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MSI believe that the UK fast food market increased by a further 3 percent in 1996 to reach a value of £5.56 billion. However the performance of the individual fast food sectors varied significantly during the year.
The sandwich sector has been one of the main areas of growth in recent years. This trend continued in 1996, with the value of the market increasing by 8 percent to over £2 billion. The sandwich sector continued to increase in proportional importance in 1996 to account for 37 percent of all fast food sales. The growth in the market has been the result of the versatility of the product and the wide range of sandwiches available. The increased availability of sandwiches through sandwich bars, supermarkets and petrol station forecourts is also a factor in the continued expansion of the market.
The hamburger market also expanded significantly between 1992 and 1995. However in 1995 the Bovine Spongiform Encephalopathy scare significantly affected sales which are believed to have declined by 15 percent at the height of the scare, but as consumer confidence returned the market declined by only 7 percent over the whole year. The expansion of the menu of the leading burger chains to include a higher proportion of non-beef products, and the public statements by the major operators that they had stopped using British beef is also believed to have contributed to limiting the extent of the decline in the value of the market.
The pizza and pasta market has also increased during the review period to reach a value of £840 million in 1996. MSI forecast that the sectors that will show the most growth in the forecast period is the premium end of the market with pasta restaurants in particular expected to be successful.
The more mature sectors of the fast food market, such as fish and chips and ethnic food, declined in real terms over the period 1992 to 1996. This was principally due to increased competition from other forms of fast food. The fragmented nature of these sectors has made it difficult for them to compete with the aggressive marketing carried out by some other sectors of the fast food market.
Some sectors of the fast food market, such as ethnic foods and pizza, have been affected by increased competition from supermarket ready meals. The selection available and quality of such products has improved significantly in recent years and now poses a significant threat to these sectors. However, if consumers like the ready meal version of a meal, which is usually cheaper than a take-away, they may be more likely to try a more authentic version from a take-away.
MSI believe there are a number of opportunities for suppliers to the fast food industry. One of the opportunities for suppliers with the most potential is believed to be the development of innovative packaging for the sandwich industry.
The majority of major fast food operators have stringent selection criteria for suppliers. Chosen suppliers have to work very closely with their customers and make significant investment in order to compete in the sector. MSI believe that most purchasing is carried out on a national scale and therefore only a small number of suppliers are used by the major fast food chains.
Text © 1997 MSI
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