Still A ‘Flat, Fickle And Fierce’ Market—But Room To Grow Too

CGABusinessRestaurants and pubs face a potent cocktail of challenges from rising costs, intense competition and Brexit, CGA’s Peter Martin told the inaugural UKHospitality Conference this week, but the best brands still have plenty of potential for growth.

He summarised the current market as “flat, fickle and fierce”: flat because the Coffer Peach Business Trackershows like for like sales growth of just 0.6% in the last 12 months; fickle because consumer loyalty is fading; and fierce because there are more brands in the casual dining sector than ever before.

Martin also used UKHospitality’s ‘Shaping the Future’ Conference’ to highlight signs from the CGA Prestige Foodservice Price Index that operators are facing steep inflation in the costs of many key food and drink items. They are also being challenged by Brexit, with CGA’s Business Leaders’ Survey suggesting that two thirds (67%) of leaders have been negatively affected by the UK’s decision to leave the European Union—largely because of the impact on staff availability.

On top of that is the risk of saturation in restaurants, which has prompted closure programmes and CVAs from several casual dining operators this year. CGA data shows that there are now 5,000 more food-led venues than six years ago, while the Leaders’ Survey indicates that more than half (54%) of bosses are concerned about the over-supply of sites. Intense competition has led to “brand to brand combat” for every sliver of market share, Peter Martin told the Conference.

But he also identified reasons for optimism, including the finding from CGA’s Business Confidence Survey in May that three quarters (75%) of sector leaders are optimistic about prospects for their business over the next 12 months—11 percentage points higher than three months earlier. CGA research also suggests that the frequency with which people go out to eat and drink remains stable.

The turbulence in out-of-home eating and drinking makes it vital to stay on top of fast-moving trends spotlighted by CGA at the Conference—like soaring sales of craft beer and premium drinks brands, and the increasing popularity of food delivery. Martin also identified key priorities for the sector, like the need to motivate, train and retain good staff and the importance of embracing emerging technologies like apps, contactless payment and voice-control ordering.

For brands that can provide consumers with the experience, technology and value they want, there are still substantial opportunities—and Martin reminded the Conference that challenging times like these can be a springboard for exciting new food and drink concepts to launch and grow.