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This report covers: burger restaurants, pub restaurants, pizza and pasta restaurants, roadside restaurants, popularity of brands

Companies covered include: Allied-Domecq, Bass, Burger King, City Centre restaurants, Granada group, McDonald's restaurants, Pizza Express, Punch Taverns, Scottish & Newcastle, Whitbread, Aberdeen Steak Houses Group, Ask Central, Belgo Group, Brannigans, Conran Restaurants, Fatty Arbuckles, Groupe Chez Gerard, Groupe Flo, Luminar leisure, Mongolian Barbeque, Morland, Nando's Chickenland, Oriental Restaurant Group, Passion for Food, The Rank Group, Roadchef, Shimla Pinks, Simpsons of Cornhill, Spaghetti House, Welcome Break

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Executive Summary

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EXECUTIVE SUMMARY

The UK restaurants market registered annual sales growth of 5.5 percent at current prices in 1999, with sales at £10.15bn. Sales growth was lower in 1999 than in the previous 2 years but the restaurants sector is still a dynamic one with new brand innovations and menu diversification maintaining consumer interest. The restaurant market is also benefiting from the key socio-economic trends that have been prevalent in recent years. These include increased disposable income, time pressures at work and at home, increased tourism numbers, and a growing number of ‘cash-rich, time-poor’ consumers who are using restaurants and cafés as alternatives to home cooking for essential as well as special occasion meals.

In this report, the restaurants market is divided into five main sectors. The largest is the other restaurants sector, including a diverse range of outlets from small, low-cost operations through to some fast food branded outlets and premium restaurants. Burger restaurants represent the second largest sector, followed by public house (pub) restaurants, pizza and pasta restaurants and roadside restaurants. Sales in the pizza and pasta sector increased in 1999 following some sector restructuring and growth of premium brands, while more branded outlets and sites boosted sales in the roadside restaurants sector.

Eating out is now a part of the lives of most consumers, with 62 percent of Target Group Index (TGI) respondents stating that they eat in restaurants in the evenings and 50.8 percent reporting that they eat in restaurants during the day. The customer bases are quite different at these different times of day, dominated by younger adults in the evening but by much older consumers in the daytime. Restaurant brand owners are increasingly targeting outlets and menus at specific consumer groups, and this process of market segmentation is likely to continue.

While the majority of operators in the sector are small companies, the larger brand owners have been increasing their presence in the market through acquisitions, disposals of non-core activities and some organic growth. The leading restaurant company, Whitbread PLC, has sold its brewing interests and Bass PLC has done the same to focus on retailing. Scottish & Newcastle PLC is in the process of selling some non-catering businesses. Granada Group PLC and Compass Group PLC have announced a merger of their food service and hotel businesses, while specialist companies in specific markets, such as Pizza Express and Ask Central, have expanded quickly — mainly through organic growth.

The socio-economic factors noted above, which have boosted sales in the market in the last 2 years, should continue to help sales growth in the next few years. An older population will require some new outlet concepts and menus. There could also be some brand rationalisation by the major players and a concentration on the development of core brands. In 2000, the market is expected to grow by a similar level to 1999 (5.7 percent), and by 2004 the market is forecast to reach £12.61bn.

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Last updated by Jacob van Eldik 22th October 2000