishmentsCombination of cafés andgrab & go ranges atassorted retailers,including c-stores,department stores, petrolretailers andsupermarketsPublic houses and barsselling food, includingmanaged and leasedoutletsSit-down and grab & gofacilities in theworkplace, but excludingvending machinesIncludes locations wherefood and beveragesupports the primaryreason to visit, includingshopping centres, themeparks, sports arenas,music festivals andconcertsBurger King, KFC,McDonald’s,WimpyCosta Coffee, Pret AManger, Starbucks,SubwayM&S Café, Sainsbury’s,Spar,Tesco,Wild BeanCaféBeefeater, Harvester, JDWetherspoon,TobyCarveryAssorted contractcaterers, brandedconcessions and inhousecatering solutionsAssorted contractcaterers, brandedand independentconcessionsTRAVELFoodservice facilities forconsumers in transit –including prior andduring travelLittle Chef, Roadchef,Upper Crust,WelcomeBreakSource: Allegra Strategies Analysis, 20095 Eating Out in the UK 2009

ResearchBackgroundSubstantial research has been conducted inpreparing this study of the UK Informal Eating Outmarket. This has comprised four main activities:SUMMARY OF CONSUMER, INDUSTRY EXECUTIVEAND MARKET RESEARCH ACTIVITIESACTIVITYNOTESCONSUMERRESEARCH• 2,000 household telephone interviews,representative sample, qualitative andquantitative questions• 350 face-to-face indepth interviews in-store in12 McDonald’s stores• 45 family eating out diaries, covering visitpurposes, occasions, venues, timings, spend andlikes and dislikes. Diaries maintained for a twoweek period, with the sample spread over a twomonth period running between May – June2009DESKRESEARCH• Analysis and review of existing eating outmarket research• Reviews of news articles, trade press, industrywebsites and key operator reports and accounts• Synthesis with existing Allegra databases andreportsFOODSERVICEINDUSTRYSENIOREXECUTIVERESEARCH• 30 interviews with senior executives across thefoodservice sector, conducted via telephone andface-to-face• Analysis supported with mining of previousAllegra data and interview findingsINDEPENDENTOPERATORRESEARCH• 100 interviews with independentcafé/restaurant owners/managers conductedvia online and telephone• Feedback captured on the specific issues andstrategic challenges facing the sizeable UKindependent operator sectorSource: Allegra Strategies Analysis, 2009Eating Out in the UK 2009 6

Chapter 1The Scale of the InformalEating Out MarketIn This Chapter• The size of theInformal Eating Outmarket by value• The rise of themarket• The make up of themarket• The contribution ofthe market to GrossValue Added• Employment trends• The impact of therecession• The UK Informal Eating Outmarket is estimated to beworth a sizeable £40.3 billionin 2009• £40.3bn equates to £2.1bnspent at breakfast (5% of thetotal), £17.1bn at lunch (42%),£16.7bn at dinner (42%) and£1.4bn at supper/late nightdining (3%). Both mid-morningand afternoon snacks accountfor £3.0bn (8% of the total)• Over the last 40 years, theInformal Eating Out markethas taken an increasing shareof the total expenditure byconsumers on food andbeverages – reaching 22% in2009. This compares with just14% in 1969• Consumers will spend onaverage £12.75 per week or£663 per year on informaleating out in 2009 – thiscompares with £4.44 per weekor £230 per year in 1989KEY POINTS• As of March 2009, 1.36 millionpeople were employed acrossthe restaurant & café, pub &bar and canteen and cateringsector• In 2006, the Informal EatingOut market contributed 3% toGross Value Added – this ranksit as one of the Top 10industries in terms ofcontribution to the UKeconomy• An estimated 7.7 billion mealsare eaten out of the home in2009 – equivalent to 148million meals a week• On average, 1 in 9 meals areeaten out of the home everyweek. In early 2008, the figurewas 1 in 8, reflecting theimpact of the recession• The largest segments of theInformal Eating Out market interms of value are informalrestaurants (27%), pubs (23%),coffee shops/sandwich bars(17%) and fast food/takeaway(11%)7 Eating Out in the UK 2009

The Size of theMarket by ValueAllegra estimates thevalue of the InformalEating Out market for theUK to be £40.3 billion in2009.This is equivalent to averageannual household spending of£1,665. This valuation assumes adecline of 0.5% in the InformalEating Out market over the period2008-2009 – the first annualcontraction for over 40 years.This negative growth is linkeddirectly to the recession, which hasaffected consumer confidence,employment, household incomeand, in turn, household spendingon eating out. Despite this recentdecline, the compounded annualgrowth rate for the period 2004-2009 stands at 3.8%.There has been positive, andconsiderable, growth in theInformal Eating Out market inthe last 40 years. Although therehas been a slight contraction in2009, growth is expected toresume in 2010.Fig. 1.1 – THE VALUE AND ANNUAL GROWTH OF THE INFORMAL EATINGOUT MARKET AT CURRENT PRICES, 2000-2009 - £ Million6.60% 5.80%6.80%5.40% 6.30% 3.80% 3.80%8.30%26,327 27,864 29,762 31,359 33,341 34,624 35,931 38,8964.00%2000 2001 2002 2003 2004 2005 2006 2007 2008Fig. 1.2 – THE VALUE OF THE INFORMAL EATING OUT MARKET AT CURRENTPRICES, 1969-2009 - £ Million-0.50%40,452 40,2502009Source: Allegra Strategies Analysis, ONS, 2009 Market Value Percentage change year on yearNote:The 0.5% market contraction is based on a number of sources, most notably quarterlyperformance insights from Crest, ONS Consumer Trends and assorted company trading results,as well as from economic forecast data and surveys of outlook prospects from restaurant andcoffee shop business leaders.1,3082,3625,302 8,474 13,087 17,618 24,689 33,341 40,45219691974 1979 1984 1989 1994 1999 2004 2009Source: Allegra Strategies Analysis, ONS, 2009Eating Out in the UK 2009 8

The 2009 market value of £40.3billion equates to 22% ofconsumers’ estimated totalexpenditure on food and beverageproducts of £187 billion and willclaim just over 4% of totalconsumer expenditure (ONS, 2009).Despite a slight dip in 2009, thisshare has steadily increased overthe past 40 years. Growth hasbeen driven by the physicalexpansion of foodservice operators,as well as an increasing number ofconsumers, as eating out becomesan integral part of people’slifestyles. The changing landscapeof the High Street, now laden withcoffee shops, sandwich bars and‘fast casual’ concepts,is testament to the level ofdemand by consumers for informaleating and snacking.Allegra’s consumer research showsthat 1 in every 9 meals is eaten outof the home, which translates to11% of all meals. In 2008,consumers ate 1 in every 8 meals(13%) out of the home each week.This average figure masks a widerange of eating out frequencies bydifferent consumer groups.Inevitably, it will have beenaffected by the recession. Manypeople are now opting to cookmore meals from scratch andentertain guests from their home –and this trend is strengthened bythe increase in ‘foodie’ culture aswell as the ever present celebritychefs in the media.Fig. 1.3 THE VALUE OF THE INFORMAL EATING OUT MARKET AS APERCENTAGE SHARE OF TOTAL FOOD AND DRINK CONSUMED IN ANDOUT OF THE HOME14%196915% 16% 16% 17% 18% 20% 22% 22%1974 1979 1984 1989 1994 1999 2004 2009Source: Allegra Strategies Analysis, ONS, 2009The Rise of the InformalEating Out MarketExpenditure on food out of the home has increasedconsistently, with particular acceleration since themid-1990s, when growth in the market began toovertake rises in disposable income. This is clearlyindicated in Figure 1.4 and only serves to illustratethe important role that eating out now plays in themodern lifestyle.Fig. 1.4 COMPARISON OF GROWTH IN INFORMAL EATING OUTEXPENDITURE AND DISPOSABLE INCOME - Index (100 = 1988)22127933926123317219614217216151972100 1327556100317251291976 1980 1984 1988 1992 1996 2000 20042008Source: Allegra Strategies Analysis, ONS, 2009 Disposable income Informal Eating Out Market Value9 Eating Out in the UK 2009

The Make upof the MarketThe Informal Eating Outmarket comprisesinformal restaurants,fast food and takeawayoutlets, coffee shops &sandwich bars, retailgrab & go and cafés,pubs, the workplace,leisure venues and travellocations.INFORMAL RESTAURANTS:• An informal restaurant offers asit-down meal in a casualatmosphere with a spend perhead of £15 or under. Thepopularity of such restaurants ison the rise. There are numerousinformal concepts expandingwithin the market, with brandssuch as Gourmet Burger Kitchen,Nando’s and YO! Sushi offeringonly a part waited service; as wellas concepts such as Giraffe andWagamama, offering full servicebut which remain fast,convenient and well priced.FAST FOOD AND TAKEAWAY:• The fast food segment offers nowaited service, but the ability tosit down within theestablishment. Fast food isusually a burger or a chickenoption. The price tag of a meal ata fast food restaurant is £3.69(NPD Group, CREST, 2009) whichis considerably lower than in aninformal restaurant. Leading fastfood brands include McDonald’s,Burger King and KFC.• Takeaway, unlike fast food,typically does not provide seatingwithin the establishment.The majority of takeaway food istaken home to eat or delivered tothe home. Takeaway in the UK,for the most part, is Ethnic food(Chinese/Indian/kebab) ortraditional fish and chips. In thevast majority of cases, takeawayoutlets are independently run.COFFEE SHOPS/SANDWICHBARS/CAFÉS:• The coffee shop market has seenconsiderable growth in recentyears and is a common feature ofany High Street in the UK.Branded coffee shops such asStarbucks, Caffè Nero and CostaCoffee have become householdnames in the same way that fastfood brands have. As well as thefamiliar brands, there arenumerous independent outlets.The café culture which has sweptthe UK in recent years invitescustomers to drink coffee in awarm and inviting atmosphere.• Like coffee shops, there areseveral established sandwichbars in the UK – Subway andGreggs across the entirety of theUK, and Pret A Manger and Eatwhich are commonplace in theSouth East. Unlike coffee shops,the environment offered insandwich bars is more gearedtowards grab & go and efficientorder transactions processing.• Traditional ‘cafés’ are alongstanding feature of the UKInformal Eating Out market.Thought of by many as a place toget a ‘fry-up’ and a cup of tea, the‘café’ still has sentiment withmany older and more traditionalUK consumers.RETAIL GRAB & GO ANDCAFÉS:• Supermarkets/conveniencestores/petrol stations offerconsumers ‘food-on-the-move’with sandwiches, drinks andsnacks to choose from. With avast number of outlets, they are acommon choice for busyconsumers who want to eatquickly and cheaply. The grocerychain with the largest number ofoutlets across the UK is Spar(3,174) with the Co-operative closebehind (3,142) (The Grocer, May2009).• Many supermarkets and petrolstations, as well as departmentstores, also offer cafés as a meansto increase dwell time andcapture additional spending fromtheir customers. A few examplesinclude M&S Café, Debenhams’Style Café, House of Fraser’s CaféZest and BP’s Wild Bean Café.PUBS:• The total number of pubs in theUK is estimated at 57,500 (BritishBeer and Pub Association). Agrowing share of pubs offer food,something which has becomeincreasingly important since theintroduction of the Smoking B-anin 2007 and its impact on alcoholsales. Ongoing closures of pubshave brought into question thelongevity of the pub in futureyears. However, in terms of outletnumbers, the pub remains one ofthe largest contributors to theInformal Eating Out market.Eating Out in the UK 2009 10

THE WORKPLACE:• Many larger employers providecatering services for their staff –frequently heavily subsidised,where the consumer pays anominal amount for a sizeablemeal. Certainly with many largeorganisations, the provision offood will be by contract caterers.Four of the largest in the UK areCompass plc, Sodexo, Aramarkand Elior.LEISURE:• Leisure refers to locations wherefood is not the primary reason forvisit but where there is foodavailable. Examples includeshopping centres, shopping parks,theme parks, sports arenas, musicfestivals and concerts. Dependingupon the location, food can varyfrom branded outlets toindependent kiosks.TRAVEL:• Motorway Service Areas providemotorists with fuel, foodserviceand retail outlets. The threelargest operators are Moto,Welcome Break and Roadchef.These providers have partneredwith leading High Street brands,such as McDonald’s, Costa andMarks and Spencer, but alsoprovide their own brand cateringoffer. Other roadside restaurantsinclude Little Chef as well asnumerous independents.• Foodservice is also present withintrain stations and airports as wellas aboard trains and planes. Again,there are a scattering of brandswithin such locations as well asindependently ownedestablishments.Of these market segments, informalrestaurants (27%), pubs (23%) andcoffee shops/sandwich bars (17%)take the largest share of the marketby value.Fig. 1.5 SEGMENTAL SHARE OF THEINFORMAL EATING OUTMARKET BY VALUE, 2009Leisure (£1.2bn) 3%Travel Related (£0.6bn) 1%Workplace (£3.0bn) 7%Retail Grab & Go and Cafés (£4.4bn) 11%fast food and Takeaway (Out of Home Only) (£4.3bn) 11%Coffee Shops/Sandwich Bars/Cafés (£6.7bn) 17%Pubs (£9.2bn) 23%Informal Restaurants (£10.9bn) 27%Source: Allegra Strategies Research and Analysis, 2009The Size of the Market by TransactionsThe total number ofinformal meals eaten outof the home in 2009 isestimated at 7.7 billion.Fig. 1.6 SEGMENTAL SHARE OF THE INFORMAL EATING OUT MARKET BYNUMBER OF TRANSACTIONS, 2009Industry interviews reveal thattransaction numbers have held upreasonably well in the recession.Many operators have, in thisdownturn, fought to hold onto theirvolumes and market share, choosingto sacrifice their margins instead.The relative strength in volumenumbers will help to ensure theInformal Eating Out marketcontinues to expand in future years.19% 17% 17% 16%Coffee/Shops/SandwichBars/CafésInformalRestaurantsSource: Allegra Strategies Analysis, 2009Fast FoodandTakeawayPubs14%Retail GrabGo andCafés12%Workplace5%Travel andLeisure‘Coffee shops/sandwich bars andcafés’ has the highest number oftransactions with 1.5 billion. This isfollowed by ‘fast food and takeaway’and ‘informal restaurants’, each with1.3 billion transactions.Note:There is no double counting here. The travel and leisure segment as well as the workplacehave a lower number of transactions largely because many of the foodservice operators withinthese sites are brands and have been counted within their relevant segments.11 Eating Out in the UK 2009

The Size of the Marketby Outlet NumbersOutlet numbers acrossthe entire Informal EatingOut marketplace stand atan estimated 250,500 inmid 2009. While inoverall terms this figureis little changed from2008, this masks amodest increase in thenumbers of coffee shops,sandwich bars & cafés,offsetting the decline inthe numbers of pubs.Coffee shops have benefited fromgrowing demand for specialitycoffee beverages and risingappreciation of café culture.Indeed, for many, the coffee shophas become a ‘third space’destination (i.e. preferred placeoutside the home and theworkplace), usurping the pub inthe process. Pubs continue to bechallenged on several fronts – notleast declining alcohol sales,stiffening off-trade competitionfrom the supermarkets, highlyleveraged parent businesses andthe fallout from the Smoking Ban.This is resulting in significantclosures. Closures have beenestimated at 35 a week in 2009,with numbers down by over 4,000since 2005, with smaller pubswith limited food offerings mostheavily impacted.The largest contribution to thetotal outlet count is derived fromthe number of workplace facilities,with the estimated total of 88,600equating to a 35% share. Thisincludes workplace canteen andcafé units across business andindustry, education and healthcaresites, many of which are heavilysubsidised and also cater to aconsumer base outside the scopeof this market definition, not leastschool children and the infirm.These points help to explain therelatively low market share byvalue in comparison.A key feature of this market is theimportance of lunchtime, and thishelps to account for significant‘grab & go’ purchasing activity.Convenience-led retail outlets,including convenience stores,petrol forecourts andsupermarkets, capture a significantshare of this expenditure,particularly in larger urban areaswith high white collar workingpopulations. Several retailers, notleast Marks and Spencer and theleading supermarket chains, havealso blurred the retail/foodserviceboundaries by incorporating cafésand hot food-to-go counters.Allegra estimates the number ofindependent outlets in 2009 to be108,400 – 43% of the total numberof outlets. The mix betweenbranded formats and independentsvaries greatly within the differentsegments of the Informal EatingOut market. For example, withinthe workplace, the provision of foodand beverages is largely throughcontract caterers. As a result, theproportion of independents is onlya small percentage. Within theinformal restaurant, café andtakeaway segments, however, thenumber of independents farexceeds the brands. Relatively lowcapital investment and limiteddedicated skill requirements resultin independents accounting forbroadly four-fifths of the fast foodand takeaway and the informalrestaurant segments.Fig. 1.7 SEGMENTAL SHARE OF THEINFORMAL EATING OUTMARKET BY OUTLETNUMBERS, MID YEAR 2009Travel Related (4,744) 2%Leisure (15,678) 6%Coffee Shops/Sandwich Bars/Cafés (23,338) 9%Retail Grab & Go and Cafés (27,276) 11%Informal Restaurants (26,656) 11%fast food and Takeaway (30,918) 12%Pubs (33,247) 13%Workplace (88,609) 35%Source: Allegra Strategies Analysis, 2009Eating Out in the UK 2009 12

The Contribution of the Informal EatingOut Market to Gross Value Added (GVA)Gross Value Added,introduced by the ONSin 2005, measures thecontribution to theeconomy of eachindividual producer,industry or sector in theUnited Kingdom, and isone of the key economicindicators used formeasuring theperformance of a sector.GVA is used in theestimation of GrossDomestic Product (GDP).The last available data for total GVAfor the UK was in 2006 and was£1,177bn. The Informal Eating Outmarket as a proportion of GVA in2006 was 3.0% – one of the top 10contributors. Similar sizedindustries include RecreationalServices and Computer Services.The largest contributors to GVA in2006 were Letting of Dwellings,contributing 7.2%, Constructionwith 6.3% and Education with 5.9%.Table 1.1 TOP TEN CONTRIBUTORS TO GROSS VALUE ADDED, 2006RANKINDUSTRYGROSS VALUEADDED AT BASICPRICES (£BN)12345678910LETTING OF DWELLINGSCONSTRUCTIONEDUCATIONRETAIL DISTRIBUTIONPUBLIC ADMINISTRATION AND DEFENCEHEALTH AND VETERINARY SERVICESBANKING AND FINANCEWHOLESALE DISTRIBUTIONOTHER BUSINESS SERVICESTHE INFORMAL EATING OUT MARKET84.874.069.365.263.062.160.245.942.135.9Source: Allegra Strategies Analysis, ONS, 200913 Eating Out in the UK 2009

