Food Thinkers at City University
Eating-out versus eating-in:
The battles to feed us out of
home
Peter Backman
25 March 2015
What we’ll talk about
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To start
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Introduction
The Foodservice Sector
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The Foodservice Sector
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The Consumer
The Operator
The Distributor
The Supplier
Repacking the sector
Cross-sector
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Menu developments
What’s happening?
Key players
Wrapping it all up
Who am I?
• Prehistory
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RHM Research
Food Manufacturers Federation (now FDF)
Research and consultancy
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30 years experience
The industry’s leading supplier – and interpreter – of information
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Horizons FS - Managing Director
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plus ARENA – past Chairman
Horizons
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Provide information and insight
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100% focused on foodservice and hospitality in UK - and Europe
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We work for:
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Operators
Distributors
Manufacturers
Investors, service providers
Our services
Where does our information come from?
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30 years’ exposure to foodservice
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Surveys of consumers, operators
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Discussions / interviews
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Menus
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Feedback from conferences
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Desk research
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Horizons databases
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and so on …
Some notes on interpretation
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Unless otherwise stated:
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•
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Information is for 2013 or 2014
Values (purchases or sales) are for food
Source is Horizons
© Horizons
The Foodservice Sector
How big is foodservice?
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Food, drink sales to consumers
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£46.6 Bn
Excludes drink in Pubs, Hotels, Student Unions etc not served with food
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Food sales to consumers
£34.5 Bn
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Food sales to operators
£10.7 Bn
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Food shipments
£7.5 Bn
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It serves
7.9 Bn meals/year
© Horizons
Foodservice plus retail
Total Food and Drink: £155 billion in 2013
Foodservice
28%
Retail
© Horizons. Source: Horizons with IGD
Hospitality market – UK and inbound tourists
Worth £119 billion in 2013
Hospitality
Foodservice 33%
Drink in pubs
© Horizons. Source: Horizons with British Hospitality Association
A £234 billion market …
Hospitality
Foodservice 19%
Drink in pubs
© Horizons
Institutions
Retail
Caterers spend £44 billion each year on…
Food
Soft drinks
Alcohol
Labour
Disposables
Cleaning chemicals
Powered equipment
Rent/Rates etc
All other
© Horizons
The Consumer
You all know …
•
Changing demographics and
lifestyles
•
We’re getting older
•
1.9 million more women than
men
More - and smaller –
households
More divorcees
More retired people
More women in work
People are marrying later
Women are having children
later
Not enough children
But there are more of us
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•
•
•
•
•
•
•
© Horizons
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Concerns
• Ebola
• Ukraine
• Syria
• Terrorism
• Immigration
Also
• Jobs
• Available money
And
• Diet
• Obesity
•
“It’s one damn thing after another”
Who eats out?
Who is most likely to eat out?
80
75
Percentage
70
65
Equally likely to be:
• Male or female
60
55
50
Dec 09 Jun10 Dec 10 Jul 11 Dec 11 Jun 12 Dec 12 Jun 13 Dec 13 Jun 14
Source: Horizons Eating Out-Look June 2014
Most likely to be:
• 18-24 years old
• ABC1
• Living in London
• Full-time student
• Never married
• With 1 child
Frequency of eating out
Who eats out most often?
Eating out occasions in last 2 weeks
4
3
2
1
0
Dec 09 Jun 10 Dec 10 Jul 11 Dec 11 Jun 12 Dec 12 Jun 13 Dec 13 Jun 14
Source: Horizons Eating Out-Look June 2014
Most likely to be:
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Male
•
18-24 years old
•
AB
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Living in London
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Full-time student
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Never married
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With 0-1 children
Average meal spend £ per head
£16
Who spends most on a meal?
