That was the year that was…

26/01/2015 - 11:48
It’s been another year of steady growth for the eating out industry, with ‘Fast Casual’ the sector every operator wants a slice of.

But with competition ever more ferocious, it’s never a walk in the park for even the biggest and most powerful chains – particularly at the mid-to-lower end of the market where discounting or ‘good value’ is still the name of the game for chains like Greene King’s Hungry Horse and Mitchells & Butler’s Sizzling Pub and Pizza Express.

Despite consumers still feeling the pinch, and with wages barely moving, confidence remains fragile, households still allocated 5% more of their total leisure spending to restaurant meals than they did in 2013. Eating out continues to become a more common activity and less of an occasional treat.

Well-known restaurant and pub brands are where they’ve been heading – attracted by the certainty of a reliable offer. And they’re taking their children with them in increasing numbers – the NPD Group says number of families dining out in pubs with children is up 5.5% this year, with family dining now accounts for 20.8% of all meals.

Financiers have been as pleased by the sector’s progress as the eating-out public – Hony Capital, one of China’s leading private equity firms, paid Gondola £900m for Pizza Express; US private equity firm TPG paid the Kayes £304m for Prezzo; and Hugh Osmond, a former PE owner, paid Tragus £37 million to add Strada to his growing portfolio at Sun Capital.

Groups that grew strongly in 2014 included names such as Loungers, Bill’s, Côte, Prezzo (which opened its 250th just recently), Leon, Carluccio’s, JD Wetherspoon and Five Guys.  The Restaurant Group, with its 450 restaurants and pub restaurants spread across leading names such as Frankie & Benny’s, Chiquito and Garfunkels, bid farewll to chief executive Andrew Page but looks well set to continue on its majestic way under new man Danny Breithaupt, a member of the senior team for many years.

The premium burger market, where Five Guys and Byron are leading the way with impressive figures, was one of the year’s success stories, driven partly by consumer desire to customise their meals. In response, McDonald’s said it would be focusing strongly on more “customizable options” in the coming year.

The “I’ll have it served my way” trend has partly been fuelled by street food’s amazing success in the UK. Offering a broad menu of flavoursome good-value options for people to create their own tasty meals, the concept has been making established restauarant operators sit up and see what they can learn from it.

Street food, with its spiciness and foreign ingedients, may have helped encourage another of the sector’s success stories this year – ethnic cuisine. Groups like Giggling Squid, Wagamama and a series of Mexican restaurants such as Wahacca and Chimichanga plus Italian chains have all witnessed impressive growth. The sub-sector’s strength persuaded Taco Bell to open its first UK high-street restaurant, to add to its three food court franchises.

Free-from dishes are also up this year, by 9%, a trend which can only accelerate as the new allergen legislation begins to reshape menus across the board. From December 13, staff will be required to supply all the necessary allergen information on request to customers about the food and drink on offer. The costs for food businesses gearing up for new EU Food Information Regulations, the British Hospitality Association has estimated, could be up to £200m a year.

With up to 2% of people suffering food allergies and up to 20% believing they have some kind of food allergy, according to NHS figures, there could be millions of requests for information for food businesses to deal with. The possible upside is a new business stream if restaurants can inspire confidence amongst the allergy-afflicted. But when Unilver surveyed hospitality businesses a few months ago, the signs were not looking good: over 40% of restaurateurs were unaware of the new law.

Reflecting even more poorly on the sector, perhaps, is that hospitality and catering employ the highest percentage of people who work below the living wage, according to new research by services company, KPMG.

The research found that over 80% of catering and kitchen assistants, 85% of waiters and waitresses and 90% of bar staff are all working below the living wage, of £7.65 an hour nationally and £8.80 an hour in London. There are 456,000 kitchen and catering assistants employed in the UK, paid on average £6.89 and it’s estimated that 370,000 of those employed in the sector are paid below the living wage.

Finally, as Christmas approaches and the sector gears up for its busiest time of the year, peace and goodwill is not being offered to every punter. Diners who arrive late or turn up to their reservation with more or fewer people in their party than they booked for have been voted 'the most frustrating' in a survey detailing the opinions of more than 100 restaurant operators on the habits of customers. And as for no shows…. Merry Christmas to (almost) everyone.

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