| KN52043 |
| KEY NOTE FAST FOOD AND HOME DELIVERY OUTLETS : May 2003 |
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This report covers: fast food, sandwiches, burgers, fish and chips, pizzas, chicken, ethnic foods,Chinese meals, Indian meals, coffee shops, soup bars, takeaway restaurants, fast food restaurants,
Companies covered include: McDonald's Restaurants, Greggs, Pizza Hut, Kentucky Fried Chicken, Prêt-à-Manger, Burger King, Domino's Pizza, Perfect Pizza,Wimpy restaurants Group, Compass Group, Subway, Benjy's Group, Deep Pan Pizza Company, Delifrance, Fast Food Systems, Favourite Fried chicken, O'Briens Irish Sandwich Bars, Spud-U-Like, Coffee Shops, Caffé Nero Group, Coffee Republic, Costa, Starbucks Coffee Company UK,
EXECUTIVE SUMMARY
| The UK market for fast food and home delivery outlets, as defined by this report, includes both branded fast food chains and independent outlets selling hot or cold eat-in food without table service, or takeaway food. The market was worth an estimated £7.82bn in 2002, with sales growth of 4.6 percent at current prices during the year. Between 1998 and 2002, the market increased in value by 19.4 percent at current prices, outperforming growth in the UK catering market as a whole. |
| The largest market sector, and one of the most buoyant, is sandwiches. Shorter lunch breaks, consumer tastes turning to light lunches and snacks, and the spread of more branded sandwich outlets across the UK have all contributed to sales growth. The second-largest sector is burgers. However, the burger market has been one of the weaker-performing sectors in 2002, with price discounting and competition from other fast food brands affecting sales. Both the pizza and chicken sectors have benefited from consumers switching from burgers. Chicken outlets continue to expand and emphasise their family-dining options, while home-delivery pizza sales, and sales from new outlets in shopping parks, leisure parks, and transport terminals, are a key element in pizza sector growth. Sales growth in the fish and chips sector has improved in 2002 when compared with 2001. |
| The `other' fast food and home delivery outlets sector includes a variety of outlets, such as coffee shops, Indian and Chinese outlets, sushi and noodle bars, soup bars, doughnut, muffin, and other pastry shops. Sushi and noodle bars saw healthy growth in 2002, along with coffee shops. The latter have diversified their menus and increased sales of sandwiches and light meals. |
| McDonald's and Burger King take the majority of sales in the burger sector, but both suffered from weaker sales in 2002 — McDonald's recorded its first loss since 1965 during the year, while Diageo sold the Burger King brand at a much lower price than originally anticipated, because of the difficult trading conditions in the market. KFC and Pizza Hut are the leading players in the chicken and pizza sectors respectively. Branding has increased in the sandwich sector, with chains such as O'Briens Irish Sandwich Bars and the US brand Subway increasing their market presence. Market leaders Pret A Manger and Greggs continue to grow. |
| The pace of outlet openings, particularly in the burger sector, is likely to slow in the next few years. The saturation of London by sandwich bars and coffee shops will also lead to the expansion of these catering concepts elsewhere in the UK. |
