Britain’s £50 billion foodservice sector is in the midst of its most rapid evolution in decades. The rise of the Millennial, a demographic au fait with technology and wanting new and exciting social experiences, is transforming the eating-out segment as a raft of new outlets and formats pop up to challenge the traditional order.
The sector has been on the rise for some time, rivalling home dining for an equal share of the food pound, but this has accelerated rapidly as food becomes a near omnipresent feature of the British social landscape. Figures from foodservice consultancy Horizons show that in the past decade growth in food-serving outlets has been strongest in the pub sector, which has seen a seismic shift from drinks-led to food-led sales. Indeed, there has been a 135 per cent increase in the number of pub-restaurants whose primary food income now exceeds beverages, from 7,600 outlets in 2001 to 13,500 in 2014.
That switch away from pure drinking establishments has been gathering pace since the turn of the millennium, but newer trends are also having an impact. The biggest single factor affecting the catering sector in the last five years – particularly in London and other big cities – is the rise of street food and night markets, according to Peter Martin, founder of analysts GCA Peach. “The challenge for the market is to really understand what’s out there,” he told the Foodservice 2020 Conference at Hotelympia last week. “It is an ever-changing market, and street food is all about experience, the whole vibe. We are a country of experience junkies, and we want to be wowed.”
Millennials have been identified as the key demographic defining these changing times. The group, which broadly encompasses those born between 1980 and 2000, might not spend as much money as older generations, but they eat out much more frequently and are prepared to pay for quality food and drink. They are regarded as much more varied in their habits and adventurous in their food, driving innovation, authenticity and demand in the market.
Simon Stenning, foodservice strategy director at Allegra Strategies, points out that the power of this demographic has taken the sector a little by surprise, becoming as it has, the most powerful force in the market right now. “There is an ageing population over 65, and we expected that would mean dramatic changes for the foodservice market, with large numbers of older people eating out more frequently,” he says. “However, people have been taking their habits with them as they age, and they are not going out as often as we expected. It is in fact the Millennials whose frequency and spend has increased more than any other demographic.”
Some 39 per cent of Millennials polled by GCA Peach said they would attend a street food event this year, with 38 per cent set to attend a live music event, backing up the theory that this group is driven by seeking excitement and experience alongside their food and drink.
Changes are not just afoot on the street though, as a macro trend towards health, balanced by a willingness to indulge and spend a little more for quality, hits the entire restaurant sector. It’s all about the freshest ingredients, with newcomers such as Leon, Benito’s Hat, Red’s and Five Guys providing accessible, healthy food in a fun, modern environment.
The ultimate nod to the importance of the health sector, in December McDonald’s unveiled its concept McDonald’s Next outlet in Hong Kong, a restaurant notable for its large, 19-ingredient salad bar at its heart. Pizza Hut in the UK already offers free, unlimited salad alongside every main meal bought.
These trends bode well for fruit and vegetable suppliers, who will be the ones providing many of the fresh and local ingredients to outlets seeking “authenticity”. Companies such as Riverford Organic are “right on trend”, according to Martin, who also notes that vegetable juice sales are up 19 per cent in foodservice outlets on the back of the rise of juice stores.
Life is not easy though. Perhaps surprisingly considering all this change and excitement, like-for-like growth in the pub and restaurant sector was only 1.5 per cent in 2015, underlining the intensity of competition and how hard it is for operators to make a profit.
That view is backed by analysts at Horizons, who say that growth in the sector is likely to slow in the longer term as overcapacity drives downward pressure on like-for-like sales and competition for new sites intensifies.
“It is difficult to see how the level of growth in food outlets can be sustained in the longer term,” says Horizons’ managing director Peter Backman. “Competition among operators means there will be a struggle to improve like-for-like sales across the sector, keeping menu prices fairly flat and margins low.”
Whichever way you look at it, foodservice is changing, but the good news is the market is very much still there, and that means opportunity for suppliers. “The future of foodservice is secure, whether through marketing or the quality of produce,” says Stenning. “Consumers now habitually want to eat out and it is part of their lifestyle. Marketing will be about engaging with consumers to get them to experience new things. Operators will have to take a basic ‘we eat’ mentality into more of an experience, delivering more than just a meal.”
At the recent City Food Lecture, Future Foundation chief executive Christophe Jouan spoke of the dichotomy of health and indulgence, and these two apparently divergent trends are shaping the modern eating-out scene. For those restaurants and suppliers who get it, there are rich opportunities ahead.
London's changing street scene
You may not have heard of London Union yet, but it won’t be long before you have. A new company founded by Leon’s Henry Dimbleby and Street Feast’s Jonathan Downey, the business has ambitious plans to take over London’s street scene with a dozen local markets and, most eye-catchingly, a major flagship site with 200 traders and 100 bars by 2020.
This is not just the whim of a pair of bearded and check-shirted hipsters either – London Union has the backing of some serious heavyweight foodie names, including Rosie Boycott, Giles Coren, Jamie Oliver, Nigella Lawson, Thomasina Miers and Tom Parker-Bowles.
Q&A: Jason Atherton, chef and owner of Pollen Street Social,London
Do you follow trends or set them?
You need to be mindful of your customers, and what their likes and dislikes are. You want your food to be exciting, of the moment and not following trends. But it’s important that you have brand values and enhance them with innovation.
What’s the future of fine dining?
It will always exist, but there are quite a few changes taking place. It’s getting harder and harder for chefs. They now have two or three restaurants for the day-to-day stuff and then maybe a 10-15 seat diamond establishment for fine dining. Tasting menus will get shorter – people are more health conscious and don’t want 25 courses – but they do still want a special experience.
With the supermarket price war affecting suppliers, is something similar happening in foodservice?
Chefs spend a lot of time talking to farmers and producers. We go through the whole food chain and never once does price come into the discussion. It’s only about quality.
What are the next big trends in foodservice?
I don’t like to predict the future. I never saw Nordic cuisine coming. But I believe some young chef out there will really do modern British [well]. I’d like to see us making more of our regional cuisine, like Lincolnshire, Scotland, Cornish etc. We have some really amazing cuisine. The fresh produce has always been there, we just chose to ignore it for 50 years.
How do you see social media?
You will always have beaters and I don’t read the Twitter trolls. It doesn’t bother me in the slightest. You shouldn’t let that spoil the fantastic vehicle that social media is.
Jason Atherton was speaking at Foodservice 2020 in London
How to get consumers eating healthy
Marketing and clever product positioning can have a big part to play in encouraging diners to select healthier options, research suggests. According to Lin Dickens, marketing director at caterer Bartlett Mitchell: “Marketing is not about selling people things they don’t need, but there is an issue around people wanting to eat more healthily. There was a trial in which healthier food was placed at the beginning and end of the servery in a buffet and customers ate healthier things.”
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