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22 S
epte
mbe
r 20
10
Developments in foodservice
- Presentation for Food from Denmark-
Horizons: Foodservice Architects
• We help our clients build successful businesses in foodservice
• 100% focused on foodservice and hospitality in UK, Europe, USA, UAE
• We work for:• Investors• Operators• Distributors• Manufacturers
Menurama
• 6-monthly menu collection and analysis• 400 menus• 100 chains• 4 regions• 36 menu characteristics• 10,000 data points
• Trends since 2003• Used for:
• Strategic and tactical review of customer offers and prices• Identifying emerging trends
QuickBite
• Qualitative survey of consumers’ eating out behaviour• By channel and outlet type• 4 times a year• 1,000 adults aged 16+ interviewed
• Questions• How often - in the last 2 weeks - have you eaten food
away from home• In which type of establishment did you obtain the last
meal away from home?• How much did your own meal cost?• In the year ahead, are you likely to eat our more, less, or
about the same as you did last year?• Plus: special questions
Foodservice and Retail
Retail and Foodservice –Feel the differenceRetailOrderedSystems-drivenThe customer has to work
FoodservicePeople centric“Anything else to make your meal special?”Entrepreneurial
Institutions >>
Retail
Foodservice plus Retail …
Total Food and Drink: £140 billion
30%
Source: Horizons with IGD
Foodservice
Foodservice has given the retail world:•Pizza•Indian food•Chinese food•Burgers•Oven-ready chips•Ice cream•Coffee
Overview of foodservice in the UK
Operating sectors
• Restaurants• Quick Service• Pubs• Hotels• Leisure• Staff Catering• Health Care• Education• Services
• Contract Caterers• Travel
Caterers spend £41 Billion each year on ...
FoodSoft drinksAlcoholLabourDisposablesCleaning chemicalsPowered equipmentRent/Rates etcAll other
Food and drink
Labour
Other
Equal shares:
Food and drink 1/3Note: Food alone 1/4Labour 1/3Other expenditure 1/3
Foodservice and “Near foodservice”
• Mainstream foodservice• Popular foodservice• Hotels/leisure• Institutional
• Vending• Blurring: foodservice/retail
• On the go• Retailers’ home delivery• Retail “eating out/eating in”
• What it’s not• Accommodation, travel, gambling• Retail
0.0
0.5
1.0
1.5
2.0
2.5
Restaurants QSR Drinkingplaces
Hotels Leisure StaffCatering
Health Care Education Services
Meals
Billion
Meals served by UK foodserviceMeals served 2009:
Total: 8 billion
Source: Horizons
0
5
10
15
Restaurants QSR Drinkingplaces
Hotels Leisure StaffCatering
Health Care Education Services
€ b
illion
Sales value of UK foodservice Total Food and Beverage sales 2009:
£41 billion
Source: Horizons
Top 10 brands
Restaurants
• Pizza Hut• Pizza Express• Nando's • Frankie & Benny's• Little Chef • Prezzo • ASK • Prezzo • Café Rouge • Zizzi
QSR• Greggs • Subway • McDonald's • Costa Coffee • KFC • Starbucks • Burger King • Domino's Pizza • Caffè Nero • Ben & Jerry's
Who have outperformed their sector?
1. Carluccio’s• Sales: +8.0%• Sector: -1.1%• Maximise revenue – cover
costs throughout the day
2. JD Wetherspoon• Sales: +1.2%• Sector: -1.5%• Maximise customer spend
on profitable lines
3. Domino’s• Sales: +17.5%• Sector: +2.1%• Increase sales by being
available everywhere, all the time
• The lessons?• It’s possible to grow in
the midst of a recession• Be available• Offer what the customer
wants
Source: Market Dynamics Toolbox, Key Brands and Accounts
How big is foodservice in the UK?
• Food, drink sales to consumers £42.0 Bn• Food sales £31.2 Bn• Drink sales – alcoholic & soft drinks £10.8 Bn• Share of Retail + Foodservice 30%
• Food sales to operators £10.1 Bn
• Food ex-factory shipments £7.1 Bn
• Per year, it serves 8.3 Bn meals
• Number of outlets 259,000
Pricing
£3.00
£4.00
£5.00
£6.00
£7.00
£8.00
£9.00
'Jan 06 'Jan 07 'Jan 08 'Jan 09 'Jan 10
Avera
ge m
en
u p
rice
Starter Main Course Dessert
Dish prices
Source: Menurama
Starters, DessertsPrices go upConsumers stay away
Price of a 3 course meal Widening difference
£0.00
£5.00
£10.00
£15.00
£20.00
'J an04
'J ul04
'J an05
'J ul05
'J an06
'J ul06
'J an07
'J ul07
'J an08
'J ul08
'J an09
'J ul09
'J an10
Pri
ce o
f 3
co
urs
e m
eal
Restaurant
Pub
Source: Menurama
Promotions
0
10
20
30
40
50
60
M09
A M J J A S O N D J 10
F M A M J
Nu
mb
er
of
off
ers
Other offers
%/£ off
Meal Deals
2 for 1
Meal Deals
21%
Meal Deals
36%
Still eaten there
Gone somewhere else
Not eaten out
What would you have done if you hadn’t used a discount voucher?