Average spend per head
incl drink (£)
£12
£8
£4
£0
Dec 09 Jun 10 Dec 10 Jul 11 Dec 11 Jun 12 Dec 12 Jun 13 Dec 13 Jun 14
Source: Horizons Eating Out-Look June 2014
Most likely to be:
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Male
•
25-34 years old
•
C1
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Living in London
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Working full time
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Married
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With 2 children
3 + 1 fundamental reasons why consumers are eating out more
Demand side drivers
1.
Consumers are increasingly affluent
•
2.
They have more time
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3.
Note: Medium/long term
The key issue: leisure time choice
Nowadays, consumers eat out as a matter of course
Supply side driver
4.
Growing choice of places to eat
© Horizons
Drivers – consumer issues
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More change
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Fickle consumers – more choice
Changes in lifestyle
Demand for “me”
More “on the go”
Health / wellness / lifestyle
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More eating out – in addition to eating at home
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Price
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Meeting (lower) price expectations
© Horizons
The Operator
Operating sectors
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Restaurants
Quick Service
Pubs
Hotels
Leisure
Staff Catering
Health Care
Education
Services
© Horizons
}
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Contract Caterers
Restaurants
European-Ethnic-Pizza/Pasta-In-Store-Themed
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Facts
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29,670 Outlets
11% of the total
746 million meals
9% of the total
Key Issues
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No change in total importance
Casual dining
Discounting
Source: Horizons
Source: Horizons Market Structure and Trends
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Operators
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Fewer majors than you think
Emerging Ones To Watch
Quick Service
Fast Food-Cafes-Take Away-Ethnic-Sandwich
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Facts
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32,956 Outlets
13% of the total
2,080 million meals
26% of the total
Key Issues
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Growing
Highly competitive
Key market drivers
US imports
Source: Horizons Market Structure and Trends
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Operators
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A handful of large players
Emerging Ones To Watch
Pubs
”Brewery” owned-Pubco owned-Managed-Tenanted-Branded-UnbrandedFreehouses-Night Clubs-Wine Bars. Excluding: Pub Restaurants
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Facts
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43,727 Outlets
17% of the total
821 million meals
10% of the total
• Key Issues
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Declining core business
Future of Pub
Metamorphosing into restaurants
Horizons
Source:Source:
Horizons
Market Structure and Trends
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Operators
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Pubcos
Managed operators
Regional brewers
Freehouses
Hotels
Hotels-B&B/Guest Houses-Farms-Holiday Camps-Caravan Parks
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Facts
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45,052 Outlets
18% of the total
602 million meals
8% of the total
Key Issues
• Asset light / Many “owners”
• Diversity of F&B offer
• The overseas visitor
Horizons
Source:Source:
Horizons
Market Structure and Trends
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Operators
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<4,000 group owned
Budget chains
27,600 have >10 rooms
Leisure
Visitor Attractions-Entertainment-Sports/Social Clubs-Events-Mobile CateringOn-Board
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Facts
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20,078 outlets
8% of the total
522 million meals
7% of the total
Key Issues
• Generally inexperienced
• Growth of sports venues
• Low average throughput but …
• Unexploited
Source: Horizons
Source: Horizons Market Structure and Trends
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Operators
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Fragmented
Some mega outlets
Staff Catering
Contracted-Self Run-Industry-Commerce-Government-Off Shore
• Facts
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17,656 Outlets
7% of the total
768 million meals
10% of the total
• Key Issues
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Contractors dominate
Smaller workplaces
Competition from the High Street
Horizons
Source:Source:
Horizons
Market Structure and Trends
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Operators
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Contractors
Health Care
Hospitals-Homes-NHS/Trusts-Local Authority-Private-Contracted-Self Run
• Facts
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32,181 Outlets
12% of the total
968 million meals
13% of the total
• Key Issues
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2 sectors:
• Hospitals
• Care homes
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Costs are vital issue
Source: Horizons
Source: Horizons Market Structure and Trends
Operators
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Contractors
Trusts
Education
Primary-Secondary-Tertiary-Contracted-Self Run
• Facts
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32,360 Outlets
13% of the total
1,110 million meals
14% of the total
• Key Issues
• Quality
• Costs
Source: Horizons
Source: Horizons Market Structure and Trends
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Operators
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Local authorities
Contractors
Services
Fire-Police-MoD-NAAFI-Welfare-State-Private
• Facts
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3,070 Outlets
1% of the total
257 million meals
3% of the total
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Operators
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• Key Issues
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Special needs
Fragmented
Source: Horizons Market Structure and Trends
Sector-specific
Local authorities
Prisons
MoD
Contractors
Contract Caterers
Staff Catering-Health Care-Education-Leisure
• Facts
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13,690 Outlets
6% of the total
1,336 million meals
17% of the total
• Key Issues
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They have clients AND customers
Several income streams
Changing charge structure
Competing on High Street
Changing business models
Source: Horizons Market Structure and Trends
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Operators
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•
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Top players
Level 2
The rest
The UK foodservice market - meals
Meals served (billions)
2.5
2.0
1.5
1.0
0.5
0.0
© Horizons
Source: Horizons
Food purchases (£ billions)
The UK foodservice market – Food purchases
2
1
0
© Horizons
Source: Horizons
The UK foodservice market – F&B sales to consumers
Food and beverage sales (£ billions)
12
10
8
6
4
2
0
© Horizons
Source: Horizons
The Caterer is not the same as the Retailer
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The caterer is:
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•
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Part housewife
Part manufacturer
Part retailer
To simplify … caterers are entrepreneurs
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•
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•
•
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Foodservice is a craft
Costs of entry are low
Caterers talk to their customers at every purchase occasion
They are in the hospitality business … not the retail business
They don’t operate systems … they fly by the seat of their pants
They are driven by satisfying their customers … not by numbers
© Horizons
Who decides? Who influences?
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Customer
•
•
•
Chef
Owner
Cash & carry visitor
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Unit? Head office?
Chef
Ops
Marketing
Buyers
Committee? Individual?
© Horizons
•
Contractor
Purchasing consultant
Client
Customer
Cost sector
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•
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Group operators
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Contract caterers
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Individual
Party
Independent operators
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•
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Chef
Head teacher
Parents
Pupils/Patients/Prisoners
Buying consortia
Distributors
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•
•
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Buyers
Marketing
Sales
Logistics
Decision making in foodservice
• Complex
• Requires understanding
• Needs nurturing
• Constant updating
• Absence of mass medium
Consequently:
• Resource hungry
• Slow
© Horizons
The Distributor
Caterers spend £16.8 billion each year on …
Food: £10.7 bn
… plus other, capital items
Source: Horizons
© Horizons
Food
Cold drinks
Non-food consumables
Equipment
At what temperatures do operators buy food?
Food: Food:
£10.1
Billion
£10.7
bn
Source: Horizons
© Horizons
Ambient
Chilled
Fresh
Frozen
Where do operators buy
their
food?
£10.1
Billion
£10.7 bn
Source: Horizons
© Horizons
Delivered Wholesaler
Contract Distribution
Cash and Carry
Others inc Retail
Menus
And …
All Sectors
Ave.
Price
1 (1)
Beef Burger
2 (2)
Pizza
3 (3)
Chicken Burger
£8.35
4 (4)
Fish & Chips
£9.68
5 (5)
Rump Steak
£11.61
6 (7)
Roast Chicken
£10.73
7 (10)
Rib Eye Steak
£18.52
8 (6)
Chicken Curry
£9.72
9 (9)
Sirloin Steak
10 (11) Sunday Lunch
£9.27
£10.53
(12) Grilled Chicken
£10.95
14 (15) Pork Ribs
£8.06
£13.13
15 (14) Beef Lasagne
£8.47
16 (18) Vegetable Burger
£7.43
17 (20) Chicken Pasta
£9.82
(16) Combo
£13.33
19 (17) Mixed Grill
£11.05
20 (-)
Hot Dog
60
£8.63
£9.75
Sausage & Mash
But world cuisines, and “ethics” abound
£16.57
11 (13) Chicken Breast
(8)
The old favourites are still key
£6.12
Source: Horizons Menurama Summer 2014
Number of Foodservice Brands
Rank
50
40
30
20
10
0
Summer 2010
Winter 2010
Summer 2011
Winter 2011
Summer 2012
Winter 2012
Summer 2013
The offer
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Wide choice
•
•
The “aware” consumer
•
•
Sliders, platters, tasters...