The Impact of theRecession“The recession will lead to a number ofcasualties and portfolio rationalisationby weaker operators, as well as toseveral who might survive in the shortterm,but for whom this is a mere stay ofexecution.”John HutsonManaging Director, JD Wetherspoon“The recession has elevatedconsciousness around value andconsumers are now much more savvyaround deals.”Damian DixonCommercial Manager, Marks and SpencerFig. 1.8 RESPONDENTS WHO ARE VISITING EATING OUT ESTABLISHMENTSLESS FREQUENTLY – SPLIT BY TYPICAL SPEND PER HEAD19% 16% 32% 41%Visit placescharging less than£5 per headVisit placescharging £5-£10per headSource: Allegra Strategies Analysis, Consumer Research, 2009Visit placescharging £10-£15per headVisit placescharging more than£15 per headUnlike previous periodsof economic decline, thisrecession has affectedindividuals across allsocioeconomic grades –most notable is theadverse affect it has hadon white collar workers.As a result, the sheer volume ofthose impacted by the recession isgreater than in previous recessions.Largely seen as discretionaryspending, eating out is one aspectwhere consumers are likely to cutback during a recession as manyconsumers have reduceddisposable income and/or concernsover their job security.Allegra’s consumer researchhighlights that people are eatingout less across the board – whethersacrificing a coffee in the morningor visiting restaurants lessfrequently. Allegra’s consumerresearch reveals that, althoughconsumers are eating out lessacross all establishment types, thehardest hit establishments havebeen those charging over £10, witha far larger percentage eating outless in these establishments thanin those charging less than £10.The inference is that informaldining is relatively well placed asestablishments are frequently ableto offer consumers good value fortheir money, at keen price points –something which is of primeimportance to consumers during arecession when disposable moneyis limited.Eating Out in the UK 2009 14

Looking more closely at the impactof the recession on a quarterlybasis and by market segment, it isinteresting to see how Ethnic andCasual Dining categories have beenthe hardest hit. Both operate atrelative high overall transactionvalues, whereas more affordableprice points exist within the fastfood Burger segment. In addition,there is a strong brand presencehere and leading chains benefitfrom significant consumer trustand higher marketing budgets.The recession will also likely causea slight reduction in the number ofoutlets, particularly amongstindependents. Some established,weaker brands will also suffer andexit the market, whilst others willprosper and continue to add moreunits to the market. Brandsexpanding include Wetherspoon’s,Costa Coffee, Subway andMcDonald’s. The closure ofunderperforming outlets, however,may not all be bad news. Newspace on the High Street, as well asfalling property prices, will provideopportunities for new entrants andthe “fitter” to expand. Allegra’sexpectation therefore, is that theoverall outlet count will not bepermanently reduced as aconsequence of the recession.An encouraging message alsoemerges from Allegra’s restaurantindustry executive research duringmid 2009. The research indicatesthat, whilst levels of concernamongst the industry over theeconomic environment in the lasteight months are still relativelyhigh, they are decreasing. This ishighlighted in Figure 1.10 andsuggests the economy is movingbeyond the worst of the recession.Fig. 1.9 QUARTERLY YEAR ON YEAR GROWTH IN SPEND IN SELECTEDINFORMAL MARKET CATEGORIES, Q2 ‘07 – Q1 ‘096.4%6.2%3.4%2.3%8.6%4.7%0.0%1.1%Q2’07 Q2’08 Q3’07 Q3’08 Q4’07 Q4’08 Q1’08 Q4’09Source: Allegra Strategies Analysis, NPD Group, CREST data, 2009Burger Sandwich and Coffee Casual Dining EthnicNote: Values sourced from CREST data. There are specific definitions in the way the market isassessed: ‘Burger’ refers to fast food hamburger and chicken; ‘Ethnic’ refers to takeaway ethnicfood (Chinese, Indian, etc.);‘Sandwich and Coffee’ refers to coffee shops, cafés and ice cream shops;and ‘Casual Dining’ refers to a sit down but informal meal.Fig. 1.10 LEVEL OF CONCERN WITH CURRENT ECONOMICCLIMATE, 2009 VS. 200815% 11% 51% 43% 31% 37% 3% 9%Highly Concerned Concerned Slightly Concerned Not ConcernedSource: Allegra Strategies Analysis, Industry Research, 20097.7%1.8%-1.4%-1.6%9.0%-4.1%-6.9%-8.3%Sept ‘08May ‘0915 Eating Out in the UK 2009

Employment Statisticsin the UKAs of March 2009, 1.36million people wereemployed across therestaurant & café, pub &bar and canteen &catering sectors, whichequates to 1 in 20 of theUK workforce.With 29.1 million people employedin total in the UK in March 2009,the sector accounts for 4.7% of theworkforce. This compares with theretail sector which accounts for10.8% of the workforce.Restaurants & cafés comprised thelargest of these segments,accounting for 46% of the totalnumbers employed. The impact ofthe current recession is evident inthe 2009 figures with therestaurant & café segment down1.3% and the pubs & bars subcategoryfalling by 2.3%. However,the longer-term decline in the pubsector is also illustrated withemployment numbers having fallenby 57,000 from their peak in 2005.Numbers employed within therestaurant and café marketsegment have increased steadilysince the mid 1990s, though growthhas slowed in recent years. The fallin employment from 2005 onwardscan be attributed to the fall in thenumber of pubs which hasdwindled in recent years.Employment in restaurants andcafés has only started to fall since2008 and is a result of weakenedeconomic conditions.Fig. 1.11 TOTAL EMPLOYMENT IN THE RESTAURANT & CAFÉ, PUB & BAR AND CANTEEN & CATERING SECTORS,MAR. 2000 – MAR. 2009233.8251257.9266.3?271259.1243.7226.6242.9243.7483.8534.7484.1509.7529.6521.3559.6523.4583.4548.3596.9550.9616.2543526.7622.2505.6626.2494.1616.320002001 2002 2003 2004 2005 2006 2007 2008 2009Source: Allegra Strategies Analysis, ONS, 2009 Restaurants & Cafés Pubs & Bars Canteens & CateringEating Out in the UK 2009 16

Fig. 1.12 SHARE OF TOTAL EMPLOYMENT WITHIN RESTAURANTS & CAFÉS BYEMPLOYMENT SIZE BAND54% 22% 13% 8%1-4 5-9 10-19 20-49Source: Allegra Strategies Analysis, ONS, 20092%50-990%100-2490%250+Figure 1.12 illustrates that themajority of people employedwithin the restaurant and cafésector falls within the smallestestablishment sizes – those whichemploy 1-4 people. This serves tohighlight the importance ofindependents and smallerestablishments within themarketplace.Looked at by gender split, andconcentrating purely on the largestsector – restaurants & cafés, it isinteresting to note the balancingtrend that has occurred over thepast decade or so. While there arestill more females than menemployed in the sector, thedifference is by no means asmarked as was the case in themid-1990s. This reflects acombination of factors, includingfemales taking on a wider varietyof job roles, relatively slowergrowth in part-time positionsthan full-time, and malesbecoming more attracted to thecareer opportunities.17 Eating Out in the UK 2009

Fig. 1.13 GENDER SHARE OF TOTAL EMPLOYMENT IN THE RESTAURANT AND CAFÉ SECTOR, MARCH 1996 – MARCH 200969.5%66.5%60.1%57.1% 57.4% 57.3%54.4%53.5% 54.4% 53.9% 52.4% 50.5% 52.8% 52.7%39.9%42.5%42.8% 42.7%45% 46.5% 45.6% 46.1% 47.6% 49.1% 47.2% 47.3%30.5%31.5%13,067 17,618 24,689 33,34140,25024,689 33,34140,25019961997 1998 1999 2000 2001 2002 2003 200420052006 2007 20082009Source: Allegra Strategies Analysis, 2009 Male FemaleFig. 1.14 PART-TIME AND FULL-TIME SHARE OF TOTAL EMPLOYMENT IN THE RESTAURANT AND CAFÉ SECTOR,MARCH 1996 – MARCH 200960.5%58.7%61.3%61.5% 63.6% 60.9%56.5%59.5% 59.9% 56.5% 55% 53.8% 53.6% 52.8%39.5%41.3% 38.7%38.5%36.4% 39.1%43.5% 40.5% 40.1% 43.2% 45.1% 48.1% 48.4% 47.2%13,067 17,618 24,689 33,34140,25024,689 33,34140,25019961997 1998 1999 2000 2001 2002 2003 200420052006 2007 20082009Source: Allegra Strategies Analysis, 2009 Part Time Full TimeIn a similar fashion to the gender split, there has also been a process ofequalisation within the part-time and full-time roles within restaurants& cafés. This does not reflect a decline in the number of part-time jobsover the 1996-2009 period, merely that they have not kept pace with theincrease in full-time positions. Part-time jobs have increased by 82,000 toreach 326,000, whereas full-time positions have grown by 133,000 tostand at 292,000 in March 2009.Eating Out in the UK 2009 18

Staff Turnover and Retentionwithin the IndustryBy industry sector, thehotel, catering and leisureindustry has the highestturnover rate – 41% in2007 – though morerecent figures areexpected to show a slightlowering (CIPD, 2008,Recruitment Retention andTurnover Report).High employee turnover within thehospitality industry is partlyattributable to the constant flow ofstudents working part-time in pubs,bars and restaurants – frequentlythese are first-time jobs. Two thirdsof workers within the hospitalityindustry have been in their job forless than two years (Survey, TheBuzz, 2008).In a 2008 survey (CIPD), commonreasons cited for leaving a jobincluded: A change of career,promotion outside of theorganisation, level of pay, and a lackof career developmentopportunities.The challenge for the foodservicesector is to devise a strategy fit toretain staff on a longer-term basis.This is increasingly difficult ascareer paths, particularly amongyoung workers, are getting morefluid with the notion of long-termloyalty to a company at risk ofdying out.The recession, however, will havehad a positive impact on therecruitment and retention of staff.With a greater number of highcalibre candidates looking for work,the foodservice industry will be ableto entice some of these candidatesinto the sector. The necessity forcompanies within the industry towork on training and careerprogression will still remain in orderto retain these individuals beyondthe economic downturn.19 Eating Out in the UK 2009

Eating Out in the UK 2009 20

Chapter 2Market Historyand EvolutionIn This Chapter• Market historyand evolution –1960s to today• Case study 1 –More mobileconsumers• Case study 2 –Eating outdevelopment focuson Coventry• Case study 3 –Timeline of UKopenings of selectedInformal Eating Outbrands• Towards the end of the 1900s,eating out becamesignificantly more affordableand accessible to all consumers• The emergence of the InformalEating Out market is directlylinked to increasing affluence,rising mobility and foreigntravel, and the growth inbranded restaurant concepts• The absence in Britain of astrong indigenous food culture,allied with its multi-culturalsocietal fabric, has enabled arich diversity of cuisine typesto flourish – and resulted in atruly multi-national InformalEating Out market• A potted history...-1960s - New social freedomsand eating out concepts- 1970s - Tentative times forInformal Eating Out- 1980s - New faster foodfashions- 1990s - The emergence of‘fast casual’ dining- 2000s - Café culture takescentre stageKEY POINTS‘‘The eating outmarket haschanged. Whenwas the last timeyou put a suit onto eat out?’’Stephen CliffordMarketing Controller, Brake Bros‘‘There is nowmuch greaterchoice and higherquality than everbefore. Brandshave becomemuch more evidentwith a strongeremphasis onfreshness andinnovation. Andconsumers havebecome far moreselective anddemanding.’’Ewan VentersFood and Catering Director,Selfridges21 Eating Out in the UK 2009

1960s – New Freedomsand Eating Out Concepts• A period of significantsocial change, with theformality and socialconstraints of previousdecades replaced bygreater acceptance andconfidence in individualexpression• First openings ofPizzaExpress andKentucky Fried Chickenin 1965 signal theemergence of theInformal Eating Outmarket• Widening of British foodtastes boosted by theintroduction of packageholidays and expansionof Indian restaurantsand takeaways with thegrowth in migrants fromthe Indian sub-continentIn one sense, the origins ofinformal eating in the UK arecenturies old and can be tracedback to the growth in trade andcommerce that accompanied theestablishment of many newsettlements and towns during theRoman occupation of c.50-400AD!However, in its contemporarysense, the Informal Eating Outmarket really began to take shapein the 1960s. The ‘Swinging Sixties’was a decade of revolution againstthe conservatism and socialconformity that characterised theausterity and rationing of post-war1950s. The 1960s were far moreprosperous years and hostedseveral notable foodservicedevelopments as well assignificant cultural changes.Re-introducing Italian inspiration,the pizzeria arrived complete withthe first purpose-built pizza ovenin the UK, with the originalPizzaExpress opening in London in1965. This year also saw Americanfast food influences taking root,with the establishment of the firstKentucky Fried Chicken. At thistime, Wimpy was in the vanguardof bringing burgers to Britons, orLondoners at least, with nine barson Oxford Street by the end of thedecade. Also influential in makingeating out more widely accessibleand, in contributing to it becomingmore of a leisure activity, was theemergence of bistros. Theseeateries provided casualenvironments and offered anassortment of mainly Frenchcountry options, including garlicmushrooms, ratatouille, moulesand pâté.The 1960s also saw Britons’ foodtastes being expanded by thegrowth in package holidays. Theserelatively cheap combinations offlights, transfers andaccommodation provided the firstchance for many people to haveaffordable travel abroad,particularly to Spain and Greece.The growing British economy andan enduring legacy of post-warreconstruction led to labourshortages and resulted insignificant in-bound migration.The UK’s largest wave of Indianmigrants arrived in the late 1950sand 1960s, quickly introducingspicier food items to consumers’eating repertoires. In the process,Indian takeaways and restaurantsbecame familiar fixtures on shopparades across many major townsand cities. They joined theemerging Chinese takeaway sectorand provided welcome newalternatives to the substantialnumbers of traditional fish & chipshops.Despite the emergingliberalisation, pubs remained abastion of masculinity – withattendance viewed by generationsof men as sacrosanct. Food wasvery much secondary to drink, withwives expected to have mealsready at home – particularly inmore industrial, working classareas outside London.Eating Out in the UK 2009 22

1970s – Tentative timesfor Informal Eating Out• Major economic scarsfrom the fall-out of theOil Crisis in 1973 withhigh unemploymentand inflation• Growth in eating athome boosted by risinghousehold ownership ofdomestic appliances• Popularity ofsteakhouse pub chainsIn many respects, growth in eatingout activity was on hold during the1970s. The first half of the decadewas a period of significanteconomic and political uncertainty,with oil price shocks, power cuts, amajor recession and substantialunemployment. However, whileconditions improved as the decadeprogressed, eating out appetiteswere also dampened by majoradvances in electrical appliancesthat improved the quality ofdomestic life. The penetration ofrefrigerators, freezers and colourTVs among UK households grewstrongly – by 1978, more than 90%of households owned a fridge andover 40% possessed a deep freezeor fridge freezer.Growing TV viewing madehousehold names of cooks RobertCarrier, Fanny Cradock and Graham(Galloping Gourmet) Kerr. Theyencouraged more consumers to bemore experimental and confidentin the kitchen, and provided a fillipto in-home entertaining. Theleading grocery chains alsosupported improved dining-in,with initial moves towards openinglarger superstores and offering farmore varied assortments, includingnew, ready-prepared frozen foodssuch as lasagne, gateaux and boilin-the-bagfish.Pubs, in particular, benefited fromthe convenience advantages offrozen food and many introduceda selection of chicken, sausages,burgers or scampi, served withchips in a ‘basket’. The solidtradition of the roast dinner alsobecame part of the eating outexperience. It became thecentrepiece of carvery-styleoperations, with the roast meatcarved from the joint at thecustomer’s request. Pub chainsteakhouses also emerged – suchas the Berni Inn and Beefeaterbrands – continuing thetraditional British fondnesstowards relatively plainly cookedmeat. Indeed, red meat wasdished up on a regular basis, withthe average person consuming450g per week – double theconsumption level of today.Red meat-eaters were alsodelighted with the arrival ofMcDonald’s into the UK in 1974,with Burger King following threeyears later. As with previous newchain openings, London wastargeted for market entry. Togetherwith Pizza Hut also making itsdebut, the informal element ofeating out was beingstrengthened.The 1970s also saw the introductionof equal pay for women and bettereducation regarding contraception,resulting in more females enjoyingimproved career prospects. Theenhanced spending power, andreduced time for at-home mealpreparation, would become anincreasingly important InformalEating Out market growth dynamic.Indeed, Figure 2.1, highlights howfemale employment has increasedstrongly since the early 1970s, risingby 4.3 million or 49% over the 1972-2008 period.Fig. 2.1 GROWTH IN FEMALE EMPLOYMENT AND SHARE OF TOTALEMPLOYEES NUMBERS. UK 1972-200837.1%37.1%9,107197238.5% 40.1% 41.7% 43.1% 44.9% 45.5% 45.7%9,5371976Note: Includes part- and full-time employmentSource: Allegra Strategic Analysis, ONS, 200910,052 10,124 11,247 11,478 11,868 12,573 13,080 13,5491980 1984 1988 1992 1996 2000 2004Share of total %45.9%46.0%2008Female Employment in 000s23 Eating Out in the UK 2009

1980s –New faster food fashions• Period of strongeconomic growth andrising materialism• Emergence of moresophisticatedsandwiches – both fromMarks and Spencer andfirst Pret A Mangerstore opening• Rapidly expanding fastfood segmentThe 1980s split opinion – to some itwas a decade of greed andconspicuous consumption, toothers, it was a period ofentrepreneurship and possibility. Agrowing divide certainly emergedbetween the rich and poor, withbetter off families paying less taxand enjoying the growingabundance of new food options –including nouvelle cuisine.What is clear is that the eightiesmarked a period when several keysocietal trends that we recognisetoday became evident – not leastthe emergence of working women,falling household sizes and therising importance of convenienceand healthy eating. These factorscontributed to the 1980s beingcharacterised by two things – themicrowave and the sandwich.More specifically, Marks andSpencer began selling its popularsandwiches and Prawn &Mayonnaise was quicklyestablished as the best seller.Taking inspiration, small andindependent bakers sought somecompetitive protection from theburgeoning supermarket multiplesand started offering more preparedoptions to appeal to the growingtake away market. Greggsexpanded its store portfolio, whilePret A Manger opened for businessin 1986. The fast food operatorsalso moved to embrace healthierdevelopments. Wimpy was thefirst to introduce a vegetarianoption with its Spicy Beanburger,while McDonald’s became the firstchain to provide nutritionalinformation for the benefit ofconsumers.In terms of leading restaurantbrands, back in 1983, the largestchain was operated by Little Chef,with over 310 outlets. This wasfollowed by Berni Steak Housesand Cavalier Steak Bars, as Britons’love affair with red meat endured.However, by the end of the decade,Little Chef was usurped byMcDonald’s, with its growingcoverage of Great Britain nudgingit towards the 400 mark.Competition in the fast food sectorwas also strengthening, both fromthe introduction of new productsand entrants. Chicken nuggets andmeal options for kids were addedto menus, with new competitorsemerging in the form of Domino’s,Taco Bell and Wendy’s. In addition,and at the lower end of theculinary spectrum, kebab shopswere given a huge fillip bycomedian Harry Enfield’s ‘Stavros’character.While not all new players were toprove successful, the ground wasbeing prepared for a new breed ofeating out genre – one thatcombined fast convenience with amore sophisticated, yet casualinformality.Eating Out in the UK 2009 24

