Trading in the UK’s hospitality sector was so tough during 2012 that operators have become resigned to the fact that current levels of business are the new norm, and survival depends very much on maintaining consumer footfall with offers and innovative menus.
In its Annual Review of 2012, Foodservice consultancy Horizons says that, despite experiencing another year of negative growth, the country’s foodservice operators had coped well and had emerged in good shape for 2013 and the possibility of some growth in the market.
Horizons’ managing director Peter Backman commented:
“The last few years have demonstrated that the majority of strong businesses survive, and that operators across all sectors and within the supply chain, have learned to cope. They have developed the systems, and mind-sets, that are effective in exceptionally tough times, and invested money in businesses that can actually deliver profit and growth.”
Restrained consumer confidence
Backman added that lack of growth in the market during 2012 was fuelled by restrained consumer confidence, largely due to fears over unemployment. Low interest rates had also left consumers with less money in their pockets which, together with intensive competition amongst foodservice operators, meant that people were becoming more choosey about where, and when, they ate out.
The battle for consumers
“The continued use of vouchers and money-off deals means that the battle for consumers continues, particularly amongst mid-spend, high street operators. Operators are also experiencing competition from the retail sector, where keenly priced meal deals are still popular.
While 2012 was a significant year for tourism and the promotion of the UK as a tourism destination with the Queen’s Jubilee and the London Olympics, these events did little to improve overall spend on eating out.
Looking ahead to 2013, however, Backman has some grounds for optimism:
“The overall position has been characterised by slow decline of the sector over the last few years – but we suspect that this has been a result of a certain amount of culling of inadequate operators. Some sort of bottom has now been reached or will be in early 2013. At some point during 2013 we expect consumer confidence to start returning and spend on eating out will start to rise again.”
The need for innovation
Backman said the year ahead would be characterised by the continued need for operators, and suppliers, to attract consumers with innovation in terms of food offers and new service styles, which perhaps might include a more embracing return to all-you-can-eat buffet styles of service.
Discounting will continue, but operators will be careful about how they target these offers and ensure the marketing behind them serves to build a stronger relationship with customers as well as to maintain their interest with special offers.
“We are unlikely to see operators abandoning discounts and money-off deals this year as consumer confidence needs to be more robust to sustain an effective price rise.”
Ethical issues important
Horizons also predicts that ethical issues regarding sustainability, food provenance and ethical trading, which have become less important over the past few years, will once again come to the fore during 2013.
About Horizons
Horizons provides fresh insights into the foodservice market, based on longstanding involvement and knowledge about the market and its supply chain. The company provides facts and reports, guidance and learning, workshops and networking for operators, manufacturers, distributors and investors in the UK and across Europe.
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