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Developments in foodservice

- Presentation for Food from Denmark-

Horizons: Foodservice Architects

• We help our clients build successful businesses in foodservice

• 100% focused on foodservice and hospitality in UK, Europe, USA, UAE

• We work for:• Investors• Operators• Distributors• Manufacturers

Menurama

• 6-monthly menu collection and analysis• 400 menus• 100 chains• 4 regions• 36 menu characteristics• 10,000 data points

• Trends since 2003• Used for:

• Strategic and tactical review of customer offers and prices• Identifying emerging trends

QuickBite

• Qualitative survey of consumers’ eating out behaviour• By channel and outlet type• 4 times a year• 1,000 adults aged 16+ interviewed

• Questions• How often - in the last 2 weeks - have you eaten food

away from home• In which type of establishment did you obtain the last

meal away from home?• How much did your own meal cost?• In the year ahead, are you likely to eat our more, less, or

about the same as you did last year?• Plus: special questions

Foodservice and Retail

Retail and Foodservice –Feel the differenceRetailOrderedSystems-drivenThe customer has to work

FoodservicePeople centric“Anything else to make your meal special?”Entrepreneurial

Institutions >>

Retail

Foodservice plus Retail …

Total Food and Drink: £140 billion

30%

Source: Horizons with IGD

Foodservice

Foodservice has given the retail world:•Pizza•Indian food•Chinese food•Burgers•Oven-ready chips•Ice cream•Coffee

Overview of foodservice in the UK

Operating sectors

• Restaurants• Quick Service• Pubs• Hotels• Leisure• Staff Catering• Health Care• Education• Services

• Contract Caterers• Travel

Caterers spend £41 Billion each year on ...

FoodSoft drinksAlcoholLabourDisposablesCleaning chemicalsPowered equipmentRent/Rates etcAll other

Food and drink

Labour

Other

Equal shares:

Food and drink 1/3Note: Food alone 1/4Labour 1/3Other expenditure 1/3

Foodservice and “Near foodservice”

• Mainstream foodservice• Popular foodservice• Hotels/leisure• Institutional

• Vending• Blurring: foodservice/retail

• On the go• Retailers’ home delivery• Retail “eating out/eating in”

• What it’s not• Accommodation, travel, gambling• Retail

0.0

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Restaurants QSR Drinkingplaces

Hotels Leisure StaffCatering

Health Care Education Services

Meals

Billion

Meals served by UK foodserviceMeals served 2009:

Total: 8 billion

Source: Horizons

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5

10

15

Restaurants QSR Drinkingplaces

Hotels Leisure StaffCatering

Health Care Education Services

€ b

illion

Sales value of UK foodservice Total Food and Beverage sales 2009:

£41 billion

Source: Horizons

Top 10 brands

Restaurants

• Pizza Hut• Pizza Express• Nando's • Frankie & Benny's• Little Chef • Prezzo • ASK • Prezzo • