KN52044

KEY NOTE REPORT PLUS : Fast Food and Home Delivery Outlets : May 2004

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This report covers:fast food, home delivery outlets, sandwiches, burgers, pizza, chicken, fish and chips, other, fast food, takeaways, coffee shops, home delivery, obesity, market trends, menu diversification, restaurants, Takeaways,

Companies covered include: Benjy's, Burger King, Domino's Pizza UK, Greggs, Kentucky Fried Chicken, McDonald's, O'Briens Irish Sandwich Bars, Perfect Pizza, Pizza Hut, KFC, Prêt A Manger (Europe) Ltd, Subway, Wimpy,Caffè Nero Group, Costa, Favorite Fried Chicken, Fast Food Systems, Starbucks Coffee Company, Spud U Like,

TABLE OF CONTENTS

EXECUTIVE SUMMARY

IThe UK fast food and takeaway market generated estimated sales of £8.1bn in 2003 at retail selling prices, increasing sales by 3% since the previous year. Its share of the total UK catering market has been increasing year-on-year over the past 5 years. Consumer demand for convenience, and the widespread development of fast food and takeaway outlets on various sites, has encouraged sales. Although dominated by a few large global brands, the market is still highly fragmented with most operators classed as small businesses.

The largest market sector is sandwiches, contributing over 36% of all sales in this market in 2003. Sandwich sales have benefited from the trend towards shorter lunch breaks and the corresponding demand for light lunches and snacks, and the spread of more branded sandwich outlets across the UK. As well as traditional sandwich bars and cafés, sandwiches are now also available from other outlets such as petrol station forecourts, supermarkets, other retail outlets, and numerous office delivery services.

The second-largest category is burgers, representing 22.4% of all sales in this market. After a poor performance in 2002, the market for burgers improved its sales performance in 2003 through menu diversification and more emphasis on brand building. Burgers are taking a smaller share of sales at traditional burger outlets year-on-year. Both the pizza sector and chicken restaurant market have benefited from consumers moving away from burgers. Chicken outlets continue to expand and emphasize their family dining options, while home delivery pizza sales have driven growth in the pizza sector. Sales growth in the fish and chips sector remains limited.

The other fast food and takeaway' sector includes a variety of outlets such as coffee shops, Indian and Chinese outlets, sushi and noodle bars, soup bars, salad bars, organic food outlets, doughnut, muffin and other pastry shops. Traditional takeaway foods such as Chinese and Indian are saturated and are experiencing little growth. Obesity issues and health concerns, especially among children, are forcing changes in the market. More brand owners are developing lighter options, vegetarian offerings, and introducing more fresh fruit and salads.

In traditional sectors, such as burgers, the pace of outlet expansion is slowing down as leading suppliers concentrate on building sales at existing outlets. In the other areas, notably pizza home delivery, chicken, and sandwiches, there is still considerable growth in new store openings. Sales growth from 2004 to 2008 is forecast to be less than the previous 5 years, partly due to a lower level of new openings, increased competition, and mature markets in some market areas. Between 2004 and 2008, the total market is forecast to increase by 11.2% at current prices, compared to a growth of 15.5% at current prices between 1999 and 2003.

Text © 2004Key Note

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Last updated by Amanda Porteous June 2004