1990s – The emergenceof ‘Fast Casual’ dining• Rising social mobility,household wealth andliving standards• Proliferation andinternationalisation offast casual and quickservice dining concepts• Emergence of gastropubsegmentThe 1980s may have paved the way,but the 1990s represented agenuine step change in theevolution of the Informal EatingOut market. Exciting new brandedconcepts emerged, and tried andtrusted brands expanded theirreach significantly. In the process,eating out became a more routinepart of many more lives.In particular, the value mid-marketrestaurant sector grewexponentially during the 1990s.Appealing to a large segment ofconsumers looking for somethingstylish yet safe, PizzaExpress wasjoined by a raft of pizza & pastabrands, including Ask, Carluccio’s,Strada and Zizzi. Opening up newfrontiers was the emergence of theinnovative yet accessible,Wagamama, which debuted in1992. Offering non-specific‘Oriental’ food at affordable pricesand with open kitchen practices,this was an exciting new additionto the informal scene. And thesame could be said for YO! Sushi.Opening its first outlet in 1997, YO!Sushi brought Japanese-inspirednew food and restaurant practicesto the UK.Without question, consumers weredeveloping more sophisticatedtaste buds and demanding spicierfood. In 1992, South African-based,but Portuguese-inspired, Nando’sbegan capitalising on this throughits flame-grilled peri-peri chickenranges. Nando’s also helped tocreate a new space in the informalmarket with its pay first, but tableservedapproach.The upward trajectory of all thingsAsian boosted the opening of a raftof independent Thai restaurantsand the popularity of Indian foodin the 1990s helped to raise theprofile of Chicken Tikka Masala tofavoured national dish status.Pubs also caught the Asian bug,expanding menu options and, in anumber of cases, sub-contractingout kitchens and converting entirefood assortments over to Thaicuisine. Indeed, the pub sectorgrew strongly during the mid-late1990s on the back of a burgeoningcatering business. Several smallerpub chains and independentsraised the bar on their foodstandards by joining the pubrestaurantmovement – with theterm ‘gastro-pubs’ beingintroduced to describe moreupmarket establishments.Concentrating on higher footfallurban areas, were a couple of newentrants to the sandwich sector.Eat and Subway both opened in1996 and offered healthieralternatives within the market –but to different target audiences.Taking more than a littleinspiration from Pret A Manger, Eatwas also aimed at office workers.By contrast, US-based Subwayoffered more youthful appeal andintroduced a customised sandwichproposition to the market via itsfranchise-based business model.Also helping to consolidate themore affordable end of theinformal market were a number ofnotable developments within thecoffee shop sector. Starbucksarrived in the UK via its acquisitionof the Seattle Coffee Company in1998, while the emerging businessdevelopment possibilities did notgo unnoticed by several othersizeable operators. Whitbreadacquired Costa Coffee in 1995,Nestlé opened its first Café Nestléin 1997 and McDonald’s purchasedthe Aroma chain two years later.This emerging market segmentwas certainly stirring, but fewwould have predicted thephenomenal growth that wouldoccur in the new Millennium.25 Eating Out in the UK 2009

2000s – Café culturetakes centre stage• Rapid expansion ofbranded coffee shopsand increasinglypervasive café culture• Emergence of healthierquick service chainsand a new‘premiumised’ sector• End of decade recessionreins in consumerspending and marketexpansionIn many ways, it is odd to talkabout the noughties as the time ofthe coffee shop as this concept hasexisted in the UK in a generic caféformat for much of the previouscentury. Moreover, even on a moretightly defined basis as a venuespecialising in roast and groundcoffee, there was over 1,000branded coffee shops by 2000.However, this is to ignore both thehuge growth this market segmentwould go on to achieve and also itsprofound impact on the broaderInformal Eating Out market.Market leaders, Costa Coffee andStarbucks, both now operate over700 units alone, and there will bewell over 4,000 branded coffeeshops by 2010. This growth hasbeen facilitated by coffee shopsexpanding across the UK, and inmany ways, usurping the pub asBritons’ preferred ‘third space’. Inaddition to their core stores, theleading coffee chains have openedconcessions in book stores, gardencentres, department stores andsupermarkets, and developedexpress kiosks to trade fromsmaller footprints at travel hubs.Not to be out-done, a host of nonspecialistoperators have exploredtheir own ways to capitalise onconsumers’ growing demand forcoffee. Marks and Spencerlaunched its Café Revive concept in2000 and is now the UK’s fourthlargest café operator. Petrolforecourt specialist, BP, hasdeveloped a chain of over 200 WildBean Cafés, while motorwayservices area operator, WelcomeBreak, has successfully introducedits own Coffee Primo brand. Inaddition, many pub chains arefighting back by strengtheningtheir speciality coffee offers, notleast JD Wetherspoon through itstie-up with Lavazza, and GreeneKing with Coffee Republic.An important point that manynon-specialist operators arelearning from the leading coffeechains is that it is not just aboutthe coffee. The branded chainshave prospered becausefundamentally they are selling an‘experience’ that consumers buyinto. The combination of therelaxing atmosphere, a carefullydesigned in-store environmentand, increasingly, free newspapersand Wi-Fi, offer a proposition thatsimply cannot be re-created athome and this has been a keydriver behind the strong InformalEating Out market growth ofrecent years.Working alongside the marketgrowth dynamic provided by therise of café culture, has been thesubstantial expansion of brandedconcepts. The UK store portfoliosof Greggs, McDonald’s and Subwayall passed the 1,000 mark duringthe noughties and have by nomeans reached saturation points.Providing a useful indicator of thescale and importance of thebranded chains is the fact thattoday, to be a Top 10 operatorwithin the Informal Eating Outmarket, a minimum estate size of500 outlets is required. As recentlyas the early 1980s, 50 would havebeen sufficient.At the same time, it has not allbeen plain sailing for brandedoperators. A number of playershave come and gone, eitherthrough closure ortakeover/conversion of underperformingbusinesses. During the2000s, examples within the cafésector include Benjy’s, Madison’sand the phasing out of the Baker’sOven brand. Previously, and withinquick service restaurants, Arby’s,Happy Eater, Pizzaland, Taco Belland Wendy’s have closed down.Indeed, it would be misleading tosuggest that the noughties havejust been about the leadingbrands. Food culture hasdeveloped appreciably and a hostof green shoots have emerged,many supported by savvymarketing and an eagerness to tapinto a variety of established andemerging consumer trends. Saladbar concepts, Chop’d and Tossed,are targeting convenience-drivenconsumers looking for healthyoptions delivered with personality.This can also be said of Leon andSnog.>>>Eating Out in the UK 2009 26

Certainly prior to the recession,premiumisation was drivingmargins and putting smiles onoperators across the eating outsector. It helped the developmentof several more indulgent bakeryledconcepts, including Baker &Spice, Le Pain Quotidien and Princi.Interestingly, these businessescomprise retail andfoodservice functions. The samealso applies to upmarket eaterie,Ottolenghi, and to earlier pioneer,Carluccio’s.Also significant is that growingnumber of operators are offeringconsumers increasingly differentpropositions across the daypartsvia extensive daily opening hours.Indeed, while the noughties havebeen characterised by boomingcafé culture, they are also verymuch about the emergence of a24/7 society. Consumers arebecoming ever more switched onand demanding much more ontheir own terms – and this is animportant marker for how themarket will evolve going forward.Case study 1More Mobile ConsumersUK residents havebecome increasinglymobile over the past 50yearsThis is evident in greater carownership and access to cars,more people on the road andspending more time travelling,and greater numbers ofcommuters. All of these factorshave been beneficial and helpedsupport the rise of the InformalEating Out market. This isthrough:• Providing greater access forconsumers to a wider choice ofeating out establishmentsFig. 2.2 PERCENTAGE OF ADULTS WITH FULL CAR DRIVING LICENCE,UK 1975-200648% 57% 69% 72%1975/1976 1985/1986 1995/1996 2005/2006Source: Allegra Strategies Analysis, Department for Transport, 2009Fig. 2.3 BILLIONS OF KILOMETRES TRAVELED BY BRITONS WITHINGREAT BRITAIN, 1971-2007• Increasing the opportunities foroperators to tap into more outof home meal occasions• Stimulating demand forproducts designed for ‘grazingon the hoof’ and ‘dashboarddining’, and boosting use ofdrive-thrusParticularly across the 1970s and1980s, the proportion of adultswith a full car driving licenceincreased strongly, and nowstands at just over 7 out of every10 adults. Unsurprisingly, carownership has also increased, andnow averages 1.14 cars per UKhousehold.419 495 681 7651971 1981 1991 2001Source: Allegra Strategies Analysis, ONS Social Trends, 2009In addition, there has beensignificant growth in the numberand length of journeys beingundertaken by Britons over thepast 40 years. The Office ofNational Statistics reports a nighon doubling of kilometrestravelled within Britain over the81720071971-2007 period. Growingemployment and commuting hascontributed strongly to this, andit is interesting to note that theaverage UK commuter nowspends the equivalent of 26working days a year commuting.(Work Wise)27 Eating Out in the UK 2009

Case study 2Eating out developmentfocus on CoventryCoventry is a relativelytraditional city in‘Middle England’ with apopulation of just over300,000.While the profile of its populationhas taken on a greater Asiancomposition, over the past 40years it has not seen significantpopulation growth and, as such,provides a useful mini case studyfor more closely exploring howthe assortment of its variouseating out establishments haschanged. Using data sourcedpurely from Yellow Pages, it isinteresting to see how varioussub-categories have grown (orotherwise), since 1978. Keyfindings include:• Significantly greater presenceand diversity in takeaways andrestaurants• Growth in cafés and sandwichshops• Halving in numbers of fish &chip shops and pubs• Emergence of branded chainsWhile it is predominantly outsidethe out of home scope of thisInformal Eating Out market, thestrongest growth has occurredwith takeaway food shops,including various ethnic, pizza andkebab outlets. Significant growthhas also taken place withinrestaurants, with this includingcontributions from both brandedchains and independents. Indeed,it is insightful to see thesubstantial segmentation of sub-Table. 2.1 GROWTH IN NUMBER OF EATING ESTABLISHMENTSBY TYPE, COVENTRY, 1978–2008Type of Establishment1978 1988 1998 2008Cafés & Sandwich ShopsFish & Chip ShopsPublic HousesRestaurantsTakeaway Food ShopsTOTALSource: Yellow Pagescategories employed within therestaurant section of the 2008Yellow Pages. This now includes:American, African, Armenian,Austrian, Bangladeshi, Belgian,Caribbean, French, Greek, Indian,Indonesian, Irish, Japanese,Korean, Kurdish, Lebanese,Malaysian, Mediterranean,Mexican, Middle Eastern,Mongolian, Moroccan, Nepalese,Polish, Portuguese, Russian,Scottish, Spanish, Thai, Turkishand Vietnamese.Cafés & sandwich bars showparticularly strong growth overthe past decade, which is verymuch in keeping with the rise ofcafé culture in the UK in general.This segment is also interestingfrom some of the names of subcategoriesthat have been used.Back in 1978, this included snackbars, ice cream parlours and milkbars, descriptions that havelargely disappeared since. Newersub-categories have emerged inthe form of internet cafés andpottery & ceramic cafés.Unsurprisingly, fish & chip shopshave lost out to the substantial436125659274462463227936347029522191071245316431127144168534Growth1978-200821-30-1298514188growth in competition fromother takeaways and restaurants.The other major loser in thisanalysis has been public houses.Again, this is in line with widerUK trends, but the magnitude ofthe decline within Coventry willhave been greater owing to itsCity status, and a heavier skewtowards smaller, beverage-ledestablishments.The expansion in eating outestablishments has also served tochange the retail landscape ofCoventry’s central shopping areasand suburban shop parades. Theretail/foodservice mix hasevolved to include a muchstronger and higher qualityeating out provision, comparedwith the more pub dominatedmarket back in the 1970s. Andwith many non-food retailersstruggling and closing, theexpanded foodservice offer ishelping to maintain footfall andreduce the number of vacantunits. Certainly, within the morecentral and higher rental areas,there is a stronger foodservicepresence, but this is focusedaround leading brands.Eating Out in the UK 2009 28

Case study 3Timeline of UK Openingsfrom Selected InformalEating Out BrandsThe origins of themodern day InformalEating Out market canbe traced back to the1960s. Pioneers,Kentucky FriedChicken andPizzaExpress,introduced new eatingideas and paved theway for a host of newrestaurant concepts.The pace and varietyof openings increasedin the 1990s and thismomentum andburgeoningheterogeneity has beencarried through intothe new millenium.Fig. 2.3 TIMELINE: THE UK DEBUTS OF SELECTED INFORMAL EATINGOUT BRANDS, 1960s-2000s1960sNew socialfreedoms andpioneeringeating outconcepts defineinformal origins1965KentuckyFried Chicken1970sDifficulteconomic timesand more focuson eating athome than out1971Costa Coffee1973Pizza Hut1974McDonald’s1980sNew fast foodfashions,includingburgers, readymeals &sandwiches1980Wendy’s1985Domino’s1990sThe emergenceof fast casualdining withmany excitingnew players1992Wagamama1992Nando’s1995Eat1996Subway1997YO! Sushi1998Giraffe2000sRise of caféculture andbirth of manynew healthier,niche andpremiumbrands2001Apostrophe2001GourmetBurger Kitchen2004Chop’d2004Leon2005Canteen2005Sacred2005Tossed1965Pizza Express1977Burger King1986Pret A Manger1998Starbucks2008Jamie’s Italian1960s 1970s 1980s 1990s2000sSource: Allegra Strategies Analysis, Companies, 200929 Eating Out in the UK 2009

Eating Out in the UK 2009 30

Chapter 3ConsumerInsightIn This Chapter• Key motivations andprimary occasionsfor eating out• Eating out behaviour– when, where andhow often• The popularity ofdifferentestablishments• Key influences whenchoosing somewhereto eat out• Spend patterns andaffordability• Changing eating outhabits amongstBritons• The trend insnacking versuseating structuredmeals• Case studies acrossdifferent regions andage brackets,including DiningDiaries• Eating out in thenext 12 months• Some 148 million meals areeaten out of the home everyweek in the UK• On average, this equates to 1 inevery 9 meals. Significantvariation lies around this figure– 16% of the British public eatfive meals or more out of thehome every week, and 19% eatno more than one meal afortnight• Most people (81%) view eatingout as a treat. However, peopleare not just eating out onspecial occasions. A highpercentage are doing so forsocial reasons, to spend timewith their friends and family• London is the Eating OutCapital of the UK – Londoners,on average, eat three mealsaway from home every week.People from Northern Irelandeat out the least, eating onaverage less than two mealsout of the home• Lunch is king! 43% of people eatlunch out of the home at leastonce a week• Coffee shops and sandwich barsare the favourite weeklydestination – 34% of consumersvisit one at least once a week• Local pubs are holding theirown – rumours of extinctionare grossly exaggerated. Thepub is particularly popular withyoung adults and the over 65s.KEY POINTSThis illustrates the sentimentthat the pub holds with UKcitizens across the board• Quality and taste of food, aboveprice, is the key determinant forconsumers looking for valuewhen eating out• People have been reining intheir eating out – 35% of peopleare eating out less than theyhave been in recent yearscompared with just 10% whoare doing so more often• There is a mixed response as towhether eating out has becomemore or less affordable inrecent years – consumers err onthe side of believing eating outto be less affordable but thiscan be attributed directly to therecession and the impact it hashad on consumer confidence• Lower priced establishmentsare currently proving popular –74% of diary keepers ate outin establishments where theprice of their meal / snack wasunder £5• The year ahead will be animprovement on the last 12months but will remain adifficult environment for theeating out market. 20% ofpeople claim they will be eatingout less over the year aheadcompared with half thisproportion expecting to beeating out more31 Eating Out in the UK 2009

Key Motivations andPrimary Occasions for Eating OutFor many, eating out isan integral part of theirlifestyle. This is a directeffect of a multitude offactors, including moremobile lifestyles, theever-widening availabilityof food, the social benefitsof eating out and a desireto broaden palates.Fig. 3.1 EATING OUT AS A TREAT - I regard eating out as a treatPercent of RespondentsWhile these factors arecontributing to the long-termunderlying trend of eating out,people continue to see theoccasion as a treat.“Going out for foodis a treat, I only goout to eat differentthings that I don'thave at home.”Female16-24, Peterborough29% 52% 9% 9%AgreeStronglyAgree Neither DisagreeSource: Allegra Strategies Analysis, Consumer Research, 20091%DisagreeStrongly“It's a treat becauseit breaks themonotony of cookingfor the day.”Male35-39, LeicesterIn support of the notion thateating out is a treat, consumersheavily disagreed with the notionthat a busy lifestyle forced them toeat out frequently. 81% of peopledisagreed that they ate out veryoften because of a busy lifestyleand 78% disagreed to some extentthat they rarely had time to cookproper meals at home.Eating Out in the UK 2009 32

The motivation behind consumersgoing out to eat is closely linked tothe notion of it being a treat and asa key part of their social lives. Themost common reasons given byindividuals for eating out of thehome were dining out with friends(21%), or family (20%) and goingout for a special occasion (21%).Fig. 3.2 ATTITUDINAL STATEMENTSPercent of Respondents78%81%9%12%I rarely have timeto cook propermeals at home8%11%I eat out veryoften because ofmy busy lifestyleDisagree Neither AgreeSource: Allegra Strategies Analysis, Consumer Research,2009Fig. 3.3 PRIMARY REASON FOR LAST EATING OUT OCCASIONPercent of Respondents21%DiningOut withFriends21% 20% 12% 7% 6% 4% 4%Treat/CelebrationDiningOut withFamilyDiningOut withPartnerSource: Allegra Strategies Analysis, Consumer Research, 2009Meal withShoppingMealwithLeisureQuickMeal-on-the-MoveRoutineMeal3%BreakfromWork1% 1%BoardroommeetingOther33 Eating Out in the UK 2009

Eating Out BehaviourIn the last 12 months,35% of consumers havereduced the extent towhich they are eatingout. 55% are eating outthe same as they were 12months ago and 10% areeating out more.Consumers are also re-consideringtheir choice of outlet, with 32% ofpeople visiting places charging £10-£15 per head less over the last yearand 41% of people reducing theirvisits to establishments chargingmore than £15 per head.When individuals are eating out:Lunch is the meal occasion eaten out of the home most often – 42% ofpeople eat lunch out of the home at least once a week. Comparatively,31% eat dinner out of the home once a week and 8% breakfast. Thegreatest percentage of people – 79% – seldom or never eat breakfast outof the home.Fig. 3.5 FREQUENCY OF MEAL OCCASIONS OUT OF HOMEHow often do you eat out?Percent of Respondents79%12%16%8%18%78%Fig. 3.4 CHANGES IN EATING HABITSIN THE LAST 12 MONTHSConcerning your generaleating habits over the lastyear, do you eat out of homemore or less?(Percent of Respondents)17%13%22%21%35%7%3%3%8%42%31%7%5%3%6%BreakfastLunchDinner/EveningMealLate Night/SupperNever Less than once a month One meal per month55%One meal per fortnightAt least one meal per weekSource: Allegra Strategies Analysis, Consumer Research, 200910%Eat out of homeLess Same MoreSource: Allegra Strategies Analysis, Consumer Research, 2009Eating Out in the UK 2009 34