Source: QuickBite1,000 adultsJuly 2010
• 10% of adults used a voucher in last 2 weeks
• Especially in pizza restaurants and take aways
Inflation: The Margin Squeeze
-8%
-3%
2%
7%
12%
2006
2007
2008
2009
2010
Input prices
Output prices
Margin squeeze
Drivers – consumer issues
• More change• Fickle consumers – more choice• Changes in lifestyle• Demand for “comfort”• More “on the go”
• More eating out – at expense of at home• Health/wellness vs obesity/heart disease• Price
• Meeting (lower) price expectations
Food and Marketing
Top 5 dishesSource: Menurama Winter 2009/2010
Restaurants• Pizza• Beef/cheeseburger• Steak• Chicken pasta• Chicken breast
Pubs• Beef/cheeseburger• Steak• Fish & chips• Chicken breast• Chicken burger
QSR (S’wich/coffee shops)• Sandwich• Muffin• Panini• Baguette• Croissant
Hotels• Steak• Beef/cheeseburger• Fish & chips• Pizza• Grilled salmon
2009
• Fairtrade• Farm assured• Local• Organic• Sustainable
2010
• Fairtrade• Farm assured• Five-a-day• Local (grown or sourced)• Line-caught fish• Rustic• Slow cooked / roasted• Sustainable
2008
• Dolphin-friendly• Organic• Vegetarian
Dixie Fish and Chips:Battered cod fillets served with fries, lemon and a side of creamy Trinity dressing
Source: Menurama
Meeting changing ethical trends
Hand Battered Fish and ChipsFillets of battered Pacific cod from sustainable sources, served with peas, fries, lemon and a side of our own Trinity dip
Hand Battered Fish and ChipsFillets of hand battered cod from sustainable sources served with peas, fries a side of our own creamy Trinity dressing
Fish and Chips – at Old Orleans
Quality Assurance / Responsible Production• Consumers increasingly demanding about their food
• Demand fuelled by celebrity chefs, press, documentaries
• Sales of premium foods suffered in the recession
• Top terms on menus - January 2010:• “Free range” (eggs, chicken, sausages)• “Organic” (meat, fish, vegetables, cheese, bread, ice cream, biscuits,
baby food)• “Home made” (meat, fish, soup, ‘English’ dishes: crumble, cottage pie,
roast Sunday lunch)• “Farm assured” (chicken, meat)• “Corn fed” (chicken, eggs)• RSPCA “Freedom Food” (chicken): on menus since 2006• “Sustainable” (fish, seafood)• “Outdoor reared”, “Outdoor bred” (meat)• “Fairtrade” (coffee): on menus since 2004• “Dolphin friendly” (tuna)• “Local”, “Farm fresh” (cheese, meat)• “Red Tractor” (meat): on menus since 2005
Quality Assurance / Responsible Production
other 2%
local /farmfresh2%
dolphin friendly2%
outdoor rearedbred /
3%
organic26%
fairtrade2%
sustainable3%
free range30%RSPCA Freedom
Food4%
corn fed5%
farm assured5%
home made16%
“Other” includes Red Tractor, hand selected, hormone free, traceable etc
Source: Menurama
J D Wetherspoon’s Curry Club
• Direct engagement with and feedback from consumers
• Targeted channel for operators to spread promotional messages
• Resulting in increased brand loyalty
Social Networking
Giraffe
Scream pubs (Mitchells & Butlers)
• Pre-dining research• at outlet, dish and nutritional level• 80% have online menus, 66% downloadable menus
Impact of the internet: fixed and mobile
Nando’s
Source: Menurama
Structure of the Market
A 25 year trend
0
2
4
6
8
10
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
Billions
of m
eals
serv
ed p
er
year
Source: Horizons
Long term trends shown in terms of volume (Meals) rather than purchases (£) because inflation can distort the picture
+0.8% pa growth in numbers of meals served
Numbers of meals
0
1,000
2,000
3,000
4,000
5,000
6,000
1981
1983
1985
1987
1989
1991
1993
1995
1997
1999
2001
2003
2005
2007
Mill
ion
s
Commercial
Non-commercial
Source: Horizons
Decline in Non -Commercial sector:Staff cateringHealth careEducationServices
Increase in Commercial sector:RestaurantsQSRPubsHotelsLeisure
During 2010
• People continue to eat out• But spend less
• Meal deals help• Operators facing a squeeze on their margins
• Inflation helped them get out over it in early 2009• 2010
• January snow – down dramatically• From mid January – market picked up slowly• Spring – generally better than expected but not great• Summer - disappointing
Beyond 2010
• Next few months - continuing modest growth• But stones in the road:
• Impact of summer budget• More taxes• Cost sector cutbacks• Less to spend• Inflation• Economic fragility• Rising unemployment
• Leading to:• Market uncertainty• Possible decline• Non-commercial sector – will decline
Distribution to the foodservice sector
Ambient
Chilled
Fresh
Frozen
Temperature profile of food purchases
Total Food purchases 2009:
Total £10.1 billion
Source: Horizons
Del Whlsl
Contract
C&C
Retail/Other
Distribution channels for food purchases
Total Food purchases 2009:
Total £10.1 billion
Source: Horizons
Brakes 3663
Booker Country Range
DBC Fairway
Caterforce Other contract
All Others
• Fragmented• Top 2 have 36%• The next 5 have 17%
• But• Sector/temperature
concentration
The major players in food distribution
£10.1 Billion
Source: Horizons