| Sales growth in the period between 2003 and 2007 is likely to be lower than in the previous 5 years, reflecting fewer new openings, increased competition and mature markets in some sectors. |
TABLE OF CONTENTS
| Executive Summary 1 |
| 1. Market Definition 9 |
| REPORT COVERAGE 9 |
| MARKET SECTORS 9 |
| Sandwiches 9 |
| Burgers 9 |
| Fish and Chips 10 |
| Pizza 10 |
| Chicken 10 |
| Other 10 |
| MARKET TRENDS 10 |
| Cash-Rich, Time-Poor Consumers 10 |
| Outlet Expansion 11 |
| Menu Diversification 11 |
| Geographical Diversification 11 |
| Core User Groups 11 |
| Increased Competition 11 |
| ECONOMIC TRENDS 11 |
| Population 11 |
| Table 1: UK Resident Population by Sex (000 and percent), Mid-Years 1998-2002 12 |
| Gross Domestic Product 12 |
| Table 2: Index of Growth in UK Gross Domestic Product at Current Prices (index 1995=100), 1997-2001 12 |
| Inflation 13 |
| Table 3: UK Rate of Inflation ( percent), 1998-2002 13 |
| Unemployment 13 |
| Table 4: Unemployment Rate and Actual Number of Unemployed Persons ( percent and 000), 1998-2002 13 |
| Household Disposable Income 14 |
| Table 5: Index of Household Disposable Income (index 1971=100), 1997-2000 14 |
| MARKET POSITION 14 |
| The UK 14 |
| Table 6: The UK Catering and Fast Food and Home Delivery Markets by Value at Current Prices (£bn at rsp), 1998-2002 15 |
| Overseas 15 |
| 2. Market Size 16 |
| THE TOTAL MARKET 16 |
| Table 7: The UK Fast Food and Home Delivery Market by Value at Current Prices (£m at rsp), 1998-2002 16 |
| Table 8: Retail Price Indices for Restaurant Meals and Takeaways and Snacks, and the General Retail Price Index (index 13th January 1987=100 and percent), November 2001- November 2002 17 |
| by MARKET SECTOR 18 |
| Table 9: The UK Fast Food and Home Delivery Market by Sector by Value at Current Prices (£m at rsp and percent), 2002 18 |
| Sandwiches 18 |
| Table 10: The UK Sandwich Sector by Value at Current Prices (£m at rsp and percent), 1998-2002 19 |
| Burgers 19 |
| Table 11: The UK Burger Sector by Value at Current Prices (£m at rsp and percent), 1998-2002 20 |
| Fish and Chips 20 |
| Table 12: The UK Fish and Chips Sector by Value at Current Prices (£m at rsp and percent), 1998-2002 20 |
| Pizzas 21 |
| Table 13: The UK Pizza Sector by Value at Current Prices (£m at rsp and percent), 1998-2002 21 |
| Chicken 21 |
| Table 14: The UK Chicken Sector by Value at Current Prices (£m at rsp and percent), 1998-2002 22 |
| Other Fast Food and Home Delivery Outlets 22 |
| Table 15: The UK Other Fast Food and Home Delivery Outlets Sector by Value at Current Prices (£m at rsp and percent), 1998-2002 23 |
| 3. Industry Background 24 |
| Recent History 24 |
| industry synopsis 24 |
| Table 16: Unlicensed Restaurants and Takeaway Outlets by Median Turnover, Profit Margin, Turnover by Employee and Remuneration per Employee (£000, percent and £), Latest Financial Year 25 |
| NUMBER OF OUTLETS 25 |
| Table 17: Number of UK VAT-Based Restaurant and Takeaway Enterprises by Turnover Sizeband (number and percent), 2001 and 2002 26 |
| employment 26 |
| REGIONAL VARIATIONS in the marketplace 27 |
| HOW ROBUST IS THE MARKET? 27 |
| LEGISLATION 28 |
| Minimum Wage 28 |
| Part-Time Workers' Regulations 28 |
| Working Time Directive 28 |
| Food Standards Agency 28 |
| Food Safety and Hygiene 29 |
| Disability Discrimination Act 1996 29 |
| KEY TRADE ASSOCIATIONS 29 |