Lunch is consumed out of thehome by 24% of UK adults at leasttwice a week – this figure would beconsiderably higher if packedlunches were accounted for. Thisproportion compares with 13% ofeating dinner out twice a week ormore.Fig. 3.6 LUNCH VS. DINNER – COMPARISON OF OUT OF HOMECONSUMPTION BY MORE FREQUENT PARTICIPANTSHow often would you eat out?Percent of RespondentsLunchDinnerOn average, 1 in 9 meals are eatenout of the home every week.However, this encompasses a hugeamount of variation. Some peopleare eating out of the home on afairly irregular basis – for example,16% eat lunch out less than once amonth. Others will eat five or moremeals a week out of the home. Anestimated 10 million people in theUK, or 16%, eat five or more mealsout of the home every week.Lunch dominates, largely because asizeable number of workers are outof the home during their lunchhour every day. Not all of theseworkers will be buying lunch everyday, however – 57% typically bringin a packed lunch at least one day aweek, equating to approximately 17million people. The workplacecanteen is the second mostpopular choice with 24% of peopleeating their lunch there.The most popular evenings foreating dinner out of the home areFriday and Saturday nights. Fridaynight is more popular with youngerage groups and Saturday night amore favoured evening for theearly thirties to middle aged (seeCase Study 2).9% 1% 15% 12% 18% 18% 13% 21%5+ Meals per week 2-4 Meals per week One meal per week One meal onceper fortnightSource: Allegra Strategies Analysis, Consumer Research, 2009Table 3.1 FREQUENCY OF UK CONSUMERS EATING OUT OF HOME BYMEAL OCCASIONRANK MEAL OCCASION1234LUNCHDINNERBREAKFASTLATE NIGHT SUPPERSource: Allegra Strategies Analysis, Consumer Research, 2009AVERAGE NUMBER OF MEALS EATEN OUTPER MONTHTable 3.2 TOP 10 LUNCH CHOICES AMONGST THE UK WORKING POPULATIONPercent of RespondentsRANK WORKING LUNCH12345=6=689104.92.80.90.6BRING IN PACKED LUNCHEAT IN CANTEEN/CAFÉGO TO CAFÉ/SANDWICH BARWORK AT HOMEBUY FROM SHOP/SUPERMARKETGO TO RESTAURANTGO TO A FAST FOOD OUTLET1 DON’T NORMALLY HAVE LUNCH AT WORKI GO HOME FOR LUNCHI GO TO THE PUBPERCENTAGE57.4%23.5%18.9%11.9%7.8%4.4%4.4%4.0%2.7%2.4%Source: Allegra Strategies Analysis, Consumer Research, 200935 Eating Out in the UK 2009

Where individuals are eating out:The most frequently visited establishments, i.e. customers visitingat least once a week, comprise: coffee shops/cafés/sandwich bars (34%of consumers); the workplace (17%); general restaurants (16%) and fastfood outlets (15%).Fig. 3.7 FREQUENCY OF EATING OUTHOW OFTEN DO YOU EAT OUT IN THE FOLLOWING ESTABLISHMENTS?Percent of Respondents19%22%25%47%50%79%89%22%23%11%17%26%17%16%26%16%14%13%34%12%15%11%15%14%15%8%14%1%2%1%17%2%2%1%6%GeneralrestaurantsPub restaurantsCoffeeshops/cafés/sandwich barsFast food outletsDepartmentstore/supermarketcafésWorkplace/college café/canteenFacilities infitness andleisure centresSeldom or never Once every 2-3 months Once per month Once per fortnight At least once per weekSource: Allegra Strategies Analysis, Consumer Research, 2009Table. 3.3 FREQUENCY OF ESTABLISHMENT VISITS PER WEEKRANK ESTABLISHMENT TYPEAV. FREQUENCY OF VISITS PER MONTH123=4=456COFFEE SHOP/CAFÉS/SANDWICH BARS 2.0GENERAL RESTAURANTS (BRANDED AND INDEPENDENT) 1.4PUB RESTAURANTS1.3FAST FOOD OUTLETS1.1WORKPLACE/COLLEGE CAFÉ/CANTEEN 1.1DEPARTMENT STORE/SUPERMARKET CAFÉ 1.0FACILITIES IN FITNESS & LEISURE CENTRES 0.3Table 3.3 supports what isexpressed in Figure 3.7 byrepresenting how frequently theaverage adult will visit certainestablishments – for example,people will visit a coffeeshop/sandwich bar, on average,twice a month and will visit a fastfood chain on average once amonth. By contrast, a café in adepartment store or supermarketis typically visited only once amonth.8Source: Allegra Strategies Analysis, Consumer Research, 2009Eating Out in the UK 2009 36

Eating Out Consumer TypologiesConsumers vary significantly in the frequency oftheir out of home eating patterns – from the veryregular diners to those eating out more rarely.Table 3.4 categorises and describes some of thekey characteristics of different usage segments.Table 3.4 CONSUMER TYPOLOGIES BY EATING OUT FREQUENCY5 MEALS ORMORE PER WEEK(16%)2-5 MEALSPER WEEK(22%)1-2 MEALSPER WEEK(23%)ONCE A WEEK -ONCE AFORTNIGHT (20%)ONCE AFORTNIGHT ORLESS (19%)GENDERMale, 18-24Female, 25-34Female, 35-44Female, 55-64Female, 65+AFFLUENCEAbove averageaffluenceAverage affluenceAverage affluenceAverage affluenceBelow averageaffluenceEATING OUTCHANGES IN THELAST 12 MONTHSEat out moreEat out moreEat out lessEat out lessEat out lessEATING OUTCHANGES IN THENEXT 12 MONTHSEat out moreEat out lessEat out lessEat out lessEat out lessEATING OUT IS ATREAT65% agree75% agree84% agree88% agree90% agreePOPULARESTABLISHMENTSVisits all mainestablishment typesCoffee shops, cafés,supermarket cafés,fast food outlets,general restaurants(mainlyindependents)General restaurants,local pubsCoffee shops, localpubs, generalrestaurants(independentsmainly)General restaurants(brands mainly), pubrestaurantsCOMMONREASONS FORDINING OUTBreak from work,everyday meal, quickmeal on the move,dining with friendsBreak from work,routine mealDining with partner,dining with friendsSpecial occasion,dining with family,dining with friendsSpecial occasion,dining with familyDINING OUTCOMPANION(S)Self, friendsSelf, friendsPartner, familyPartner, familyFamilyREASONS FORVISITING CERTAINESTABLISHMENTSBeen there before,food quality/taste,attentive serviceFood quality/taste,wide variety of foodoptions, good valueon food and drink,good review innewspaperConvenient location,food quality/taste,pleasantenvironment, cleanrestaurant, quickserviceBeen there before,organic/Fairtradefood, locally sourcedfood, wide variety offood options,pleasantenvironmentGood value on foodand drink, healthyfood options, familyfriendly, quickservice,recommended byfriend/family, specialoffersSource: Allegra Strategies Analysis, Consumer Research, 200937 Eating Out in the UK 2009

The Popularity ofEstablishmentsCoffee shops, cafés andsandwich bars dominatein terms of the frequencycustomers visit them.General restaurants andpubs are also popularchoices with individuals.When respondents were askedwhich establishments they havevisited in the last three months, thelocal pub and the independentrestaurants came out top with thegreatest share. 52% of respondentshave visited their local pub, 44% anindependent restaurant, and 32%an independent café.The strong visiting numbers forpubs can be attributed to the sheernumber of pub outlets. Allegra’sresearch has indicated that the pubhas sentiment with both youngadults (18-24), and the oldergeneration (65 and over). The pubis popular at different times of theday for these age groups, with theyoung adults preferring to visitpubs in the evening and olderadults during the day. Pubs havesuffered in recent years with anumber of outlets closing.However, they are clearlysomewhere which can successfullyattract all age groups and allclasses together and close thebridge between them. The choiceand quality of food in pubs hasbeen rising for several years andthe Smoking Ban introduced in2007 further fuelled the need forpubs to serve food. As a result, thepub has become a competitor tomany independent restaurants.Table. 3.5 POPULARITY OF ESTABLISHMENTSWhich eating out establishments have you visited in the last 3 months?Percent of RespondentsRANK123456=7=791011=12=12=12=12NAME OF ESTABLISHMENTLOCAL PUBOTHER INDEPENDENT RESTAURANTSINDEPENDENT CAFÉMCDONALD’SINDEPENDENT CHINESE RESTAURANTINDEPENDENT INDIAN RESTAURANTINDEPENDENT ITALIAN RESTAURANTCOSTA COFFEESTARBUCKSKFCMARKS AND SPENCER (INCL.CAFÉ)PIZZA HUTBURGER KINGSUBWAYCAFFÈ NEROSource: Allegra Strategies Analysis, Consumer Research, 2009Of the foodservice brands,McDonald’s emerges as the mostpopular establishment with 30% ofpeople having visited one in thelast three months. Costa Coffeeand Starbucks come second andthird in the ranking of the mostpopular branded chains visited byUK adults.PERCENTAGE52%44%32%30%28%26%18%18%15%13%9%8%8%8%8%“We generally like tovisit the pub, have ameal and meetfriends everyweek.”Male45-49, LeicesterEating Out in the UK 2009 38

Key InfluencesQuality and taste of food,above price, is the keydeterminant in the valueequation – it is cited asthe leading reason forchoosing a place to eatout.Cleanliness is considered to benearly as fundamental as foodquality with 71% of peoplereporting it as an important aspectto consider when choosingsomewhere to eat out.Whilst good value for food anddrinks came out as highlyimportant amongst manyindividuals (38%),cheap/inexpensive food did notrank highly as a key factor indetermining where to eat out.This indicates that whileconsumers expect value for money– something which has become ahuge priority since the economicdownturn – they are not looking forcheap food. Many would associatecheap food with poor quality.Table. 3.6 IMPORTANT ASPECTS WHEN CHOOSING SOMEWHERE TO EAT OUTWhich of the following are important when choosing a place to eat out?Percent of RespondentsRANK123456789=10=1012=13=1315IMPORTANT ASPECTFOOD QUALITY/TASTEFOOD SAFETY/CLEANLINESSNICE ENVIRON./PLEASANT ATMOSPHEREGOOD VALUE FOR FOOD & DRINKSATTENTIVE SERVICEBEEN THERE BEFORE/PREV. EXPERIENCEFAMILY FRIENDLYCONVENIENT LOCATIONWIDE VARIETY OF FOOD OPTIONSHEALTHY FOOD OPTIONSRECOMMENDATIONS BY FRIENDS/RELATIVESQUICK SERVICEFOOD SOURCED LOCALLYCHEAP/INEXPENSIVE PRICESPROMOTION/SPECIAL OFFER/DISCOUNTSource: Allegra Strategies Analysis, Consumer Research, 2009PERCENTAGE73%71%41%38%30%23%21%20%19%18%18%14%11%11%9%Spend Patternsaround Eating OutThe highest spend by individuals on their last eatingout occasion was for a business meeting, with anaverage of £26.31 spent on a meal per person, thoughthis level of spend falls outside the scope of theInformal Eating Out market.Following a business meeting, dining out with a partner also had a highaverage price tag, with spend per person of £15.80. By contrast, quickmeals on-the-move had the lowest associated spend, at £5.43.39 Eating Out in the UK 2009

Fig. 3.8 AVERAGE SPEND BY TYPE OF OCCASION£26.32£15.80 £14.80 £13.43 £11.75 £11.57 £9.48 £6.77£6.27 £5.89 £5.43BusinessMeetingDining OutwithPartnerDining OutwithFriendsTreat/CelebrationDining OutwithFamilyMeal withLeisureOtherBreakfrom WorkMeal withShoppingRoutineMealQuickMeal/Onthe-MoveSource: Allegra Strategies Analysis, Consumer Research, 2009The Affordability of Eating OutThe largest proportion ofpeople consider eatingout to be less affordablethan eating at home.Fig. 3.9 HOW DO YOU THINK THE COST OF EATING OUT VERSUS EATING ATHOME HAS CHANGED IN RECENT YEARS?Percent of RespondentsHowever, this point of view is byno means unanimous. 30% ofrespondents believe that eatingout is now more affordablecompared with eating at homethan it has been in recent yearsand 30% believe there has beenno change.When respondents are dividedbetween those who have beenaffected by the credit crunch andthose who have not, there is adisparity in views. Unsurprisingly,48% of people who have beenaffected by the credit crunch findeating out less affordable thaneating at home while 35% ofpeople who have not beenaffected by the credit crunch holdthe same view.30% 30% 40%Eating out is now moreaffordableNo changeSource: Allegra Strategies Analysis, Consumer Research, 2009Eating out is now lessaffordable“It's cheaper to eat in but it doesn't makeme eat out less. Sometimes I'm too lazyto cook.” Female, 16-24, Peterborough“It's more expensive to eat out but it's atreat, so we don't mind.”Female, 50-54, LeicesterEating Out in the UK 2009 40

It is clear that, despite the increasein the number of discounts andpromotions on offer, people are stillfinding it expensive to eat out. Thereality is that eating out is nowrelatively cheaper, in part as a resultof these extensive offers and due tooperators squeezing their marginsin order to maintain footfall.However, with individuals’ reduceddisposable incomes or perceiveddiminishing spending power due tothe recession, and need to becautious, people are deeming itmore expensive to eat out.Fig. 3.10 HOW DO YOU THINK THECOST OF EATING OUTVERSUS EATING AT HOMEHAS CHANGED IN RECENTYEARS?Percent of Respondents –Analysis by Impact ofCredit Crunch48%35%25%34%27%Affected by creditcrunch31%Not affected bycredit crunchLess affordable No change More affordableSource:Allegra Strategies Analysis, Consumer Research, 200941 Eating Out in the UK 2009

Changing Eating HabitsAffordability is not the only determinant of peopleeating out. Factors such as convenience,socialising and experimenting with new food andcuisine types all come into play in driving peopleto eat out of the home.“I cook at homeabout twice aweek, I eat out therest of the time asI am lazy.”Female16-24, CroydonFig. 3.11 CHANGES IN EATING HABITS IN THE LAST 12 MONTHS.Concerning your general eating habits over the last year, do you...?Percent of Respondents7%34%35%22%32%21%24%33%61%52%55%59%59%65%64%59%32%14%10%18%9%15%12%9%Cook fromscratchUse ready mealsat homeEat takeawaymeals at homeVisit cafés andcoffee shopsvisit fast foodoutletsEat at pubrestaurantsVisit generalrestaurantsUse drivethroughfacilitiesLess Same MoreSource: Allegra Strategies Analysis, Consumer Research, 2009“I went to a localChinese. I hadnever been thereand wanted to trya new thing.”Female35-39, BlackpoolThe general trend, as illustrated in Figure 3.11 is that people are cookingfrom scratch more than they have been previously (32%) and eatingready meals (34%) and takeaways less (35%). The trend for coffee shopsis still strong, with 18% of people going to coffee shops more than theywere a year ago and 15% of people eating more at pubs than they were12 months ago.Despite these trends in establishments, and as noted in Chapter 1,individuals over the last 12 months have eaten out less across the board.This is due to less disposable income and/or fears over their job security.Aside from this, however, Figure 3.11 shows some interesting patterns ineating behaviours which are emerging..Eating Out in the UK 2009 42

• People are cooking fromscratch more than theyhave been previously:- Many people have moved to cutback their eating out habits inlight of economic concerns. Ratherthan downgrade to restaurantsproviding a lower qualityexperience, many consumers arechoosing to cook more at homewhere they have control over theingredients they use- People are becoming moreadventurous with their food. The‘foodie’ culture has swept the UKin recent years – this, combinedwith the trend to eat at friends’houses, encourages individuals tostay in and re-create therestaurant feel at home with theirfriends- Healthy eaters are better able tocontrol what they eat whencooking at home. For example,restaurants frequently use highlevels of saturated fat such asbutter in their cooking which canbe avoided when preparing mealsat home“We prefer to cookhealthier goods athome than goingout and spendingso much, sometimesfor low qualityfoods.”Female35-39, Peterborough“My eating habitshave changeddramatically asI cook more now.”Female25-29, Peterborough• 34% of people are eatingready meals less and35% are eating fewertakeaway meals athome. This point ispartly tied in with thedesire to cook morefrom scratch at homebut there are otherfactors involved. Readymeals are commonlyregarded as high in saltand saturated fat. Withthe healthy eatingphenomenon now firmlyin place and with littlesign of waning, readymeals are often seen asan unhealthy option.• The popularity of coffeeshops and cafés has notfaltered. 77% of peopleare eating at coffeeshops and cafés eitherthe same or more thanthey were a year ago.The coffee shop acts asa social hub wherepeople can meet friends,hold business meetingsor simply relax.43 Eating Out in the UK 2009

Snacking and Meal OccasionsFig. 3.12 SNACKING BEHAVIOUR - HOW MANY SNACKS ON A TYPICAL DAYWOULD YOU HAVE?Percent of RespondentsAccording to Allegra’sresearch, structured mealoccasions are not beingreplaced by regularsnacking.55% 17% 2% 26%55% of people have just 1-2 snacksper day and only 2% have morethan five. This suggests thatBritons are eating snacks inbetween their full meals, but notinstead of them. People are alsonot skipping many meals – over thetwo week Dining Diaries, only 6%of meals were skipped.1-2 snacks 3-4 snacks 5+ snacks None, I don’tsnackSource: Allegra Strategies Analysis, Consumer Research, 2009Fig. 3.13 STRUCTURED MEAL OCCASIONS VERSUS SNACKINGEating Diaries:Percentage of entries for different meal occasions23% 5% 24% 8%24%9%BreakfastMid-morningsnackLunchMidafternoonsnackDinnerLate nightsnackSource: Allegra Strategies Analysis, Consumer Research, 2009Eating Out in the UK 2009 44

Case study 1Regionality DifferencePerhaps unsurprisingly,London is the EatingOut Capital of the UK.With 621 people for everyrestaurant in London, it has thegreatest provision of food outlets.At the other end of the scale, theNorth East has the greatestnumber of people per restaurant– 1,209. The most recent datareleased by the ONS on hotels’and restaurants’ contribution toGross Value Added (GVA) byregion in 2006, also puts Londonat the top of the regional list. (ABI,ONS, 2006).In terms of spend by region onlast reported eating out occasion,Scotland tops the ranking. Onaverage, Scots spend £13.91 eachon eating out a week, whereasfrugal consumers from Wales andthe North East of England spendonly £10.92 and £10.62respectively. London’s ranking isnot as high as might be expected.This reflects the significantlygreater use of cafés and sandwichbars during lunchtimes.Table. 3.7 AVERAGE SPEND PER PERSON ON THE LAST MEAL OCCASIONBY REGIONRANK123456789101112Table. 3.8 AVERAGE SPEND PER PERSON ON THE LAST MEAL OCCASIONBY REGIONRANK123456789101112REGIONLONDONNORTHERN IRELANDSOUTH WESTSCOTLANDSOUTH EASTEASTWALESYORKS & HUMBERSIDENORTH WESTWEST MIDLANDSEAST MIDLANDSNORTH EASTSource: Allegra Strategies Analysis, ONS, 2009REGIONSCOTLANDSOUTH WESTNORTHERN IRELANDEAST OF ENGLANDSOUTH EASTLONDONEAST MIDLANDSYORKSHIRENORTH WESTWEST MIDLANDSWALESNORTH EASTNO. OFRESTAURANTSAND CAFÉS12,3301,9955,4955,4058,6255,5302,8504,4956,0154,5653,6652,115POPULATION(000)7,6531,7425,1465,1178,2455,6022,9665,1336,8905,3904,3612,557POPULATIONPERRESTAURANTAVERAGE SPEND PER PERSON£13.91£13.49£12.76£12.61£12.58£12.39£12.37£12.33£11.38£11.13£10.92£10.626218919379479561,0131,0411,1421,1451,1811,1901,209Source: Allegra Strategies Analysis, Consumer Research, 200945 Eating Out in the UK 2009