Innovation
•
•
Provenance, ethics, health...
Sharing options
•
•
Cuisine types, independent and brand, informal and formal, price...
Caramelised beetroot and squash strudel, Honeycomb cannelloni
Premiumisation as an option (as well as value )
•
Burgers, luxury fruit breads, Posh fish ‘n chips...
Source: Horizons Menurama Summer 2013
Ethical Sourcing, Responsible Production and Quality Assurance
Number of Foodservice Brands
70
60
Summer 2013
Winter 2013
Summer 2014
50
Winter 2014
40
30
20
10
0
Note: See Appendix 2 for menus dishes described by term
Healthy/Lifestyle Eating
Number of Foodservice Brands
80
‘Healthy/lifestyle’ factors
Dietary requirements
70
60
50
40
30
20
10
0
Summer 2013
Winter 2013
Summer 2014
Winter 2014
Some growth sectors
Casual dining
Healthy
Fast casual
Breakfast
© Horizons
The Supplier
What are supplier characteristics?
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Retail focused
•
•
Foodservice turnover:
•
•
•
•
But not all are
Less than £200 Million
But most are less than £20 Million
Above average profitability - sometimes
Foodservice resources:
•
•
Limited – people, experience
Pressured production
© Horizons
The personalities
Retail
Ordered
Systems-driven
The customer has to
work
Foodservice
Centred on people
“Anything else for your
meal?”
Entrepreneurial
The threat from retailers?
•
They have
•
The infrastructure
• Online
• Delivery
•
•
So they can become
•
•
•
•
•
The supply base
Cash and carries
Delivered wholesalers
Standalone caterers
Are they already?
But do they have they will?
© Horizons
How do foodservice and retail differ?
Retail
•
•
•
•
•
•
•
•
•
•
•
•
Impersonal
Consumers buy brands
Quantum leaps
Short term results
Systems driven
Big turnover
Few buying points
Mass market
Media focus
Simple supply chain
Long production runs
Senior management have
experience
© Horizons
Foodservice
•
•
•
•
•
•
•
•
•
•
•
•
Hospitable
Operators buy from companies
Small steps
Long haul
Entrepreneurial
Smaller turnover
Many buying points
Bespoke
Trade focus
Distributors involved
Short production runs
Senior management have
expectations
Repacking the sector
The Foodservice Universe
What’s Going On?
