Eating out has become an integral part of consumers’ lives, and is no longer the rare treat it was 30 or 40 years ago. But as discretionary spend continues to come under pressure, those same consumers are taking active steps to switch their spending towards more affordable restaurants.
And this trend, according to researcher Allegra Strategies, is driving the impressive growth for branded restaurants. In its Project Restaurant 2012 report, published at the end of last month (June) Allegra says that consumers are maintaining their restaurant visit frequency – often influenced by discounting offers – although their actions are still influenced by the economic downturn.
According to Allegra the branded sector – which includes everyone from KFC to Carluccio’s – takes a 21% share of the overall eating-out market value, and is set to significantly outperform the rest of the retail and hospitality markets, with 6.5% annual growth, and sales reaching an estimated £11.6bn by the end of this year. The growth reflects the combined effect of like-for-like increases boosted by inflation, together with the physical expansion of outlets.
Allegra splits the branded sector into pubs, casual restaurants and fast food. In the branded fast-food chains, growth has been led by key players McDonald’s, Domino’s and KFC, who have the highest value forecast growth of 7.9% reaching £4.6bn.
Outlet growth for branded “casual” chains of 4.6% is driven by Prezzo adding 45 restaurants and growth of 31%; Pizza Express with 31 new sites; and Carluccio’s adding 16 outlets. Expansion is a key feature of casual chains, reaching 3,777 outlets and growing by a total 166 outlets in 2012. The branded pub restaurants are significantly outperforming the overall pub market, with JD Wetherspoon still leading expansion.
Long-term growth prospects remain positive with increased spend, supported by continued inflation forecast at 2%, and expansion growth of 5.7%, contributing to the estimated branded restaurant turnover growth of 7.8% in 2013 to reach £12.5bn. Allegra predicts growth will continue to exceed 13,800 outlets and reach £14.5bn turnover by 2015.
Anya Marco, director of insight at Allegra Strategies, said: “With their marketing prowess, consistency and familiarity, and the ability to capitalise on new outlet expansion opportunities, branded chains will continue to drive growth in the market.
“By focusing on innovative ways to deliver added value for money, branded restaurants can benefit from a greater share of consumer spend on experiences that cannot be easily replicated at home.”
Just the facts…
- Fast food operators, including health-conscious outlets, will be leading growth in the industry, outperforming the sector as a whole with growth of 6.7% this year.
- In the next 12 months, 70% of consumers surveyed expect to eat out at the same rate as they have done in the past year.
- Italian remains the nation’s favourite eating out cuisine, as stated by 40% of consumers, and Indian cuisine comes second with 30% of consumer preference.
- The average spend per person in branded restaurant chains is £12.98 for lunch and £20.13 for dinner.
- Men are more likely to spend more than women, and the over-60s are the highest spending group.
(Source: Allegra Strategies Project Restaurant 2012)