Fig. 3.14 PERCENTAGE OF PEOPLE EATING LUNCH OUT OF THE HOME AT LEAST ONCE A WEEK BY REGIONPercent of Respondents49%48% 46% 45% 43% 42% 41% 41%41% 40% 39%37%LondonNorthernIrelandNorthEastSouthWestYorkshireEastMidlandsWalesNorthWestSouthEastScotlandEast ofEnglandWestMidlandsSource: Allegra Strategies Analysis, Consumer Research, 2009London has the greatestlunchtime eating out activity. Asthe capital, the number of workersin London exceeds any other citywithin the UK. It is largely theworking population’s lunchtimeactivity which accounts for thehigh number of lunches eaten outof the home over the course of aweek. The West Midlands has thelowest out of home lunchtimeactivity with 37% of people havinglunch out at least once a week.Eating out as a social occasion ispopular in the evening. Again,London comes out on top with thegreatest frequency of dining in theevening. Perhaps surprisingly, only19% of people in Northern Irelandeat dinner out of the home atleast once a week. This lies instark contrast with the relativelyhigh number of people inNorthern Ireland who eat lunchout of the home at least once aweek. People from the WestMidlands have the exact oppositebehaviour; consuming the fewestlunches – but nearly the greatestnumber of dinners – out of thehome.Fig. 3.15 PERCENTAGE OF PEOPLE EATING DINNER OUT OF THE HOME AT LEAST ONCE A WEEK BY REGIONPercent of Respondents39%38% 32% 32% 32% 30% 29% 28%28% 27% 25%19%LondonWestMidlandsWalesNorthEastEastMidlandsNorthWestEast ofEnglandSouthEastSouthWestScotlandYorkshireNorthernIrelandSource: Allegra Strategies Analysis, Consumer Research, 2009Eating Out in the UK 2009 46

Case study 1Regionality Difference continuedTable. 3.9 EATING OUT TRENDS ACROSS REGIONSREGIONFREQUENCYAVERAGESPEND PERPERSON ONLAST EATINGOUT OCCASIONPREFERREDOUTLETSATTITUDES,OPINIONS ANDBEHAVIOUREASTMIDLANDS11% of all meals areeaten out of the homeevery week£12.37Visit local pubsand fast foodchains frequentlyProportionately,eat the mosttakeaway mealsDisagree that eating outestablishments mustdisplay nutritionalinformationEAST OFENGLAND11% of all meals areeaten out of the homeevery week£12.61Coffee shops,generalrestaurants(brands andindependents) arevisited frequentlyPrimary reason for eatingout is to celebrate a specialoccasionStrongly believe that moreinformation on healthyeating would encouragethem to eat more healthilyHave cut back their visitsthe most to places chargingless than £5 per headLONDONEat out of the homethe most – 15% of allmeals are eaten out ofthe home every weekEat breakfast out of thehome the most often –14% of Londoners eatbreakfast out at leastonce a weekEat dinner out of thehome the most – 39%eat dinner out at leastonce a week£12.39Fast food andgeneralrestaurants aremost regularlyvisitedestablishmentsMost concerned thathealthy food should beoffered in restaurantsMost confident abouteating out more in the next12 monthsNORTH EAST11% of all meals areeaten out of the homeevery week£10.62Visit coffee shops,fast food outlets,supermarket cafésthe mostHighest number who arecooking from scratch moreHighest percentage ofpeople agree there aren’tenough healthy options atrestaurantsMost strongly in favour ofcalorie labellingMost believe eating out isnow more affordable than itwas a year agoHave tightened their beltsin the recession. 40% arevisiting places which charge£10-£15 less and 57% arevisiting restaurants whichcharge over £15 less47 Eating Out in the UK 2009

REGIONFREQUENCYAVERAGESPEND PERPERSON ONLAST EATINGOUT OCCASIONPREFERREDOUTLETSATTITUDES,OPINIONS ANDBEHAVIOURNORTHERNIRELAND9% of all meals areeaten out of the homeevery weekEat lunch out the most– 66% of people eatlunch out at least oncea fortnightEat dinner out the least– 17% eat dinner out atleast once a week£12.76Frequent coffeeshops the mostHave cut back onvisiting fast foodchains the most inthe last yearMost concerned abouthaving food which issourced locallyStrongly regard eating outas a treatReceived the best customerservice on their last eatingout occasionNORTH WEST11% of all meals areeaten out of the homeevery week£11.38Majority say thatthey seldom oralmost never visitfast foodestablishmentsTaste of food is the mostimportant to this regionWhen choosing a diningdestination, they valueconvenient location themost, are the most likelyregion to takerecommendations fromfriends and are mostswayed by good reviews innewspapersSCOTLAND13% of all meals areeaten out of the homeevery week£13.91Visit coffee shopsand fast foodoutlets the mostoftenWorkers most likely to eat inwork canteenLeast worried about healthyeating when eating out ofthe homeSOUTH EAST11% of all meals areeaten out of the homeevery week£12.58Highest numberto have visited akebab shop in thelast three monthsAlongside Yorkshire and theNorth East, they most preferattentive over fast serviceSOUTH WEST11% of all meals areeaten out of the homeevery week£13.49Most likely to goout to friends’houses to eatThe most popular reason fortheir eating out was to takea break from workWALES13% of all meals areeaten out of the homeevery week£10.92Visit pubrestaurants themost with 39%visiting a pub atleast once afortnightWorkers most likely to bringin a packed lunchMore likely to recall thequality of customerexperience at their diningestablishment as poor orvery poor, compared to anyother regionEating out in restaurantscharging under £5 far moreEating Out in the UK 2009 48

Case study 1Regionality Difference continuedTable. 3.9 EATING OUT TRENDS ACROSS REGIONS - continuedREGIONFREQUENCYAVERAGESPEND PERPERSON ONLAST EATINGOUT OCCASIONPREFERREDOUTLETSATTITUDES,OPINIONS ANDBEHAVIOURWESTMIDLANDS13% of all meals areeaten out of the homeevery weekEat a late night supperthe most – 10% do so atleast once a weekEat lunch out the least– 37% eat lunch out atleast once a week£11.13The mostfrequent fast foodvisitors – 38% visitan outlet at leastonce a fortnightPlace food quality higher onthe agenda when choosinga restaurant than any otherregionRegion most affected by thecredit crunchYORKSHIRE10% of all meals areeaten out of the homeevery weekEat breakfast out theleast – 2.8% eatbreakfast out at leastonce a weekEat a late night snackthe least frequently –3% eat a late nightsnack at least once aweek£12.33Has the lowestproportion of highfrequency fastfood visitorsWould most preferrestaurants to support localsuppliers over any otherethical initiativeMost concerned that theyreceive attentive customerservice over speed of serviceSource: Allegra Strategies Analysis, Consumer Research, 200949 Eating Out in the UK 2009

Fig. 3.16 EATING OUT TRENDS – REGIONAL HIGHLIGHTSScots are the least worriedabout healthy eating wheneating out of the homeThe NorthernIrish are themost avid coffeeshop users –58% visit one atleast once aweek. They alsoeat lunch out themost and dinnerout the leastPeople in the NorthEast have tightenedtheir belts in therecession. 40% arevisiting places whichcharge £10-£15 lessand 57% are visitingrestaurants whichcharge over £15 lessPeople from theNorth West the leastvisit fast foodestablishmentsPeople fromYorkshire aremore concernedwith receivingattentivecustomer servicethan they are fastservice. They eatout less than anyother region withthe exception ofNorthern Irelandwho eat out theleastMost likely to go out tofriends’ houses to eatThe Welsh visit pubrestaurants the mostwith 39% visiting a pubat least once a fortnightMost frequent fast foodusers are in the WestMidlands - 38% visit afast food outlet at leastonce a fortnightProportionately,people from theEast of Englandeat the mosttakeaway mealsThe South East has thehighest number of people tohave visited a kebab shop inthe last three monthsPeople fromthe East ofEnglandhave cutback theirvisits toplaceschargingless than £5Londoners eat outthe most – 15% oftheir meals areeaten out of thehome every week.Londoners arealso the mostlikely to eatbreakfast out ofthe homeSource: Allegra Strategies Analysis, Consumer Research, 2009Eating Out in the UK 2009 50

Case study 2Age differencesYoung adults aged18-24 have the greatestvisiting frequency ofeating outestablishments of anyage group.The two most populardestinations for the young arecoffee shops and sandwich bars,of which 46% of 18-24 year oldsvisited at least once a week, andfast food establishments, whichare visited by 34% at least once aweek. The pub is the mostpopular choice with older agegroups. 78% of respondentsaged 55-64 have visited a pub inthe last three months.Fig. 3.17 FAST FOOD ESTABLISHMENT USERS BY AGE. How often do you eatout in the following establishments?Percent of Respondents – Analysis by Fast Food Restaurantand Age17%8%18%25%34%18-2426%14%23%15%22%33%15%22%12%17%45%16%15%10%15%65%11%9%8%8%79%6%8%3%4%25-34 35-44 45-54 55-64 65+Seldom or never Once every 2-3 months Once per monthOnce per fortnightAt least once per weekSource: Allegra Strategies Analysis, Consumer Research, 200951 Eating Out in the UK 2009

Table. 3.10 DIFFERENTIALS IN AGE PROFILESYOUNG &ADVENTUROUS18-24YOUNGERMIDDLE AGED25-34OLDERMIDDLE AGED25-34SENIOR& ELDERLY55-65+They have the greatesteating out frequencyCoffee shops/sandwichbars is most populardestinationThe younger generation useready meals more thanother age groupsThey use ready meals morethan other groupsThey look for food which ischeaperThey have busier lifestylesand less time to cook athomeFriday night is a popularnight to eat outThis age group eat out lessthan the young &adventurous but more thanthe retired-elderlyThey dine in informalrestaurants the mostTheir most preferred weeklydestination is the coffeeshop/sandwich barThis group cook fromscratch the mostUnsurprisingly, this groupcare most that theestablishments are familyfriendlyEating out on Saturdaynight is more popular withthis age group than eatingout on a Friday nightThey share many of thesame attributes as the25-34sThey are the least likely todine at pub restaurantsEating at a convenientlocation is more importantto this age group than theother age groups, but lessimportant than it is to thesenior generationThey are more concernedthat healthy food optionsare availableWorkers within this agegroup tend to take a packedlunch for their lunch duringtheir working dayThey eat out the leastPubs are the most populardestination with this groupMature adults are lookingfor better value as opposedto inexpensive foodcompared with the youngThey eat out more for lunchand less for dinnerEating habits have changedthe least in the last 12monthsThey also expect to eat outto the same degree in thenext 12 months - far moreso than other groupsSource: Allegra Strategies Analysis, Consumer Research, 2009The average spend by age groupclearly illustrates who are thebiggest spenders. The 45-54 yearolds who are of working age, oftenwithout dependent children andarguably with the most expensivetastes, spend the greatest amount.Contrary to this, 18-24 year olds,many of whom are students or inlow paid jobs, spend the leastamount on food when they eat out.Fig. 3.18 AVERAGE SPEND PER PERSON BY AGE RANGE£8.97 £11.77 £12.23 £14.1618-24 25-34 35-44 45-54£13.0055-64£12.4065+Source: Allegra Strategies Analysis, Consumer Research, 2009Eating Out in the UK 2009 52

Case study 3Dining diaries45 individuals acrossage groups, sociodemographicsandregions within the UKwere asked to fill in a14 day diarydocumenting theireating patternsthroughout the day,both in and out of thehome.These diaries have providedinsight not only into thefrequency with which people eatout of the home but also ontheir overall eating patterns, forexample on whether they aresnacking more, rather thaneating structured meals.Questions were also asked tothe diary keepers about theexperiences they had when theyate out of the home, including,how much money they spent,whether they had a good overallexperience, and whether or notthey would return.Table. 3.11 SNAPSHOT OF DINING DIARY10/06/2009 18:00-20:00Q3Q4Q5Q6Q7Q8Q9MEAL OCCASIONDINNEREATING AT HOME/EATING OUT OF HOMEATE OUT OF HOMEFOOD TYPE CONSUMED ON OCCASIONMEAT DISH - SALADDRINK TYPE CONSUMED ON OCCASIONJUICEPERSONS PRESENTWITH ADULT FAMILY MEMBERSWITH FRIENDS’ CHILDRENWITH FRIENDSHOUSEHOLD ROOM LOCATIONNO ANSWERIN FRONT OF TV?NO ANSWERSource: Allegra Strategies Analysis, Consumer Research, 200953 Eating Out in the UK 2009

Of the meals eaten out of the homeby the diary keepers, 74% cost £0-£5,11% cost £5-£10 and 8% cost £10-£15.Only 8% of meals eaten out of thehome cost the diary keepers morethan £15 per person. This highlightsthe trend in purchasing lowerpriced meals.The diary keepers noted what theyenjoyed most and least about theirvisits – good food, good companyand quick service were all cited asthe best aspects for consumers.This tallies with the other streamsof research which cited food qualityas the most important factor whenchoosing somewhere to eat out.(See table 3.6).With regards to diary keepers’ worstaspects, 61% said there was no badaspect to their visits. This highnumber illustrates that the majorityof individuals were satisfied withtheir experience overall. Key issuesfor consumers included slow service(a concern for 7% of people), and anFig. 3.20 DINING DIARIES: TOTAL AMOUNT SPENT ON DIFFERENTEATING OUT OCCASIONSPercent of Respondents74% 11% 8% 8%£0-£5 £5-£10 £10-£15 £15 andoverSource: Allegra Strategies Analysis, Consumer Research, 2009overly expensive meal, noted by 6%.Poor quality food came relatively fardown on the list. This may bebecause people are cautious in theirchoice of restaurant, only visitingplaces where they have heard orknow the food to be good quality.Table. 3.12 EATING DIARY: BEST AND WORST ASPECT OF VISIT WHEN EATING OUTRANK BEST ASPECT OF THE VISITWORST ASPECT OF THE VISIT12345678910GOOD FOODGOOD COMPANYQUICK SERVICECHEAP/INEXPENSIVENOTHINGIT WAS A TREATNICE ATMOSPHERE/PLEASANT ENVIRONMENTOTHERFAMILY TIMEFOOD THAT I DON’T HAVE AT HOMENOTHINGSLOW SERVICETOO EXPENSIVELACK OF FOOD CHOICERUSHED/BUSYPOOR ATMOSPHEREPOOR QUALITY FOODTOO NOISYLACK OF CLEANLINESSUNFRIENDLY STAFFSource: Allegra Strategies Analysis, Consumer Research, 2009Eating Out in the UK 2009 54

Eating Out in the Next 12 Months(Further information can be found in Chapter 5 – The Future of the InformalEating Out Market)To fully understandconsumers’ futureattitudes towards eatingout, it is useful tocompare how people’shabits have changed inthe last 12 months withhow they are set tochange in the next year:Fig. 3.21 EATING OUT IN THE NEXT 12 MONTHSDo you think you will be eating out more or less in the next 12 months?Percent of Respondents• 55% of people currently say theyeat out about the same as theydid 12 months ago. This compareswith 70% of people who say inthe next year they will eat outabout the same amount as theydo today• 35% of people said they arecurrently eating out less nowthan they were 12 months ago.This compares with 20% ofpeople who claim they will eatout less in the next year thanthey do todayThe figures highlight that, in thenext year, the majority of peopleanticipate they will be eating outat the same frequency as they dotoday. A higher number (20%)anticipate that they will be eatingout less, and 10% hope to eat outmore. If contrasted with people’sattitudes today towards eating out,a relatively positive picture ispainted for the speedy recovery ofthe eating out market postrecession, indicating that the worstis over.10% 70% 20%More in the next12 monthsAbout the sameSource: Allegra Strategies Analysis, Consumer Research, 2009“We will be eatingout less in the nextyear unlessfinances improve.”Female16-24, LeicesterThere are three additional factorswhich will continue to impinge onconsumers’ propensities to eat outin the short to medium term:• Individuals will be plagued withlow consumer confidence forsome time yet and a changedmentality about how they shouldbe spending their money – thismentality could be irrecoverableLess in the next12 months• The rise of healthy eating and theawareness of healthy eating.Britons are in the knowledge that,if they cook from home, they areable to better control what theyconsume and monitor theircalorie, fat and salt intake. Moreoperators will respond to thistrend and improve the number ofhealthy options they offer• The growing dominance ofsupermarkets. Since therecession, many supermarketshave introduced dine-in rangeswhich enable consumers torecreate the eating outexperience, but for far less money55 Eating Out in the UK 2009

Eating Out in the UK 2009 56

The Rise of Healthier Eating‘‘Eating more healthily is a goal for society at large and moreprogressive operators will benefit from the enhancedcustomer feedback the greater provision of nutritionalinformation will generate.’’John HutsonChief Executive, JD WetherspoonLooked at since theemergence of the InformalEating Out market, therise of healthier eating isin part a response to thesuccess that the foodindustry has achieved inmaking different types offood products widelyavailable to moreconsumers on moreeating occasions.marks a return to some of themore positive aspects of eatingbehaviours 50 years ago. Healthyeating is a crucially importantlong-term trend. It stands as oneof the few genuine consumer‘megatrends’ and is continuallybeing shaped by a plethora ofconsumer, corporate, Government,media and societal influences asFigure 4.2 shows.Within Allegra’s most recent Top ofMind survey of Food & BeverageIndustry leaders carried out in Q42008, healthy eating was identifiedas the most important noneconomictrend affectingconsumer behaviour. It was secondonly to greater price consciousness,although after the recession,healthy eating has the potential toregain primary status. As oneindustry executive remarked:‘‘It istimeless’’.From the austerity and limitedchoice that existed at thebeginning of the 1960s, there isnow a vast abundance of food andbeverage options available 24-7.The gradual emergence of manymore diet, low fat and healthyoptions in the retail environmenthas met the demand for healthyeating and increased consumerawareness of the issue.While the noughties are an age of‘unprecedented plenty’, so they arealso a time of increasinglyknowledgeable and demandingconsumers, with greaterrecognition of the truism that ‘weare what we eat’. This is drivingincreasing ‘food culture’ anddemand for more natural and lessprocessed food. Indeed, in manyways, the rise of healthier eatingand more disciplined consumptionTable 4.2 INDUSTRY LEADER VIEWS ON MOST IMPORTANT CONSUMERTRENDS AFFECTING UK FOOD & BEVERAGE SECTOR, TOP 10 RANKINGQ4 2008 VS. Q4 2007CONSUMER TRENDPRICE CONSCIOUSNESSHEALTHY EATINGSQUEEZE ON HOUSEHOLD BUDGETSMORE DEMANDING CONSUMERSCONVENIENCERISING COST OF LIVINGMORE KNOWLEDGEABLE CONSUMERSBUSIER LIFESTYLESLOCAL PROVENANCEGROWING ‘FOOD CULTURE’Source: Allegra Strategies Analysis, Top of Mind Survey, 20092008123456789102007121N/A132151053959 Eating Out in the UK 2009