A 30 year trend in numbers of meals served
Meals served 1981 - 2013
•
10
Meals Billions
8
6
4
2
Popular Catering
•
•
Restaurants, QSR, Pubs
1.4% CAGR
0
© Horizons
Total Foodservice
Source: Horizons Market Dynamics Toolbox Base year 2010
0.5% CAGR
Almost unbroken upward trend in food sales value
Food sales at current prices 1981 - 2013
35
30
£ Billions
25
20
15
10
5
0
© Horizons
0.5% CAGR
The pain
Competition is growing
Costs won’t go down
Add value
Cut costs
Maintain margins
Fickle consumer demand
Government spending less
Evolve business models
F&B Sales – Forecasts for 2015 at constant prices
3.7%
2.9%
2.4%
2.9%
2.7%
0.8%
£14
-1.4%
Food Sales £Billion 2015
£12
0.0%
0.3%
0%
-10%
£10
£8
£6
-20%
-30%
£4
£2
£0
Source: Horizons Market Structure and Trends
-40%
-50%
F&B Sales
Total
£47.8 Bn
Group
+5.6%
2014-15
+2.6%
Ind. Sales £Bn
Gp. Sales £Bn
% change 2014-15
Foodservice in the US and UK
220
200
1981 = 100
180
160
UK
USA
140
120
100
Sources: Horizons; NRA
Population affect on foodservice growth in the US
220
200
1981 = 100
180
160
USA - Actual
USA - Population adjusted
140
120
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
100
Source: Horizons; NRA; ONS; US Bureau of Statistics
Population effect on US v UK comparison
150
140
1981 = 100
130
120
UK
USA
110
100
90
Source: Horizons
Inflation - The Margin Squeeze
15%
10%
5%
0%
J A J O J A J O J A J O J A J O J A J O J A J O J A J O J
2008
2009
2010
2011
2012
2013
2014 2015
-5%
-10%
Margin Squeeze
Source: Horizons / ONS
Food Prices
Selling Prices
Discounting is evolving
180
Base = 100 December 2008
160
140
120
100
80
60
40
20
0
M M J
S N J M M J
2009
S N J M M J
2010
Sources: Horizons Voucher Tracker
2011
S N J M M J
2012
S N J M M J
2013
S N J M M J
2014
S N
Key Players
25 UK Leading Groups
2,000
Beverage not associated with food
Pubs
QSR
Full service
1,500
£ F&B Sales £ Million
Includes
•
Restaurants, QSR, Pubs
•
UK only
•
System-wide sales
•
Groups sales - not individual brands
•
Beverage not associated with food – only applies
to Pubs
1,000
Greene King
acquires Spirit
500
Tragus
spins off
Strada
SSP
IPO
Gondola
splits PE,
Ask / Zizzi
0
Source: Horizons, Company information
Hony acquires
Pizza Express
TGI
sale
The next 25 Groups – for context
150
Beverage not
associated
with food
Other Beverage
Pubs
QSR
£ F&B Sales £ Million
Restaurants
100
50
Includes
•
Restaurants, QSR, Pubs
•
UK only
•
System-wide sales
•
Groups sales - not individual
brands
•
Beverage not associated with
food – only applies to Pubs
130+ Ones To Watch
0
Source: Horizons, Company information
Ones To Watch – October 2014
Rank
Brand
Type
Outlets
Growth
since 2011
1
Fuel Juice Bars
Juice bar
24
16
2
Dunkin' Donuts
Bakery quick service
14
14
Abokado
Healthy quick service
22
13
Tortilla Mexican Grill
Mexican burrito fast casual
20
13
Pieminister
Pie quick service
20
13
Boost Juice bars
Juice bar
18
12
Chozen Noodle
Pan Asian casual dining
12
12
Decks
British casual dining
12
12
Five Guys
Gourmet burger fast casual
12
12
Farmhouse Inns
Pub restaurant casual dining
24
11
Wildwood
Italian casual dining
21
11
Brasserie Blanc
French bistro casual dining
20
11
Coast to Coast
American casual dining
12
11
El Mexicana
Mexican burrito fast casual
12
11
3
6
10
Source: Horizons Ones To Watch October 2014
What is a
‘One To Watch’
brand?
• Restaurant/QSR
• 5-25 sites
• >20% growth
over past 3 years
In short …
•
Lots of options
•
Big players are too big to ignore
•
•
•
That’s why everyone goes after them
That’s why they can demand best price
But compared with retail
•
•
•
Small
Fragmented
They’re all different ... even if they look the same
© Horizons
Wrapping It Up
What have we learned?
© Horizons
How to contact me
Horizons
Winston House
2 Dollis Park
London N3 1HF
T: +44 (0)844 800 0456
M: +44 (0)7785 242809
E: [email protected]
Tw: @PeterBackmanFS
www.hrzns.com