KN40054

KEY NOTE Report Plus : RESTAURANTS : September 2004

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This report covers: restaurants, pubs and hotels, burger restaurants, pizza/pasta restaurants, roadside restaurants, chicken restaurants, binge drinking, obesity,

Companies covered include: Compass, Group, Whitbread, McDonalds, Burger King, The Restaurant Group, Pizza Express, ASK Central, Nando's Chicken, Kentucky Fried Chicken, Wimpy, Tragus, Holdings, Conran Restaurants, Gaucho Grill, Giardino, La Tasca Restaurnats, Paramount, Signature, Restaurants, Yo! Sushi,

EXECUTIVE SUMMARY

This Key Note Market Report Plus on restaurants covers consumer expenditure on sit-down meals. Expenditure on alcoholic drinks to accompany meals is excluded. The markets for takeaway food and canteen meals are not considered, and are covered in the Key Note Market Report Plus Fast Food & Home Delivery Outlets. In 2003, consumer expenditure on restaurant meals amounted to £12bn at retail selling prices (rsp), a rise of 2.8% on 2002. Between 1999 and 2003, the restaurant meals market grew in value by 17.4% and now accounts for a quarter of the total consumer catering market.

In the UK, the choice of restaurants is characteristically broad as a result of consumer willingness to adapt to new styles of eating and drinking from all over the world. Japanese sushi, Spanish tapas and Indonesian restaurants have joined the more traditional curry houses. In addition, French, Italian and Greek restaurants can be found in the majority of British towns. In 2003, the most traditional British venue — the local public house (the `pub') or hotel — accounted for 16.3% of the total restaurants meal market, followed by burger restaurants (13.8%). Pizza/pasta, roadside and chicken restaurants each accounted for a lower share of the total market. However, recent innovations include Nando's — a restaurant that sells Portuguese chicken recipes — which has grown rapidly to 86 outlets.

BMRB International Ltd's Target Group Index (TGI) survey shows that of the adults who ate in a restaurant in the last 12 months, two-thirds visited for dinner and around half ate lunch in a restaurant in the last 3 months. Frequent usage of restaurants is closely correlated to social grade and income, with 83.6% of ABs visiting restaurants in the evening in the last 12 months. Another important factor is whether both partners in a household are working, which makes it practical and affordable to eat out regularly.

Younger adults tend to prefer branded restaurant chains, although the majority of restaurants focus on families. Research conducted specially for Key Note found that, in 2004, the usage of branded chains continued to decline, despite their high profile in the market. Usage of the leading restaurant brand Pizza Hut (fast-food brands such as McDonald's were not prompted) decreased by six percentage points, and most other chains — Brewers Fayre, Harvester, Little Chef, Beefeater, etc. — recorded a lower penetration than 3 or 4 years earlier.

Since 2001, growth in the restaurant meals market has been relatively slow, as a result of the slowdown in demand for fast food. This is due partly to market saturation, the obesity debate and the rise of healthy-eating values. Fast-food chains are remedying this problem with improved menus and McDonald's — the UK's and the world's largest restaurant chain — announced that it would stop offering 'super-size' meals to help tackle obesity. Given these initiatives and rising consumer demand for eating out, Key Note forecasts that, between 2006 and 2008, growth in the restaurant meals market will remain between 5% and 5.9%.

TABLE OF CONTENTS

Text © 2004 Key Note

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Last updated by Amanda Porteous November 2004