Fig. 4.1 KEY INFLUENCES DRIVING THE GROWING IMPORTANCE OF HEALTHY EATINGMEDIA INFLUENCES• Increasing healthcoverage• Availability ofinformation• Evolving cookeryprogrammes• Celebrity influencesSOCIETAL INFLUENCES• Changing lifestyle habits• Growing concern over obesity• Greater health consciousness• Wider well-being awarenessCONSUMERINFLUENCES• Increased demand• Growing knowledge• Rising expectations• Greater informationavailabilityCORPORATEINFLUENCES• New productopportunities• Marketing messages• CSR initiatives• CompetitivedifferentiationSource: Allegra Strategies Analysis, 2009GROWINGIMPORTANCE OFHEALTHY EATINGGOVERNMENTINFLUENCES• Increased labellinginformation• Product contenttargets and advertisingrestrictions• Healthy eatinginitiatives• Focus on schooldinnersHealthier Eating Out HabitsGovernment and industryinitiatives to promotehealthy eating,particularly the 5-a-dayprogramme, appear tohave generated tractionwith consumers.This is impacting out-of-homeconsumption patterns – nearly halfsay they have made changes towhat they eat out of home. Closeto 1 in 4 adults claim to haveincreased their intake of fruit andvegetables over the past 12months. Lower consumption ofhigher fat products also emergedas a popular response.Just over half of adults (52%) havenot made any changes to thehealthiness of what they consumewhen eating out. Allegra’s detailedcustomer research highlights anumber of factors as to why thisproportion remains so high:• Eating out for many remains atreat and an indulgence• Consumers are not prepared tocompromise on taste and do notbelieve they will receive the samelevel of pleasure from healthierproducts• For some, there is the perceptionthat healthier eating is moreexpensive• A proportion of people are fed upwith being lectured to abouthealthy eating• Food nutrition is poorlyunderstood by consumers who,for the most part, are not easilyable to develop a greaterunderstanding• Lack of nutritional informationavailable on which to base a moreinformed menu choice• There is a strong core ofconsumers who are not interestedin changing their eating habitsAs one interviewee noted:“I eat very healthilyat home. Going outis more of a treatso taste is the mostimportant thing.There is nothingwrong withindulging oncein a while!”Female30-34, PeterboroughEating Out in the UK 2009 60

Fig. 4.3 AGREEMENT WITH WHETHERCHANGES HAVE BEEN TOEAT MORE HEALTHILY WHENEATING OUTWhen eating out of homeover the last 12 months,have you made a consciousdecision to eat morehealthily?Percentage of Respondents48% 52%YesNoSource: Allegra Strategies Analysis,Consumer Research, 2009Fig. 4.4 CHANGES MADE WHEN EATING OUT REGARDING HEALTHY EATINGWhen eating out of home, what changes have you made concerning healthy eating in the last12 months? Percentage of Respondents23%Eaten morefruit & veg.19% 12% 11% 11% 10% 9% 8%Reduced fatReducedsugar/sweetsDrunk morewaterEaten lessfast foodEatensmallerportionsReduced saltReducedcalorieintake8% 6%ReducedcarbohydratesDrunk lessalcoholSource: Allegra Strategies Analysis, Consumer Research, 200961 Eating Out in the UK 2009

Table 4.3 KEY CHARACTERISTICS OF HEALTHY EATING CONSUMER TYPOLOGY BY SEGMENTPREDOMINANTCHARACTERISTICSDISCIPLINEDEATERSHEALTHYEATINGPRAGMATISTSINDULGENT-LEDADVENTURERSHEALTHYEATINGREJECTERSGENDER, AGEAND HOUSEHOLDFemale; Age skewtowards olderadultsFemale; 25-44 yearsand with kidsMale; 18-24 yearsMale; bias to 18-24or 65+ years oldAFFLUENCE ANDSOCIO-ECONOMICSAverage profile, butslight skew to D/EsAbove averageaffluenceNo distinct biasBelow averageaffluence levelsEATINGPREFERENCESAvoids fast food,little snacking andreducing takeawayconsumptionEating out is atreat, more cookingfrom scratch andpacked lunchesFrequently on-themoveand enjoyssnacking, fast foodand evening mealsLikes fast food,takeaways, snacksand late nighteatingFAVOURED EATINGOUT VENUESLikes independentcafés and local pub,including thosewith carveryLikes coffee shopsand cafésWide repertoireincluding informalrestaurants, fastfood units andpubsLikes fast foodchains, inexpensivepubs and ChinesetakeawaysHEALTHY EATINGATTITUDESHave reduced fat,carbohydrate andsalt intake, highestagreement thatnot enoughhealthy optionsand strongenthusiasm forcalorie labellingAgree thatinsufficient choiceof healthy eatingoptions exists andpreference towardsintroduction ofcalorie labellingDo not subscribe tothe view thatinsufficient healthyoptions areavailable, butbalance of opinionin favour of calorielabellingMinimal changesto dietary habits,strong preferencefor taste overhealth and lowestdesire to see calorielabellingSource: Allegra Strategies Analysis, 200963 Eating Out in the UK 2009

Healthy Eatingby DaypartIt is a recognised eatingout trend that people eatmore healthily at thestart of the week, butthat this changes tobecome more indulgenceledas the weekprogresses.It is also the case that eating out ismore health-oriented during thefirst part of the day, and becomesdistinctively less so during eveningand at night.Analysis of consumers’ eating outbehaviours found that, on average,only on 38% of eating occasionswas a conscious decision made tochoose a more healthy option. Thisproportion was highest for a midmorningsnack at 55%, but lowest,at 14%, for a late night snack.Interestingly, while consumersmight make an effort to eathealthier breakfasts at home, thisis less evident when they are onthe go.Table 4.4 PROPORTIONS OF CONSUMERS MAKING A CONSCIOUS DECISIONTO CHOOSE A HEALTHY OPTION WHEN EATING OUT BY DAYPARTMEAL OCCASIONBREAKFASTMID-MORNING SNACKLUNCHMID-AFTERNOON SNACKDINNERLATE-NIGHT SNACKOVERALL AVERAGESource: Allegra Strategies Analysis, Consumer Research, 2009YESto HealthyOption34%55%48%25%22%14%38%NOto HealthyOption66%45%52%75%78%86%62%Eating Out in the UK 2009 64

The Future of Healthy EatingHealthier eating is a longtermtrend and one that,particularly within theeating out sector, looksset to grow in importance.Consumer awareness of the caloriescontained within different productoptions is going to increase withcalorie labelling. As consumers areinfluenced by healthy eatingcampaigns and the actions ofgovernment and NGOs so theeating out market will need tocontinue to innovate and adapt inorder to keep pace with customerdemand and an increased level ofawareness of what their foodcontains. In the short term, theresponse involves developing andreformulating food and drink thatare lower in salt, sugar and fat, andin continuing to enable moreconsumers to make better informedproduct choices. Ultimately,consumers will have to make subtlechanges to their palates and tasteexpectation.Because healthy eating is one of themega trends impacting on theeating out industry, suppliers andoperators who fail to respond andimprove the healthiness of theirproducts and menu offers will loseout as the competitive bar is raised.New product and ingredientinnovation will be catalysed asoperators introduce a wider rangeof healthier options. In some cases,product and portion sizes may beamended to meet reduced caloriecount targets.The industry executive researchshows that there are other moredetailed healthy eating trends thatare possible:• Families moving away fromestablishments, which they do notperceive to offer a suitablybalanced rangeTable 4.5 A SEGMENTATION OF FUTURE CONSUMER APPROACHES TOHEALTHIER EATINGFOCUSBALANCESLOWPOSITIVESUSTAINABLESource: Allegra Strategies Analysis, 2009• Younger females are among themost conscious of what theyconsume and are most likely toswitch their purchasing patterns• Sales of products that consumersdo not currently recognise asbeing highly calorific are likely tobe impacted• More manual worker groups mayconsume products offering highercalorie counts per unit cost• Increased ordering of one or twocourses rather than three, and ofshared dishesClearly defined perspective on healthand healthy eating:• Customised eating based on foods with a direct benefit• Obsessive knowledge of own food consumption• Rejection of unhealthy foodsModeration and discipline, and negotiatingextremes:• Calorie intake and expenditure held in check• Indulgent foods combined with more healthy foods• Portion size disciplineValue process of food growth and preparation:• Inclination to rest and relax more• Belief in cooking from scratch and slow cooking processes• Use of quality ingredients that are fresh and seasonalIdea that positive eating leads to apositive life:• Healthy body healthy mind• Eating experience as important as eating itself• Focus on what to eat instead of what not to eatConsumers desire to preserve way of living:• Embrace concept of planetary health• Good for me – human sustainability• Belief in locally grown and communal productsAdditionally, there is the genuineprospect of growth in the numberof consumers who fall within the‘Disciplined Eaters’ and ‘HealthyEating Pragmatist’ categories.However, over the longer term,there is expected to be furthersegmentation of the healthy eatingadvocates, with new and subtlydifferent consumer sub-groupsformed as they embrace morepersonalised lifestyle and wellbeingorientations. These are summarisedunder the headings of: Focus,balance, slow, positive andsustainable.65 Eating Out in the UK 2009

The Rise in Importance of ProvenanceTable. 4.6 KEY PROVENANCE CAMPAIGNSMedia Interest in ProvenanceKEYCOMPONENTSBUYINGBRITISH‘Buying British’ is thecampaign to encourageBritish consumers tobuy Britishproductsover foreignalternativesFAIRTRADEFairtrade products aimto help producers indeveloping countriesand promotesustainabilityORGANIC‘Organic’ refers to foodgrown without artificialfertilisers or pesticidesand in a way thatemphasises croprotation andmaking themost ofnaturalfertilisersRAINFORESTALLIANCERainforest Allianceworks to conservebiodiversity and ensuresustainable livelihoods,by transforming landusepractices, businesspractices and consumerbehaviourSEASONALPRODUCTSSeasonal food refers tothe time of the yearwhen given food type isat its peak either interms ofharvest orits flavour -and typicallybothABOUT• ‘Buying British’ is a relatively recent, but fast growing phenomenon amongstoperators and consumers alike. People buy British to support the localeconomy, as well as reduce concern over food miles• Britain’s leading supermarkets have taken steps to increase their UKsourcing, particularly for meat products• The ‘Red Tractor’ logo is now commonly found on products, providingassurance that food has been sourced from high quality British producers• In September 2009 the annual British Food fortnight will again bring thistopic to the forefront, highlighting the diversity and quality of UK produce• 2008 UK Fairtrade sales totalled £700 million, up to 43% from 2007(fairtrade.org)• Growing demand for Fairtrade can be attributed to the rise of the ethicalconsumer• Greater consumer education and awareness of the benefits of Fairtrade toThird World producers has led to a significant increase in demand for suchproducts• The recession has not stopped people from buying Fairtrade produce - anestimated quarter of British consumers purchased Fairtrade products inJanuary 2009 (IGD - Shopper Trends, 2009)• Following more than a decade of sustained growth in this area, theeconomic downturn has resulted in slowing demand for organic products• According to The Soil Association’s Organic Market Report 2009, sales oforganic food grew by only 1.7% from 2007 to 2008, compared with a 22%increase from 2005 to 2006• Dairy products and fresh fruit and vegetables are the most heavilypurchased organic products, accounting for 30% and 26% of organicspending respectively in 2008• It appears that organic products are perceived to be expensive rather thanmainstream items - consumers are not convinced about the product benefitsand are unwilling to pay the organic premium in the current climate• Established in 1986, Rainforest Alliance now rivals The Fairtrade Foundationand other such established bodies. Rainforest Alliance ensures farmers’benefit financially but offers cheaper prices on coffee and no licensing fee touse their logo (unlike The Fairtrade Foundation which charges a 2% fee basedon the wholesale coffee price)• For this reason, it is popular choice with the large food and beverage brandswanting to tap into the ethical market• Companies already aligned with the Rainforest Alliance include Kenco CoffeeCompany, Costa Coffee, Lavazza and McDonald’s - sustainability is a hot topicand companies who are found lagging on sustainability could facedifficulties in the long term• Rainforest Alliance continues to grow worldwide - it is active in more than60 countries and now covers 2.6m coffee farms. This number is doublingevery year• Brands switch to Rainforest Alliance certified coffee are experiencing a 5-10%increase in sales in the months following their conversion; McDonald’s whoswitched to Rainforest Alliance coffee in 2007 saw a 24% sales jump• Eating ‘in-season’ is gaining popularity and is a growing trend on restaurantmenus• In 2008 celebrity chef, Gordon Ramsey, called for legislation to banrestaurants from putting out-of-season produce on their menus• The Eat Seasonably campaign, launched in May 2009, aims to promote fruitand vegetables at their seasonable best and reconnect people with the foodthey are eating. It is supported by Defra Secretary of State Hilary Benn andthe UK’s major supermarkets• Seasonal products present a potential market opportunity for restauranteursand retailers - Burgerville, a fast food operating in the US, serves onlyseasonal food options sourced locally. Others could follow this exampleResearch clearlyhighlights thatconsumers are keen toknow more about theorigin of their food.78% of respondents agreed that fastfood and takeaway outlets shouldprovide more of this information.Amidst this rising concern, somespecific trends and campaigns havesprung up, which are outlined inTable 4.7.Of these, Fairtrade and organic areperhaps the most established, andwhilst the trend for Fairtrade foodhas remained robust, demand fororganic has waned. Organicproduce has suffered in the midst ofthe economic downturn as peopleare unwilling to pay the premiumtypically charged as they do not feelorganic food offers value for money.‘Buying British’ is a trend which hasgained momentum recently andhas become a key aspect of demandfrom consumers. Equally,seasonality has increased inpopularity with consumers andwith operators responding to thiswith more frequent changes inmenus. The number of farmers’markets in the UK has drasticallyincreased in the last five years.There are now around 800 farmers’markets in the UK today, comparedwith 450, five years ago.“It's important toknow what they areselling in fast foodchains. They mostlysell cheap food soI'm worried aboutwhat I am eating.”Female30-34, PeterboroughSource: Allegra Strategies Analysis, 2009Eating Out in the UK 2009 66

Consumers typically hold the viewthat food which is highly priced isderived from a better source. Asexpressed earlier, the view amongstconsumers is that high provenancefoods are higher quality and, in turn,will have a price to match. As foodin fast food operators and takeawayoutlets is inexpensive, there is moreconcern from consumers that it hasderived from poor quality origins.Fig. 4.6 CONSUMERS’ ATTITUDESTOWARDS THE ORIGIN OFFOODMore information should be madeavailable about the origin of foodbought from fast food andtakeaway outletsDisagree 9%Neither 13%Agree 78%Source: Allegra Strategies Analysis, 2009Whilst consumers want moreinformation provided about theorigin of their food, they also wantto eat food which is sourced fromthe UK. 58% of people prefer to eatfood which is sourced from the UK –a demand which is partly beingdriven by the recent attention oversupport for British farmers andproduce, as well as consumerpreference for the freshest food.Fig. 4.7 CONSUMERS’ ATTITUDESTOWARDS PROVENANCEI prefer eating at establishmentswhere I know the food is sourcedfrom the UKDisagree 20%Neither 21%Agree 59%“UK sourced food ismore expensiveand I don't want topay more just forUK labelled food.”Female30-34, Cardiffexerci tation ullaexerci tation ullaexerci tation ullaexerci tation ullaexerci tation ullaexerci tation ullaSource: Allegra Strategies Analysis, 2009exerci tation ullaexerci tation ulla“I prefer eatingfood sourced fromthe UK in order tosupport localsuppliers.”Male35-39, Cardiff“For healthreasons, I wouldwant to know theorigin of my food.”Male16-24, Blackpoolexerci tation ullaexerci tation ullaexerci tation ullaexerci tation ullaexerci tation ullaexerci tation ullaexerci tation ullaexerci tation ulla“As long as thefood looks andtastes good, I don'tcare where itcomes from.”Female16-24, Blackpoolexerci tation ullaexerci tation ullaexerci tation ullaexerci tation ullaexerci tation ullaexerci tation ullaexerci tation ullaexerci tation ullaexerci tation ullaexerci tation ullaexerci tation ullaexerci tation ullaexerci tation ullaexerci tation ullaexerci tation ullaexerci tation ullaResearch has also indicated that it isthose in lower socio-economicgroups who are more concernedthat their food is sourced from theUK. These groups may be moreeager to support their localsuppliers during periods ofeconomic downturn. They may alsobe consuming foods which aretypically less expensive and,therefore, have more concerns overthe origin of such produce.67 Eating Out in the UK 2009

Fig.4.8 ATTITUDES ABOUT UK PRODUCE BY SOCIO-ECONOMICSI prefer eating at establishments where I know the food is sourced from the UK22%23%22%23%18%17%19%18%In addition to lower socioeconomicgroups, it is also the oldergenerations who care more thattheir food is of British origin. 68% ofpeople aged 55 and older agreedthat they prefer to eat inestablishments where the food issourced from the UK, comparedwith 47% of 18-24 year olds. Thereare likely to be two key reasons forthis: An interest in ‘buying British’could be associated with atraditional set of values morecommonly associated with theolder age groups. Those living onpensions may also be attracted tomore keenly priced foods, and areconscious about the quality andorigins of these products.56%55%65%63%A/BC1C2D/EDisagree Neither AgreeSource: Allegra Strategies Analysis, Consumer Research, 2009Fig. 4.9 ATTITUDES ABOUT UK PRODUCE BY AGEI prefer eating at establishments where I know the food is sourcedfrom the UK30%27%22%19%14%16%23%23%26?%23%20%15%47%18-2450% 52% 58% 67% 69%25-34 35-44 45-54 55-64 65+Disagree Neither Agree Source: Allegra Strategies Analysis, Consumer Research, 2009Eating Out in the UK 2009 68

Industry Views on Local SourcingFigure 4.10 clearlyindicates the rise inconcern amongst seniorexecutives in thefoodservice industry forusing local suppliers justin the last year.Industry leaders want to meet thedemands of their consumers, whoare looking to ‘do the right thing’and who are concerned with betterquality and more seasonalproducts. Furthermore, therecession has, in part, had apositive effect, with industry andconsumers alike wanting tosupport local suppliers when timesare more difficult. However, someoperators are deterred in thecurrent economic downturn asthere is a significant cost incurredin using quality assured foods.“Provenance isincreasinglyimportant to ourconsumers – and Iwould say that agood many actuallynow expect it as agiven, but at noextra cost.”Julia HatcherCategory Manager –Foodservice, Sainsbury’sFig. 4.10 RESTAURANTS SHOULD USE LOCAL SUPPLIERS WHEREVERPOSSIBLE58% 64% 19% 24% 23% 12%Agree Neither DisagreeSource: Allegra Strategies Research & Analysis 2009“Provenance hasbeen a growtharea. However, wehave seen evidenceof reducedenthusiasm for thistrend as therecession hasprogressed.”Stephen CliffordMarketing Controller, BrakesAs mentioned at the start of thechapter, a substantial 67% ofrestaurant senior executives andindividual restaurantowner/operators believe thatoffering locally sourced products willbe the biggest trend affectingmenus in the next three to five years.When asked how they sawrestaurant menus changing in thenext three to five years, industryleaders responded as follows:“More freshness,provenance andimprovement inquality.”Ben BartlettFood Development Manager,Scottish & Newcastle PubEnterprises“Seasonality andprovenance ofproduce will behighlighted.”Will SmithManaging Director, ArbutusRestaurant2008200969 Eating Out in the UK 2009