| British Franchising Association 29 |
| British Hospitality Association 29 |
| British Sandwich Association 29 |
| National Federation of Fish Friers 30 |
| Pizza, Pasta, and Italian Food Association 30 |
| 4. Competitor Analysis 31 |
| THE MARKETPLACE 31 |
| MARKET LEADERS 31 |
| Table 18: Top Ten Companies in the Fast Food and Home Delivery Market by Sales and Pre-Tax Profits (£m), 2001 and 2002 31 |
| Table 19: Leading Fast Food and Home Delivery Chains (number of outlets in the UK), 2003 33 |
| McDonald's Restaurants Ltd 33 |
| Company Structure 33 |
| Current and Future Developments 34 |
| Financial Results 34 |
| Greggs PLC 34 |
| Company Structure 34 |
| Current and Future Developments 34 |
| Financial Results 34 |
| Pizza Hut (UK) Ltd 35 |
| Company Structure 35 |
| Current and Future Developments 35 |
| Financial Results 35 |
| Kentucky Fried Chicken (Great Britain) Ltd 35 |
| Company Structure 35 |
| Current and Future Developments 35 |
| Financial Results 36 |
| Pret A Manger (Europe) Ltd 36 |
| Company Structure 36 |
| Current and Future Developments 36 |
| Financial Results 36 |
| Burger King Ltd 36 |
| Company Structure 36 |
| Current and Future Developments 37 |
| Financial Results 37 |
| Domino's Pizza UK & IRL PLC 37 |
| Company Structure 37 |
| Current and Future Developments 37 |
| Financial Results 37 |
| Perfect Pizza Ltd 37 |
| Company Structure 37 |
| Current and Future Developments 38 |
| Financial Results 38 |
| Wimpy Restaurants Group Ltd 38 |
| Company Structure 38 |
| Current and Future Developments 38 |
| Financial Results 38 |
| Compass Group PLC 39 |
| Company Structure 39 |
| Current and Future Developments 39 |
| Financial Results 39 |
| Subway 40 |
| Company Structure 40 |
| Current and Future Developments 40 |
| Financial Results 40 |
| OTHER COMPANIES 40 |
| Benjy's Group Ltd 40 |
| Deep Pan Pizza Company Ltd 40 |
| Delifrance (UK) Ltd 41 |
| Fast Food Systems Ltd 41 |
| Favorite Fried Chicken Ltd 41 |
| O'Briens Irish Sandwich Bars (UK) Ltd 41 |
| Spud-U-Like 41 |
| Coffee Shops 41 |
| Caffè Nero Group PLC 42 |
| Company Structure 42 |
| Current and Future Developments 42 |
| Financial Results 42 |
| Coffee Republic PLC 42 |
| Company Structure 42 |
| Current and Future Developments 42 |
| Financial Results 42 |
| Costa Ltd 42 |
| Company Structure 42 |
| Current and Future Developments 43 |
| Financial Results 43 |
| Starbucks Coffee Company (UK) Ltd 43 |
| Company Structure 43 |
| Current and Future Developments 43 |
| Financial Results 43 |
| outside suppliers 43 |
| 5. Brand Strategy 44 |
| INTRODUCTION 44 |
| companies' BRANDS 44 |
| Table 20: Estimated Market Shares of Major Fast Food Brands by Sector by Value ( percent), 2003 45 |
| ADVERTISING AND PROMOTION 45 |
| Table 21: Main Media Advertising Expenditure by Selected Fast Food Companies (£000), 2001 and 2002 46 |
| Other Marketing ACTIVITY 46 |
| Benjy's 46 |
| Burger King 46 |
| Domino's Pizza 46 |
| KFC 47 |
| McDonald's 47 |
| Pizza Hut 48 |
| Subway 48 |
| Exhibitions 48 |
| 6. Strengths, Weaknesses, Opportunities and Threats 49 |
| SANDWICHES 49 |
| Strengths 49 |
| Weaknesses 49 |
| Opportunities 49 |
| Threats 49 |
| BURGERS 50 |
| Strengths 50 |
| Weaknesses 50 |
| Opportunities 50 |
| Threats 50 |
| FISH AND CHIPS 50 |
| Strengths 50 |
| Weaknesses 51 |
| Opportunities 51 |
| Threats 51 |
| PIZZA 51 |
