Looking Back, Looking Forwards

What a year! A quick, end of year, flick through notebooks, meeting minutes and diary entries, summarises what an extraordinary year it’s been across the foodservice market in the UK.

Another year of market growth in the out of home eating sector, with sales nudging £90 billion and forecast to continue to rise to £94 billion by 2021, even with Brexit looming (or not, as the case may, or may not, be!) But a shift in the make-up of sales with the Breakfast and Snacking sectors growing in importance, to the detriment of the traditional Lunch and Dinner sectors – further proof that we are increasingly becoming a nation of ‘grazers’ – informal, spontaneous and much less about ‘traditional’ eating times.

We ate out less each month now than 5 years ago, but spent more on each occasion IF there was added value – simple nourishment just didn’t cut it anymore.

The move to increased foodservice (and leisure space) in commercial premises continued to grow, shaping enhanced guest spend, dwell time and experience. All good so far? What could possibly go wrong?…

Well, quite a lot actually! There were CVAs galore in 2018 amongst the National branded Restaurant sector, with the likes of Handmade Burger Co., Gaucho/ CAU, Byron, Carluccio’s and Gourmet Burger Kitchen suffering as a result of over expansion, a perfect storm of increased food costs, rents, rates, transportation and minimum wage increases. Even the ‘national treasure’ of Jamie Oliver was not immune to the wave of unit closures. In their place (and in some cases their actual stores), Fast Casual continued to be the darling of the sector, with a wave of better burger/ fried chicken/ pizza/ tacos operators benefitting from a more ‘bang for your buck’ selling price, a more ‘Generation Z’ unit design and an equally important social media approach that resonated well with the millennial market. In tandem, local heroes began to claw back market share in the regions, providing the points of difference and ‘anti-brand’ identity that their communities demanded.

Which leads me neatly onto Food Halls and, oh my word, what a difference a year makes. Hot on the heels of the success of Altrincham Market, a second branch in the portfolio, Mackie Mayor, opened in Manchester. Try Markets opened at Fulham Broadway Station followed by a second, larger market in Victoria in the former Pacha nightclub. Kerb announced plans for its first indoor Food Hall in 22,000 ft² of former banana warehouse in Seven Dials. And if the year couldn’t end on more of a high note, the ‘granddaddy’ of them all – Time Out Markets, secured a 32,000 ft² site in Waterloo with an expected opening date of 2021.

Further disruption to the ‘traditional’ foodservice landscape came from the food delivery aggregators – Deliveroo, Uber Eats and Just Eat, with the former 2 players still locked in early discussions about a buyout. Deliveroo reached 17,000 UK restaurant partners and delivered an astonishing 25,000 Pizza Express pizzas each week. Not to be outdone, Just Eat recorded the busiest day in the company’s history, taking orders for 1.5 million meals in the last weekend of November. Dark kitchens continued to appear in secondary, low rent and low rate spaces, but within striking distance of their catchments. The delivery sector reached estimated sales of £8.1 billion in 2018 – a real disruptor to both the eating out market and the ‘cook at home’ market. Perhaps in recognition of this, Asda expanded its trial of a pizza delivery service in partnership with Just Eat, whilst at the other end of the scale, Sainsbury’s launched its first Food Court in its recently opened Selly Oak Shopping Park.

The Restaurant Group’s (TRG) shareholders voted in favour of moving ahead with the £357m takeover of Wagamama, giving the group an instant 133 restaurants in the UK, 5 in the US, as well as 58 franchised restaurants across Europe, the Middle East and New Zealand. A hefty price tag, but not as high as the proposed £3.9bn Costa sale to Coca-Cola which has received approval from the Chinese regulator, but still requires clearance from the European Union under the EC Merger Regulation before the transaction can complete.

In response to the growing impact of online, fashion retailers continued to develop their ‘experience’ stores, with foodservice very much an integral part of this. Next cemented partnerships with Gino d’ACampo with a new pizza restaurant, coffee shop and prosecco bar in its Manchester store, Jack Wills’ Espresso Hut opened in Soho, not far from Farm Girl above Sweaty Betty. H&M opened the first ‘It’s Pleat’ instore offer outside of Sweden with a promise of ‘healthyish food’ in the new extension of Westfield London (which by the way attracted a record 50 million visitors in 2018 – who said ‘retail is dead’)?

And last, but by no means least, a plethora of ‘competitive socialising’ experience concepts opened, ranging from miniature golf to darts, ping pong to axe throwing! These all had ‘experience’ at the heart of them, overarching the Street Food, Cocktails and DJ’s that were central to the offers.

Quite a year I think you’d agree and a sure fire sign of the times that the foodservice market never stands still. It is perhaps the most dynamic I’ve ever known it and I personally cannot wait to see what 2019 has in store.