New data released today by Cardlytics reveals that consumers are swapping fries for flat whites and dining-out for eating-in. This data is based on the spending insights of 2.5 million UK bank customers.
Spend on dining overall grew by only 3% year-on-year in 2018, compared to 9% in 2017 and 17% in 2016, revealing the underlying challenges facing the sector, and leading to the well-publicised downsizing of food chains and deep discounting.
Despite significant headwinds, delivery services continue to outperform the sector, up 19% in 2018, and single-handedly driving growth in UK dining overall from a category level. This has been led by consumers spending more per order on takeaway services, specifically older consumers.
However, despite consumers holding back from spend on dining, the data reveals they are not willing to part with their flat whites. Spend in coffee chains remains resilient, up 5% in 2018, greater than any other category. Among the best performers were Benugo, Café Nero and Paul.
Consumers are seemingly willing to trade in spend on an occasional cocktail to maintain their caffeine fix, as spend growth in bars slows, up just 1% in 2018, compared with 8.3% the year prior.
Health trend eats into fast food market share
Fast food vendors were among the most significantly impacted by the slowdown, with spend growth reduced to 1% in 2018, reversing a period of strong performance in the sector; 2017 alone saw an 11% increase in spend. This shift is driven primarily by younger consumers (those aged between 19-28 years) whose spend on fast food declined by 2% in 2018.
Average spend per trip in fast food chains has also steadily declined in recent years, with consumers spending just £6.28 on average per trip in 2018 compared with £6.58 in 2015.
Burger and fried chicken brands saw some of the largest declines in spending, down 7% and 6% respectively in 2018, as fast food chains felt the brunt of the rising health food trend. The data shows consumers are opting for healthier and trendier on-the-go options, offered by the likes of Leon, EAT and Pret a Manger, with spend on salads, soups and sandwiches up 5%.
Appetite for delivery grows
However, it is not all doom and gloom for fast food brands, many of which benefit from the uptick in the use of delivery services. Food delivery services continued its streak of stellar spending growth in 2018, up 19% year-on-year.
The average spend per order on food delivery services also continues to grow year-on-year, bucking the broader sector trend and even outpacing spend per trip at traditional casual dining restaurants. Spend per order on food delivery has risen incrementally from £18.97 in 2015 to £20.56 in 2018, compared with a decline from £21.73 in 2015 to £19.95 in 2018 at physical restaurants. Interestingly, it is older consumers who are driving growth in spend per order; those aged between 49-58 years spent on average £21.95 per order in 2018, compared with those between 19-28 years who spent just £19.30.
Hungry app users continue to be attracted by the convenience of choosing and paying for their food in one place without having to leave the comfort of the sofa, which is driving the dramatic growth trajectory for the category, which comprises the likes of Just Eat, Deliveroo and UberEats.
However, traditional food-to-go brands are taking heed of the popularity of delivery apps and responding by innovating their service models. McDonald’s and Greggs are among the brands who have recently introduced their own click-and-collect pre-order services, powered by apps, to optimise speed and convenience for walk-in customers.
Duncan Smith, Head of Business Development at Cardlytics UK, said: “Delivery services continue to be the big success story in the UK. Powered by the ease and speed of delivery apps, as well as endless choice, it’s unlikely this stellar growth will slow.
As consumers increasingly opt for eating-in over dining-out, traditional bricks-and-mortar restaurants are feeling the pressure. Yet, facing into the headwinds by embracing these platforms, as well as other consumer trends, could well pay dividends. Tapping into areas like door-to-door delivery and click-and-collect, a desire for healthier choices and other new marketing platforms could be the recipe for success for brands in 2019.”