| Strengths 51 |
| Weaknesses 51 |
| Opportunities 52 |
| Threats 52 |
| CHICKEN 52 |
| Strengths 52 |
| Weaknesses 52 |
| Opportunities 52 |
| Threats 52 |
| OTHER FAST FOOD AND home delivery outlets 53 |
| Strengths 53 |
| Weaknesses 53 |
| Opportunities 53 |
| Threats 53 |
| 7. Buying Behaviour 54 |
| LUNCH CHOICES 54 |
| Table 22: The Top Ten Food Choices for Lunch in the UK ( percent of workers consuming), 2000 and 2002 54 |
| Table 23: Leading Sources of Purchase for Lunch in the UK by Region ( percent of workers consuming), 2002 55 |
| consumer penetration 55 |
| Visits to Takeaway or Fast Food Restaurants 55 |
| Table 24: Penetration of Takeaway Outlets and Fast Food Restaurants ( percent of adults visiting), 2000 and 2001 56 |
| Table 25: Frequency of Visits to Takeaway Outlets and Fast Food Restaurants ( percent of adults), 2001 56 |
| By Sex 57 |
| Table 26: Penetration of Adults Visiting Takeaway Outlets or Eating In Fast Food Restaurants by Sex ( percent of adults), 2001 57 |
| By Age 57 |
| Table 27: Penetration of Adults Visiting Takeaway Outlets or Eating In Fast Food Restaurants by Age Group ( percent of adults), 2001 58 |
| By Social Grade 58 |
| Table 28: Penetration of Adults Visiting Takeaway Outlets or Eating In at Fast Food Restaurants by Social Grade ( percent of adults), 2001 59 |
| By Region 59 |
| Table 29: Penetration of Adults Visiting Takeaway Outlets or Eating In at Fast Food Restaurants by Region ( percent of adults), 2001 60 |
| Visits to Coffee Shops and Sandwich Bars 60 |
| Table 30: Penetration of Adults Visiting Coffee Shops and Sandwich Bars in Great Britain ( percent of adults), 2002 61 |
| 8. Current Issues 62 |
| CORPORATE NEWS 62 |
| Metro-to-Go 62 |
| Yo! Sushi 62 |
| HOME DELIVERIES 62 |
| Middle East War to Boost Home Deliveries? 62 |
| NATIONAL CHIP WEEK 62 |
| HYGIENE STANDARDS 63 |
| Food Standards Agency Report 63 |
| Food Standards Agency Food Hygiene Targets 63 |
| 9. The Global Market 64 |
| introduction 64 |
| The US 64 |
| Table 31: Leading Fast Food Brands in the US by Sales, Number of Outlets and percent of Franchised Outlets ($m, number and percent), 2001 65 |
| Japan 65 |
| 10. Forecasts 66 |
| introduction 66 |
| FORECASTS 2003 to 2007 66 |
| The Total Market 66 |
| Table 32: The Forecast UK Fast Food and Home Delivery Market by Value at Current Prices (£m at rsp), 2003-2007 66 |
| By Market Sector 67 |
| Table 33: The Forecast UK Fast Food and Home Delivery Market by Sector by Value at Current Prices (£m at rsp), 2003-2007 68 |
| MARKET GROWTH 69 |
| Figure 1: The UK Fast Food and Home Delivery Outlets Market by Value (£m at rsp), 1998-2007 69 |
| future trends 69 |
| Adapting to Demographic Changes 69 |
| Impacts of War and Terrorism 70 |
| The Influence of the Health Lobby 70 |
| 11. Company Profiles 71 |
| Burger king Ltd 72 |
| DOMINO'S PIZZA UK & IRL PLC 74 |
| Greggs Plc 76 |
| Kentucky Fried Chicken (great Britain) Ltd 78 |
| Mcdonald's Restaurants Ltd 80 |
| Perfect Pizza Ltd 82 |
| Pizza Hut (uk) Ltd 84 |
| Pret A Manger (europe) Ltd 86 |
| 12. Company Financials 88 |
| 13. Further Sources 90 |
| Associations 90 |
| Publications 91 |
| General Sources 91 |
| Bonnier Information Sources 92 |
| Government Publications 93 |
| Other Sources 93 |
Text © 2004 Key Note
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Last updated by Amanda Porteous February 2004