“More focus onlighter, healthieringredients; itemprovenancebecoming explicit inmore dishdescriptions;stronger flavoursand globalspicing.”Commercial ManagerLeading Restaurant GroupLocal sourcing is currently a highprofile trend and a key part of arising ‘food culture’; nonetheless, it isright to question whether this trendis sustainable, or whether interestmay wane in a similar fashion toorganics. Concerns exist around theextent that operators and theircustomers will pay the pricepremium frequently placed on foodswith specific origin and qualityassurance and also about the supplycapacities of many smaller scalesuppliers. As far as local sourcing isconcerned, many independents haveinsufficient knowledge of suppliers,and are concerned with red tapeand health & safety issues.A food safety program, the ‘Safe andLocal Supplier Approval’ scheme, hasbeen developed by several bodiesincluding the British RetailConsortium, and is designed tomake it easier for local retailers tostock more locally sourced food. Thescheme enables retailers to sourcemore food directly from smallsuppliers, while helping to minimisethe costs associated with foodsafety checks.With many industry leaderspredicting that ‘localness’ willsignificantly impact menus in thenext five years, they clearly see localsourcing as a long-term trend. Theimportance of food provenance isfurther supported by its links witheating well and general well-being –points that will continue to befuelled by media coverage andcelebrity chefs’ campaigns aroundBritish and seasonal produce. Thesigns are that local sourcing couldbecome an even more influentialtrend within the UK Eating Outmarket.Eating Out in the UK 2009 70

Case studyPret A MangerLong known for itsattitude to freshlyprepared food,Pret A Manger isat the forefront ofdevelopments onsustainable sourcingand quality assurance.A number of itsinitiatives arehighlighted below:SourcingORIGIN OF PRODUCTS• Sources British products and local products where possible, e.g.English apple juice and Wiltshire-cured ham• Only uses Open Barn chickens• Only uses organic milk• All eggs are free-range• All products are authentic – provides consumers with full details ofthe origin of products, for example, Fairtrade fruit from the PhilippinesSUSTAINABILITY• Bluefin tuna is no longer on the menu until supply from sustainablefisheries can be guaranteedQualityQUALITY ASSURANCE SCHEMES• Strong adherence to quality assurance schemesPork is British Farm AssuredSalmon is Marine Stewardship Council certifiedFRESHNESS• Fresh ingredients are delivered daily• Products are made fresh in store each day and leftovers are given tocharity• Shelf life of coffee beans is limited to two weeks to ensure freshnessand, in a unique initiative, unused beans are compostedSupply Chain• Thorough knowledge of product origin, farming practises, rearing,harvesting, production and delivery71 Eating Out in the UK 2009

Chapter 5The Future of the InformalEating Out MarketIn This Chapter• Short-termexpectations• The recession andits legacy• Medium-long termbusinessimperatives• Up and comingbrandsThe views andperspectivesdeveloped in thischapter are derivedfrom a number ofsources, includingdetailed interviewswith 25 leadingindustry executives,surveys with seniormanagers of over 80restaurant chains andover 100 independentoperators. In addition,the analysis isinformed by keyfindings fromAllegra’s consumerresearch insightsand from extensivedesk research.• After an envisaged 0.5%contraction in 2009, the InformalEating Out market is forecast tosee a modest recovery in 2010with growth of 0.5%-1.0%. Risingunemployment will remain aconcern and a barrier to astronger pick-up• The recession will lead to a lastinglegacy of enhanced valueconsciousness by consumers – asthey become more demandingabout their eating out, withhigher expectations of the qualityof their food and of the perceivedvalue for money• Established underlying trends ofrising affluence, growing mobilityand ‘more youthful’ olderconsumers will support strongergrowth in eating out over themedium-long term. Following anOlympics boost in 2012, themarket is forecast to reach£47.5bn by 2014, with a CAGR*of 3.4%• Foodservice will play a greaterrole in the reinvigoration of theHigh Street as a more leisureorienteddestination – but thepace of this will be set bylandlords’ softening in rentalexpectations• The future of informal eating outlies with a more specialised andsegmented marketplace, withoperators better delivering ontheir core competencies andextending their points ofdifference• Foodservice winners will be thosecompanies better equipped to tapinto consumers’ rising demand forKEY POINTSbetter value, healthy eating,convenience, authenticity, localsourcing and added-experience• Growth prospects are anticipatedmost strongly in fast casual,healthier, Oriental, British and hotfood-to-go• The poorly differentiated middleground will become a riskierpositioning for generalistoperators trying to cover toomany cuisine types• There may be fewer pubs inprospect but they will increasetheir share of the Informal EatingOut market simply becausedeveloping food sales is critical totheir survival• The market structure will changewith the emergence of a far moreconsolidated eating out market,with fewer independents andsmaller chains, and a strongerpresence of branded chains• Greater daypart targeting can beexpected, as well as the blurringof foodservice and food retailing –as operators and retailers seek tocapture a greater share of theirexisting customers’ spending andunlock new sales opportunities• Building stronger customerloyalty will become increasinglyimportant and result in moresophisticated schemes, in asimilar vein to those in the retailsector, that better rewardcustomers and create strongerdialogue and relationships*Note: CAGR = Compound AnnualGrowth Rate73 Eating Out in the UK 2009

An Introduction‘‘The next 5-10 years will be very different to the last, asconsumers will become more value conscious and operatorsfocus on ways to improve their value equations. However,scope to achieve this via cutting prices will be limited – andwithout loyal customers, much harder still.’’Alastair FairgrieveChief Insight Officer - Europe, McDonald'sOne of the most logicalplaces to start whenexploring the futureprospects of the InformalEating Out market iswith the past, andidentifying underlyinglong-term trends.This is all the more appealingwhen it offers reassurance andcomfort in the form of risingprosperity and disposable income,increasing mobility and growingeating out activity and spending.The clearly established trend is forconsumers to spend a greateramount of their total food &beverage expenditure away fromthe home – and this has by nomeans reached a mature phase.But, while the medium-long termoutlook is positive, what of theshort-term, and the impact of therecession? And also, how mightthe recession leave a lastinglegacy?Eating Out in the UK 2009 74

Short-Term ExpectationsTable 5.1 ANNUAL GROWTH IN GDP, UNEMPLOYMENT, AVERAGE EARNINGS, INFORMAL EATING OUT MARKET AND FOODRETAIL SALES 2004-2010FMARKET INDICATOR - ANNUAL GROWTH200420052006200720082009F2010FGDP3.2%1.7%2.7%3.0%0.7%-3.5%-0.1%UNEMPLOYMENT RATE - YEARLY AVERAGE4.8%4.9%5.6%5.5%5.8%8.2%9.4%AVERAGE EARNINGS4.4%4.8%3.2%4.2%3.6%1.3%1.7%INFORMAL EATING OUT MARKET6.3%3.8%3.8%8.3%4.0%-0.5%0.5%-1.0%RETAIL SALES GROWTH IN FOOD STORES4.0%3.2%3.6%4.2%5.8%2.0%2.0%-3.0%Source: Allegra Strategies Analysis, ONS, Item Club, CBI, 2009The scale of the currentrecession is evidentacross several businessindicators, not least GDP,which is predicted to fallstrongly this year. Theannual growth forecast of–3.5% would be theweakest for over 50years.Despite some expectations thatoutput will stabilise by the yearend and that a modest recoverywill begin next spring, a majorconcern lies with risingunemployment. It is forecast that900,000 jobs will be lost this year,with another 500,000 to go in2010, when unemployment willexceed 3 million. This willexacerbate worries about jobsecurity and impact the growth inaverage earnings. In turn, it willweaken confidence levels and hitconsumer spending, particularly onmore discretionary items.However, expenditure onhousehold necessities, not leastfood and drink, is expected toremain more robust – and this willcontinue to support growth inretail sales within food stores.Factor in the consumer researchfinding that the greater balance ofadults are more likely to be eatingout less in the next 12 months, andit is difficult to be optimistic aboutthe near term prospects for growthin the Informal Eating Out market.Indeed, a decline of 0.5% is forecastfor 2009. A slightly strongeroutcome is predicted for 2010, butthis is likely to be skewed towardsthe second half of the year. This isin keeping with Allegra’s survey ofRestaurant Leaders, with thelargest proportion of seniorexecutives expecting a recovery in12-18 months from April/May 2009.Fig. 5.1 UK RESTAURANT LEADERS’ EXPECTATIONS OF THE TIMING OFMARKET RECOVERYQUICK RECOVERY0% 7% 38% 41%Within 3months3-6months6-12monthsSource: Allegra Strategies Analysis, Industry Interviews, 200912-18monthsSLOW RECOVERY14%18-24months1%More than24 months75 Eating Out in the UK 2009

‘Challenging’ is a commonly usedterm to describe the currenttrading environment, and for goodreason, given the continuingprospect of weak demand and costbase pressures on food, energy andstaffing. And this will lead tocasualties across the entirefoodservice market. Manyoperators are at risk of entering adownward spiral of cutting prices(and corners), weakening theirvalue propositions, losing sales andhaving to cut margins further, butnot without potentially criticallyundermining core brand values.“The eating outmarket appears tobe behaving verydifferently in thisrecession to theprevious downturnin the early 1990s.Previously, volumestook a nosedive asmargins were held– this time it seemsthat margins arebeing compressedas operators fightto hold onto volumeand share.”Adam MartinMarketing Director,Mitchells & Butlers“The big losers inthis recession willfall into two camps:firstly, those lessable to, or not seento, provide value formoney; andsecondly, those thattoo aggressivelyplay the price card,undermine theirbrand values andfall foul of it.”David MannManaging Director, PhilpottsNevertheless, despite all theaforementioned reasons to be lessthan cheerful, the point should notbe overlooked that this is a ‘patchy’recession. A number ofhouseholders, particularly those ontracker mortgages and/or thosewith secure jobs, are actuallyconsiderably better off than theywere 12-18 months ago. Theymight not be consumingconspicuously, but they arecontinuing to eat out of the homeand benefiting from a number ofspecial offer deals and promotions.In addition, recessions presentconsiderable opportunities to anumber of operators – not leastthose with value at the heart oftheir offers and those with trustedbrands. Consumer consciousnessaround value has been elevated andpeople are now far more demandingabout wanting more for less.In recessions, consumers becomemore risk averse and gravitate tothe brands they know and trust.Stronger brands will also benefitfrom:• Greater availability of newdevelopment sites on morefavourable terms in a fallingproperty market• Greater relative access to capitalto fund store refurbishment andsite acquisition• Better conditions for therecruitment and retention ofhigher calibre staff• Opportunities to capture marketshare gains from weaker chains,which are less able to invest intheir propositions, and from theinevitable market casualties“I think thosecompanies that arecontinuing toinnovate and investduring therecession will bethe ones whoaccelerate out of it.In my personalopinion, both Costaand McDonald’scome to mind.”Malcolm PlowsTrading Director - On Premises,Coca-Cola EnterprisesEating Out in the UK 2009 76

Recessionary Legacy –Sustained or Not?Industry executivesbroadly fall into twocamps about whetherthis recession will havea lasting impact.On one hand, there is the view thatthere is a certain amount ofjumping on a recessionarybandwagon, and that is has to beborne in mind that economicactivity is cyclical and thatconsumers are fickle. On the other,there is the expectation that weare on the cusp of a genuineturning point, one that will see thesustained re-appraisal byconsumers of how they trade offquality against price and developan enhanced understanding ofwhat good value for money meansto them. Significantly, the majorityof interviewees were in the lattercamp and argued that there will bemore thriftiness – on the part ofconsumers and clients – in thefuture.“The recession willsee a lasting legacyof consumersbecoming moreselective with theirspending and wiserwith how and whatthey buy.”Steven FosterHead of Retail Categories,Manchester Airports GroupUK adults are re-appraising theirspending patterns and there are anumber of reasons for believingthat the recessionary legacy isgoing to have a sustained impact:• This recession, perhaps unlikeprevious market downturns, hasnot just largely affected BlueCollar workers in more traditionalindustries outside the South East.It is having a far more ubiquitousimpact• There will be on-going mediumterm concerns around risingunemployment and job security• The depleted state of the nation’sfinances, with the prospect of taxrises and/or governmentspending cuts, are such thatdisposable income growth isexpected to be remain subduedand lag behind the post-recessionpick up in GDP• Corporate hospitality budgetsand expense accounts have beencut back and it will be highlyunlikely that companies willreturn to the profligacy of thepast• Consumers have becomeaccustomed to cherry pickingspecial offers, using vouchers (viaboth the printed media andonline) and promotional deals –and weaning them off this isgoing to prove difficult• The recession has encouragedconsumers to make greater useof online tools and aids, such asprice comparison websites,review guides and blogs, to helpmake better-informed buyingdecisions. This activity is onlygoing to increase and is helpingto stimulate value-led thinking• Many consumers who werepreviously infrequent visitors tolower price bracket operators maywell have been more thanpleasantly surprised by the valueand satisfaction they havederived – not least from thosevenues offering free additionalservices such as Wi-Fi,newspapers and beverage refills• More fundamentally, therecession is boosting the rise ofmore demanding consumers,who want more from a host ofsuppliers on their own terms.This is not just about ‘anytime,any place, anywhere’, but alsoincludes how much they areprepared to payIn short, the recession issharpening consumers’ valueexpectations and they expectoperators to respond. The futurelies with consumers shapingbusinesses, not the other wayround. The recession has merelyaccelerated the timeframe for this.77 Eating Out in the UK 2009

Medium-Long TermBusiness ImperativesWith ever moredemanding consumers,the corporate responselies with operators addingmore value to thecustomer visit.Most noticeably, foodservicecompanies will be going ‘back tobasics’ and focusing in on theircore competencies and points ofdifference. This will result ingrowing segmentation andspecialisation, a more competitivemarketplace and require muchgreater levels of customer insightand dialogue to build loyalty. Theseaspects of the future shape of theInformal Eating Out market areeach worth commenting upon:GROWING SPECIALISATIONAND SEGMENTATIONIt is a common feature of marketsthat, as they mature, they becomemore specialised and segmented,as operators carve out nicheconcepts and look to exploitsmaller pockets of demand in amore saturated market. This isalready happening in many areasof the Informal Eating Out market.Examples include the growth ofmore types of South East Asiancuisine, such as with Balinese,Malaysian and Thai; and theincrease in premium burgerconcepts, including the GourmetBurger Kitchen, Byron and Nando’s.This trend has much further scopeto be developed, both in cuisinetypes and exploiting gaps inprevailing price architectures. Indue course, there will be a strongerboost from premium productinnovation, but the real impetus atthe moment lies with growingconsumer demand for locallysourced products and ‘authenticity’.This has partly originated from therise of food culture and Britonsbecoming more travelled, whichhas generated a desire for moregenuine eating out experiences. Ithas led to the launch of severalsmaller concepts, including Jamie’sItalian, Ping Pong and Sacred (seeCase Study 2).Growing specialisation will alsoserve to weaken the hand of thegeneralist providers. This includesseveral pub chains, which areresponding with more aggressivespecial promotions and offeringhighly competitive prices. There isinevitably a margin implicationthat not all operators will be ableto offset through higher volume.Together with brand perceptiondamage, it is questionable how farthis strategy is sustainable over themedium-long term. Developingadditional compelling reasons tovisit – and return – are essential.MORE COMPETITIONThe good news for companies inthe sector is that, over themedium-long term, there isforecast to be more mealsconsumed out of the home. Thebad news is that it is going to be amore competitive marketplace.This latter point, however, needsclarification on two fronts.Firstly, there will not necessarily bemore competitor outlets. As withthe natural market maturityprocess, it will migrate towards aless fragmented, moreconsolidated market structure.Larger foodservice brands benefitfrom significantly higher levels ofconsumer trust and recognitionthan many smaller andindependent operators, and will betougher to trade against. However,the same levels of scale economiesdo not exist within foodservicecompared with food retail, hencethe level of dominance enjoyed bythe leading supermarket chainswill not be replicated within theeating out market.Secondly, it is also not necessarilythe case that there will besignificantly more businesses.Larger businesses benefit fromgreater funding and buying power,and this will further driveconsolidation in ownership. Therestaurant sector already has asubstantial number of multi-brandoperators (for example, theGondola Group with ASK, Byron,PizzaExpress and Zizzi; and theRestaurant Group with Blubeckers,Chiquito, Frankie & Benny’s andGarfunkel’s) and more of these arelikely to come as weaker chains areacquired and new specialisedconcepts developed.These larger brand stables will beunder increasing pressure,however, to be more transparentabout their various businesspractices and corporateresponsibilities. People will becomemore interested in the businessesbehind the food outlets. This ispart of the ongoing process ofconsumers becoming betterinformed and more discerning, butwill also reflect greater adoption ofmore values-led agendas.Currently, in many multiple retailbrand foodservice companies, thislevel of disclosure is relativelymodest and will need moreattention.Eating Out in the UK 2009 78

New restaurant outlets are likely tofill many of the retail voids beingcreated on the High Street. HighStreets are going to have tobecome more leisure-oriented tosustain their vitality – and astronger foodservice presence hasan important role to play in thisrevitalisation. Indeed, moreprogressive planning authoritieswill already be revising land useallocations and categorisations tofacilitate this reinvigoration. Moreimportantly, this process will alsorequire more accommodatinglandlords. Foodservice operatorswill colonise more of the HighStreet, and provide an antidote toclaims of growing homogeneity,but the pace very much dependson the rate at which landlords’expectations on rents are reviseddownwards.GREATER CUSTOMERINSIGHTCompared with the UK’s foodretailers, foodservice operatorsremain relatively primitive. Manyare still not supported by good tilland management informationsystems to provide valuable realtime insight on sales trends andreaction to specific pricing andpromotional activities. A largernumber do not operate any form ofsophisticated (i.e. smart card)loyalty/reward scheme. Theseprovide more detailed informationabout individual consumers’buying habits and enable operatorsto develop better-informedrelationships with their customers.The recession may well be servingto curtail investment in non day-today,business-critical initiatives, butthis is going to be an area wherethe competitive bar is being raisedas operators search for ways to havedialogues with their customers andcapture greater feedback to buildloyalty. Traditional foodservicethinking about loyalty holds that itis the result of having a greatproduct, served well in attractivesurroundings. This is not going togo away, but will be reinforced byschemes that help operators tobetter know their customers andwhich help them feel special aboutusing that particular operator.The developments and benefitsthat Starbucks has introduced withits card, and YO! Sushi with its YO!Love Club are good cases in point.With greater competition, the battlefor customer loyalty is only going toheat up and there will be greaterfocus on ensuring consumers feelrecognised and valued.79 Eating Out in the UK 2009

