KN55013

KEY NOTE RESTAURANTS : September 2003

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

Companies, Brands etc.covered include: Ask Central, Burger King, City Centre Restaurants, Compass Group, Kentucky Fried Chicken, McDonald's Restaurants, Mitchells & Butlers, Pizza Express, Punch Taverns, Scottish & Newcastle, Whitbread, Conran Restaurants, Gaucho Grill, Giardino Group, Groupe Chez Gerard, La Tasca Restaurants, Loch Fyne Restaurants, Luminar, Noble House Leisure, Pizza Piazza Holdings, The Rank Group, Signature Restaurants,Yo! Sushi, Welcome Break, Nando's, Aberdeen Steak Houses, Le Petit Blanc, Garry Rhodes, Rick Stein,

EXECUTIVE SUMMARY

Many pub restaurant chains have responded to this trend by introducing new menus and modernising their outlets. Roadside catering sales maintained steady growth as more outlets were opened and the sector benefited from increased travel within the UK, as the threat of terrorist attacks made some people fearful of travelling abroad. In the fast food sector, the burger sector remains relatively weak, as consumers switch to healthier alternatives, a trend which has benefited both chicken restaurants and pizza outlets. The largest `other' sector includes a broad variety of restaurant types, from those serving ethnic cuisines to informal dining concepts and premium outlets. The sector has few branded outlets and most operators are independent. Sales growth was relatively strong in 2002, helped by the continued popularity of sandwich sales.

The weaker segments in this sector are informal dining and ethnic food outlets, although the Mexican and Japanese segments are growing. Steady year-on-year increases in personal disposable income (PDI) have encouraged more discretionary spending on eating out in recent years and this, in turn, has persuaded more new business start-ups in the restaurant market. While restaurant numbers have been growing every year in the past decade, consumer loyalty to many brands is low, making this a high-risk market with regular business failures and outlet closures.

Brand rationalisation has been a feature of the market during 2002/2003, with the focus on core brands and major players disposing of underperforming brands. The market leaders are now concentrating investment and expansion on their core remaining brands. The popularity of eating out is high and original research commissioned by Key Note in May 2003 shows that almost three-quarters of all adults had eaten in a major branded restaurant chain during the previous year. This penetration increases to over 95 percent for adults under 25.

The restaurant market should experience improved growth in 2003, but sales growth over the 5 years from 2003 to 2007 is forecast to be slower than the previous 5 years (1998 to 2003) as a reduction in consumer discretionary spending affects sales. Parts of the fast-food and pub restaurants sectors will come close to saturation point by 2006.

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Text © 2004 Key Note

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Last updated by Amanda Porteous February 2004