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GEAR UP FOR HIGHER SPENDING

13 August 2007

Despite being urged to re-learn the art of cooking good food at home, not least by
a brigade of TV chefs, in four years' time Britons will be spending about a third of
the household budget for food and drink outside the home.

This is the view of foodservice information specialists Horizons, who forecast that in 2011, of the £140 billion or so that Britons will spend in total on food and drink, £45 billion will be spent in eating out of the home. That will be an 11% increase on the £37.6 billion spent on eating out last year. Horizons managing director Peter Backman says this growth in preferring to eat out rather than cooking a meal at home is being driven by hectic lifestyles and the fact that it is often viewed as being cheaper to eat out than buy the ingredients to cook a meal.

Despite being urged to re-learn the art of cooking good food at home by a brigade of TV chefs like James Martin (right), in four years' time Britons will be spending about a third of the household budget for food and drink eaten away from home

"People will continue to buy in more from supermarkets - but foodservice will continue to grow faster - as it has done over the last 20 years. But the growth
won't be dramatic, it's a long term trend. This is all due to a number of factors like
the increased number of places to eat and drink, from coffee bars through to restaurants of all types. And this has happened while the number of cost sector eating places like works canteens has declined. The result is that people are eating in the profit sector more often.

No bonanza
However, Backman sees no great bonanza there for the taking. While people are eating out more often and spending a bit more, average spend will increase marginally.

"Average spend per meal last year was just £4.35 across all sectors and in 2011 it will be £4.53 at current values and a lot of that is the better end of the restaurant market making
up for some of the ground they've lost over recent years.
"Perhaps best placed to take advantage of current trends are what's called casual dining in the US as seen with chains like Loch Fyne, Harvester and much of the pub sector here in the UK. Where these places score is offering good value for money as well as being a good place to entertain families and friends. They're also places where the menu isn't too stretched - you don't need to know French in order to choose from the menu!"

Backman feels that the Fish & Chip shop sector is similarly placed to do well in future - providing of course that the offer is right."The thing is, despite all the hoohah about foreign food and cooking that we've still a very traditional market in the UK. We've recently done some research ourselves among several hundred eating places all types, asking them about top sellers. Among the top three selling dishes are invariably things like Fish and Chips and Steak. Only two foreign dishes featured in the top ten in Pizza and Lasagne. It sure is still a traditional market.

Tough choices
"But it's also a very tough market out there, with very tight margins. Though costs of entry are low it isn't easy going, with a lot of competition. The options aren't easy either...you've got to keep looking to save on costs but there's a limit to how much you can go on doing this. Or you can look to increase sales, often by opening another shop...but you can't be doing this all the time.

"What you can be doing is to look to increase business through extending the offer by trading throughout the day with breakfasts, lunches and snacks. While nobody eats Fish and Chips for breakfast there is an opportunity with things like rolls and of course coffee. This is what other restaurants are making a good job of right now, places from Carluccio's through to Starbucks. There is opportunity here, though you may well have to invest to get that added piece of business. I do advise people in Fish and Chips though to get out and take a good look at what other sectors are doing."

With the slow growth in average spend Blackman feels that it would be unwise for Fish & Chip operators to rush out and invest in extra restaurant seating areas, insisting: "If you're making £10 a square foot on take away you often have to make five times that on a square foot of restaurant area. You've got to be sure about the returns on the investment and that's often so difficult the only way you can really tell is to go ahead and do it. Making money from restaurants is very difficult and margins again are very tight.

Customer focus
"Regardless of what you do though the important thing is to give the customer a better quality experience. What ever you are doing it's got to be better than last year. You need concentrate on what you do best - and in doing it better.

"Fish and Chips is a very traditional business, where menus and style of service have changed little over the last 50 years. But you should still be looking for simple ways to increase turnover, even like little extra such as sauces that can bring in 20 or 30 pence more per sale. Upselling like this is a big failure throughout foodservice - there isn't near enough of it. At the very least a customer should be asked if they'd like some X, Y or Z with that."

Another area where Backman feels Fish & Chips ought to tighten up - and be wary - is the delivery of customer service: "Things aren't simple here. A lot of customers actually do find brands like McDonald's, KFC and Pret a Manger friendly and do like going there. Fish and Chip shops must serve customers quickly but they must also keep on friendly terms with the customer and engage with them. That's one of the traditional strengths of the independent, as is the ability to change things more quickly than the chains.

"However, my key advice is to be really sure of what you are doing and to stay aware of changes in the market in terms of prices, products and what the consumer is up to. Do be aware of market trends and pay attention - but don't follow them slavishly - change only when you are sure that things are right for your own business."

Backman: "Do be aware of market trends and pay attention - but don't follow them slavishly"