Medium-Long TermExpectationsResearch undertakenwith senior executivesacross the restaurantindustry, as well as withowners and managers ofUK independentrestaurants, reveal thatfast casual dining isexpected to register thehighest growth over thenext three to five years.Healthy eating ranges and Britishand South-East Asian cuisines arealso seen as having significantgrowth potential.“Fast-casual is aconvenient, easyway to go out andhave good foodwithout feelingformal, and then toalso be able to goand do otherthings.”Group MarketingManagerBar and Restaurant GroupTable 5.2 CUISINE TYPES EXPECTED TO GROW THE FASTEST OVER THE NEXT3-5 YEARSAlso identified within the researchwere the restaurant businessmodels expected to grow thefastest over the next three to fiveyears. Fast casual dining, fast foodand pub food concepts are viewedas the most promising futuregrowth formats. The high ratingfor fast casual reflects its multifacetedcomposition, informalstrengths, relative affordability andinnovative operator base. Fast foodbenefits from growing demand forgood value, hot food concepts andan expansion hungry set of leadingoperators. Pub restaurants aresupported on the back offavourable consumer sentimentand the reality that without astrong food offer, businesslongevity is limited.RANK CUISINE TYPE12345678910FAST CASUAL DININGHEALTHY EATING CONCEPTSBRITISH CUISINESOUTH EAST ASIAN E.G. THAI, NOODLE ETC.GASTRO PUBSINDEPENDENT RESTAURANTSPUB/BAR RESTAURANTSFASTFOODBISTROSLOCAL/TRADITIONAL FOODE.G. GOURMET BURGERS & CHICKEN, PASTA,PIZZA, NON-SPECIFIC ORIENTAL ETC.Allegra Strategies Analysis, Industry Research, 2009Eating Out in the UK 2009 80

Fig. 5.2 RESTAURANT BUSINESS MODELS EXPECTED TO GROW THE FASTEST OVER THE NEXT 3-5 YEARSPercent of Respondents64%Fast casualdining13% 11% 8% 2% 1% 1% 0%Fast foodPubrestaurantGastro pub Fine dining Brasseries Other Hotel diningSource: Allegra Strategies Analysis, Industry Research, 2009Based on a combination ofeconomic forecasts, pastperformance and industryexecutive interviews, Allegra hasproduced a five year growthforecast for the Informal EatingOut market. A market value of£47.5bn is predicted by 2014, whichequates to a CAGR (CompoundAnnual Growth Rate) of 3.4%. Inpart due to the continuation of arelatively low inflationary outlook,this growth rate is expected to bethe lowest over the past 25 years.Nevertheless, this market growth isforecast to generate an estimatedincrease in employment within thesector of between 3%-5%.Table 5.3 INFORMAL EATING OUT MARKET GROWTH, 1999-2014F1999 2004 2009F 2014FMARKET VALUE (£BN)£24.7 £33.3 £40.3 £47.5CAGR - PREVIOUS 5 YR. PERIOD* 7.0% 6.2% 3.8% 3.4%*Note: i.e. 1994 - 1999, 1999 - 2004 etc. Source: Allegra Strategies Analysis, 200981 Eating Out in the UK 2009

Summary of Short and Long TermExpectations by Market SegmentThe following analysisreviews the prospects ofeach Informal Eating Outmarket segment over theshort- and long-term.There will, of course, be differenceswith each segment in terms of theabilities of different operators tocapitalise on more specific growthopportunities, and this will play akey role in determining segmentalwinners and losers.INFORMAL RESTAURANTS• Short-Term Prospects- Further fall-out of independentrestaurants and weaker chains asa result of the economic decline –particularly those failing toprovide value for money and/orgood quality food- Margins will continue to besqueezed as the ‘consumerdiscount junkie’ forces them tokeep up promotions anddiscounts- More experience will be gainedaround their management ofpromotions – operators will bemore knowledgeable about whichtactics are better able to drivefootfall, repeat custom and higherspend – more profitably thanothers- Stronger justification of pricepoints and communication ofvalue messages• Long-Term Prospects- There is a positive long-termoutlook, with stronger expansionopportunities beyond theSouth East- There will be an increase in thevariety of cuisine types withgreater specialisation- Rising demand for convenience,good value and provenance by theBritish public all play to thestrengths of informal resta-urants– particularly well-executedbrands- Stronger growth to be seen insome existing operators such asCarluccio’s, YO! Sushi andWagamama, as well as anemergence of new brands- There will be more consolidatedownership in the emergent newbrands- Some brands in the middlemarket, with no previousrecessionary experience, no strongdifferentiation and who are poorlymanaged, will fall out of themarket- Operators will need to provideclear points of difference as wellas something which is not readilyavailable to people at home- Restaurants become more flexiblewith their offer at different daypartoccasionsFAST FOOD AND TAKEAWAY• Short-Term Prospects- Favourable takeaway prospectsover the next 18 months asconsumers remain price consciousand continue dining in more- Physical expansion opportunitiesfor the fast food brands with thebenefit of more advantageousproperty deals- Ensuring newer customers areattracted and retained, the fastfood chains will offer consumersupgraded environments anddining experiences• Long-Term Prospects- Fast food and takeaway will haveto work hard not to fall out offavour given the rise in healthyeating and concern over foodorigin – operators will have tobecome more transparent in orderto appease consumers of theirconcerns- Pace of growth in direct andindirect competition (e.g. risingsupermarket competition) isexpected to exceed demand,making life harder for takeawayoperators- Fast food chains will have todeliver a broader value for moneyproposition- New forms of healthy fast foodindependents and chains willemerge, with operators like Leonalready leading the way- The provision of drive-thrus willincreaseCOFFEE SHOPS/SANDWICHBARS/CAFÉS• Short-Term Prospects- Short dips in comparable storesales growth due to the economicand footfall declines- Scaling back of physical expansion- Some of the upper end deli andsandwich bars will have to lowerprices to remain competitive asthe bar is raised by mass marketoperatorsEating Out in the UK 2009 82

Summary of Short and Long TermExpectations by Market Segment- The coffee shop operators willstart to offer more promotionaldeals for customers• Long-Term Prospects- Favourable prospects with ongoingtrends to urban café cultureand growth in branded foodconcepts expected to continue forat least the next five years- There will be a greater blurringbetween coffee shops andsandwich bars in terms of the instoreenvironment and experience- Coffee shops will look to extendtheir daypart offering- Stronger expansion into smallertowns and larger centre in-fillwith smaller formatsRETAIL GRAB & GO ANDCAFÉS• Short-Term Prospects- Supermarkets will continue to farewell during the recession, withconsumers opting forsupermarkets’ meal deals as partof increased promotional activity- Higher end product developmentwill be on hold as supermarketsfocus on volumes and price-ledactivity rather than innovation- Greater Focus on entry price pointranges• Long-Term Prospects- More impactful grab & godisplays with bettermerchandising, positioning andsignage- The variety and packaging of grab& go food will develop further83 Eating Out in the UK 2009- An increased number ofconvenience stores withenhanced grab & go ranges- Grab & go sections to align closelywith local catchment areas- Dine-in ranges to become a longstandingfeature – set to seeincreased choice and wideravailability- Stronger presence of harddiscounters into grab & go market- Development of retail cafés intofree-standing café concepts toremain a low priority owing togreater margin confidence in coreretail formatsPUBS• Short-Term Prospects- Difficulties on wet sales withpeople choosing to drink at homerather than out of home – leadingto further closures and churn ofpubs across different operators- The number of pubs selling foodwill increase, making them acheaper alternative to dining atrestaurants- More aggressive price-ledpropositions to drive footfall- Greater communication of pumpprices to portray stronger valuemessage on alcohol- Favourable summer weatheroffsets impact from weaksporting calendar• Long-Term Prospects- Pubs continue to struggle todevelop core alcohol sales andgreater efforts made to sell awider range of beverages- Greater re-positioning to offer afoodservice fit to rival informalrestaurants- There will be more segmentationwith different tiers within the pubsector – some pubs expected tobecome restaurants- Greater use of loyalty schemes toencourage more regular visits- There will be more effort made bypubs on improving outdoor areasWORKPLACE• Short-Term Prospects- Further decline in footfall withincreased unemployment- Impact from greater numbersbringing in a packed lunch to savemoney- There will be greater promotionalusage- Increased focus on healthy eatinginitiatives• Long-Term Prospects- Greater challenges in costeffectively delivering greaterchoice and customised solutions- Caterers will be more mindfulabout what is happening on theHigh Street and become morecommercial, though unlikely therewill be a strong presence ofbrands- Greater consolidation – big playersas well as niche high serviceplayers will remain- Increased focus by contractcaterers on widening their servicepropositions

LEISURE• Short-Term Prospects- Reduced footfall throughrecession has negatively impactedfoodservice within smaller leisurevenues, but ‘staycation’ factorbenefits larger destinations- Theme park operators offeringpoor value for money to lose out- Greater use of promotionalactivity to be employed• Long-Term Prospects- Favourable prospects forfoodservice within leisure sectorswith strong grey market appeal- Greater focus on offering fresherand healthier product choice- The discerning consumer expectsthe same choice as they would onthe High Street, leading to agreater presence of brands andmore variety for consumers- Leisure demand boost expectedfrom London Olympics and itssporting legacyTRAVEL• Short-Term Prospects- Performance is heavily linked tofootfall and will remain underpressure- More competitive prices andspecial offers- Better quality vending to be seenacross all travel streams• Long-Term Prospects- More mobile units and standalonekiosks which take up lessfloorspace will be used aspassenger numbers increase- There will be a greater brandedpresence within stations, airportsand motorway service areas- The greater provision ofinformation for travellers inairports and train stations willreduce prevailing stress levels andboost spending- Benefits from upgrades to diningand seating areas within travelsitesEating Out in the UK 2009 84

Case study 1Established and Emerging Consumerand Societal Trends Shaping InformalEating OutThere are two maindrivers affectingdemand within theInformal Eating Outmarket – consumertrends and societalinfluences. These twotrends divide into thosethat are establishedand those that areemerging.In terms of consumer trends,value consciousness is arelatively new phenomenon thathas emerged from the currenteconomic downturn. While theUK economy will be in recessionfor a finite period of time, valueconsciousness is expected tohave a lasting effect and onewhich operators will have toadapt to – not least in terms ofdoing more to justify theirprices.Authenticity can be defined interms of desire for greatertransparency and sensitivityfrom the operator, not least interms of the sourcing,seasonality and preparation ofproduct. This translates intomore information being requiredabout the origin of theiringredients, a desire for productswhich are sourced locally, as wellas greater transparency in theactual making of the food, withmany restaurants now preparingand/or cooking the food in frontof customers to help to createan enhanced atmosphere.Fig. 5.3 KEY CONSUMER ANDSOCIETAL TRENDS SHAPINGTHE EATING OUT MARKETESTABLISHEDCONSUMERTRENDS• Healthy Eating• Convenience• More DemandingESTABLISHEDSOCIETALINFLUENCES• AgeingDemographics• FamilyFragmentation• Rising ObesitySource: Allegra Strategies Analysis, 2009The third key emerging consumertrend affecting the InformalEating Out market is experience.Consumers no longer just eatwith their eyes and with theirstomachs – they also want to bein an environment suited to theirneeds and which offers themsomething they cannot create athome or elsewhere. For example,if they are looking for somewhereto read a book, they want to beable to sit in a comfortableenvironment; if they are lookingfor somewhere to eat andconsume alcoholic drinks, theymight be looking for a fun, livelyatmosphere. It is theseexperiences that will contributeto the overall satisfaction level ofthe customer.EMERGINGCONSUMER TRENDS• ValueConsciousness• Authenticity &Local Sourcing• Experience-ledEVOLVINGINFORMALEATING OUTMARKETEMERGING SOCIALINFLUENCES• Growing Ethnicity• Declining Levelsof Trust• More OnlineSocietal influences too arecontributing to changes in themarketplace. The growingethnicity of the UK population isleading to a far greater variety ofcuisine types. Improvedtechnology is leading todevelopments in ordering foodand making the search, bookingand ordering process moreconvenient for the customer –and it will continue to do so.Consumers are also losingconfidence in a number oforganisations and authorityfigures, and this is encouragingthem to be more selective andwary about where they placetheir trust. This is creatingopportunities for operators ableto capitalise on corporateresponsibilities.85 Eating Out in the UK 2009

Case study 2Upcoming Brandswithin the InformalEating Out MarketBranded chains aregoing to take a greaterpresence within theInformal Eating Outmarket.The mega-trends present intoday’s society are drivingopportunities for new,innovative concepts to appearon the High Street. Listed hereare a small number of operatorsthat have entered the market inrecent years and that offer aunique selling point.Jamie’s ItalianJamie’s Italian offers authentic, affordable, good quality Italianfood. UK customers, of varying affluence, are able to enjoy‘celebrity chef cooking’ on the High Street.LeonLeon is a quirky brand that has a differentiatedidentity. It offers healthy and wholesome food, onlycooking with seasonal ingredients. Taste is not compromised.Ping PongPing pong offers light healthy, good tasting Asian food in aninformal environment – it also offers unique and authentic teasand cocktails.SacredSacred has brought the New Zealand café experience to Londongiving consumers gourmet coffee, including Flat Whites, herbaltea and good food.TossedHealthy food is at the heart of Tossed which providesfresh salads which are made-to-order, givingconsumers choice, great tasting food and sizeable portions.VapianoVapiano is a new and entirely modern concept in fast casual,offering made-to-order pizzas, pasta and salads along with a fullservice bar.Source: Allegra Strategies Analysis, 2009Eating Out in the UK 2009 86

Case study 3Informal Eating Out MarketScenario EnvisagingThe diagram belowdescribes four differentscenarios – all of whichare speculative –around the future of theInformal Eating Outmarket.Arguably, the UK is currently in aposition where people are lessprosperous and therefore eatingout less. As a result, in the shortterm, the market is characterisedby a number of business failuresas consumers seek better valuefor money or, indeed, choose toeat in rather than out.Without question, the InformalEating Out market is set to growin the long term and it will moveout of its current mode of‘Retrenchment andRationalisation’ towards abrighter future. With longerterm economic recovery and astrong feel-good factor, theexpectation is that a goldenperiod of ‘Abundant Confidence’will return. This will becharacterised by a wider array ofcuisine genres, growth in formattypes and innovation. However,with more ‘cocooning’, perhapsbrought on by greater securityconcerns and food scares, thereis the prospect of a strongerfocus on ‘Home-basedEntertainment’.Clearly, whilst these scenariosare speculative, they help tooutline how businesses need todevelop different tactics andstrategies for differentprospective market outcomes.Fig. 5.4 SUMMARY OF PROSPECTIVE EATING OUT SCENARIOSHOME-BASEDENTERTAINMENTConsumer: More traditional,Discerning, Foodie, Likesentertaining and Values-ledMarket Implications: Polarisingmarket, Demonstrationof food and CSR values,Growth of localised brandingand sourcingLESS/STATIC EATING OUTRETRENCHMENT &RATIONALISATIONConsumer: Price conscious,More self-reliance andLimited eating-out repertoiresMarket Implications:Depressed trading conditions,High business failures,Growth in franchises, Localand regional food focusSource: Allegra Strategies Analysis, 2009LESS PROSPEROUS MORE PROSPEROUSABUNDANT CONFIDENCEConsumer: Pleasure-seeking,Youthful, Choice-hungry,Customised and PamperedMarket Implications: Growthin niche and larger formats,Global cuisine, Experience,Service-led, Brand identityand innovationMORE EATING OUTVALUE-LED EXPANSIONConsumer: VFM sensitive,Promotion and conveniencehungry, High snackingMarket Implications: Moreconsolidation, Growth inprice-led lower-middlesegment, Loyalty schemefocus, Mobile marketing87 Eating Out in the UK 2009

BibliographyReferenced Sources:(1) Allegra Strategies, Mid-Year Market Update & UK Coffee Leader Survey, 2009(2) Allegra Strategies, Senior Executive Top of Mind Survey, 2009(3) Allegra Strategies, UK Restaurant Leader Survey, 2009(4) British Beer & Pub Association: www.beerandpub.com(5) CIPD Recruitment Retention and Turnover Report, 2008(6) Confederation of British Industry, www.cbi.org.uk(7) Ernst & Young ITEM Club(8) Department for Environment, Food and Rural Affairs (Defra), Family Food, 2007(9) Food Standards Agency, Eat well, be well, How we used to eatwww.eatwell.gov.uk(10) IGD, Shopper Trends, 2009(11) NPD Group, CREST data, 2009a. Consumer spend by IEO segment 2007-2009b. Consumer spend per visit by segment, 2009c.Daypart analysis, 2009d. Eaten at home/out of home market shares, 2009(12) Office of National Statistics (ONS)a.ABI (Annual Business Inquiry), 2006b. Consumer Trends Q1 2009: Household final consumption expenditure onfood and drink in and out of the home 1970-present dayc.Disposable income statistics 1970-present dayd. Labour Market Trends, 1996-present daye. UK National Accounts: Input-Output Analysis, 2006(13) Survey, The Buzz, 2008 (Hospitality and Catering Recruitment specialist)www.bighospitality.co.uk(14) The Grocer Magazine, May 2009(15) The Soil Association Organic Market Report, 2009Wider Desk Research:(16) British Retail Consortium, www.brc.org.uk(17) Caterer Search, www.caterersearch.co.uk(18) An Appetite for Change, Food and Beverage 2012; Deloitte(19) Euro-Chains, UK, A Restaurant Chain Monitoring Service, 2006/07 BaseReport; Gira Foodservice(20) Family Spending and Family Surveys, 1997-2007; ONS(21) Foodservice and Eating Out: An Economic Survey, January 2007; Defra(22) Horizons FS Limited (Foodservice Data)(23) Just-Food www.just-food.com(24) Mintel Group (Foodservice Reports)(25) Social Trends, 2008; ONS(26) The Datamonitor Group (Foodservice Reports)(27) UK Business: Activity, Size & Location, 2008; ONSCorporate References(28) Wide variety of foodservice operators within the IEO market, including: BurgerKing; Carluccio’s; Greggs; Jamie’s Italian; KFC; Leon; Marks and Spencer;McDonald’s; Ping Pong; Pizza Express; Pret A Manger; Sacred; Tossed; Vapiano;Wagamama; Whitbread Group, YO! Sushi(29) NGOs and relevant bodies and associations, including: Fairtrade, RainforestAlliance, Red TractorEatingOut intheUK2009A ComprehensiveAnalysis of the InformalEating Out MarketDisclaimerCopyright: Allegra Strategies Limited,July 2009All rights reserved. Use of this report isfor internal corporate use byparticipants and client organisations.No part of this publication may bereproduced or stored in a retrievalsystem, in any form or by any means,electrical, mechanical, photocopying orotherwise without the prior consent ofthe publishers.Great care has been taken to ensurethat all information contained in thisreport is accurate and incorporates thelatest developments in informal eatingout trends in the UK sector. However,Allegra Strategies can accept noresponsibility for any investmentdecision made on the basis of thisinformation or for any omissions orinaccuracies that may be contained inthis report. This report has beenproduced in good faith and we trustthat the findings will be of significantvalue to all readers.Allegra Strategies LimitedNo 1 Northumberland Avenue,TrafalgarSquare, London WC2N 5BWTel: +44(0)20 7691 8800 Fax: +44(0)207691 8810Email: info@allegra.co.uk Website:www.allegra.co.ukRegistered in England No: 3645920

EatingOut inthe UK2009A ComprehensiveAnalysis of the InformalEating Out Market