Branded restaurants display recession proof growth with sales estimated to reach £11.6 billion by the end of 2012, representing annual growth of 6.5%
According to Allegra’s Project Restaurant 2012 report, published in association with Barclays, the growth of the branded restaurant market is significantly outperforming the wider retail and hospitality markets. Taking a 21% share of the overall eating out market value, the branded restaurant sector is one of the key reasons for confidence in the total eating out turnover growth forecast of 3.9% for 2012.
The report, which surveyed over 18,000 consumers about their eating-out habits and close to 300 industry leaders about their expectations for the industry, identifies the usage of branded restaurants will continue to grow over the next 12 months as the majority of consumers, 70%, expect to eat out with the same frequency.
The growth reflects the combined effect of like-for-like increases boosted by inflation, together with the physical expansion of outlets. Allegra’s report segments the branded sector into pubs, casual restaurants and fast food. In the branded fast food chains, expansion growth has been led by key players McDonald’s, Domino’s and KFC, who have the highest value forecast growth of 7.9% reaching £4.6 billion. Outlet growth for branded casual chains of 4.6% is driven by Prezzo adding 45 stores and growth of 31%, PizzaExpress with 31 new stores and Carluccio’s adding 16 outlets. Expansion is a key feature of casual chains, reaching 3,777 outlets and growing by a total 166 outlets in 2012. The branded pub restaurants are significantly outperforming the overall pub market, with key player JD Wetherspoon still leading expansion.
The frequency of visits and footfall in branded restaurants are being upheld by significant discounting activity, with at least 70% of the Top 50 branded restaurant chains activating promotional discount programmes. Over half of consumers regularly use discount vouchers when eating out, with 1 in 6 stating they would longer visit an outlet if discounting ceased. Furthermore, there is evidence to suggest that in order to maintain frequency levels, 28% of consumers more regularly visit lower priced restaurants in the past year in a bid to save money, and 11% more regularly visit fast food outlets instead of other restaurants. This is due to 40% of consumers having low confidence in their future incomes and as a result 60% are spending cautiously when eating out. Nevertheless, 1 in 3 consumers ensure they have enough money to spend on eating out each month.
Long term growth prospects remain positive with increased spend, supported by continued inflation forecast at 2.0%, and expansion growth of 5.7% contributing to the estimated branded restaurant turnover growth of 7.8% in 2013 to reach £12.5 billion. Allegra Strategies predicts that the branded restaurant market will continue this path and grow to exceed 13,800 outlets and reach £14.5 billion turnover by 2015.
Speaking at this year’s Eating Out Summit, Anya Marco, Director of Insight, Allegra Strategies, commented: “Branded restaurants are out-performing both the wider hospitality market and the overall retail sector. The strength of a brand should not be underestimated in the restaurant market. With established marketing prowess, delivery of consistency and familiarity, and the ability to capitalise on new outlet expansion opportunities, branded chains will continue to drive growth in the market.”
Anya continued: “It is clear that UK consumers are refusing to give up on affordable eating out. The report shows that visit frequency is expected to remain stable and people are determined to continue to enjoy themselves when they can. By focusing on innovative ways to deliver added value for money, branded restaurants can benefit from a greater share of consumer spend on experiences that cannot be easily replicated at home.”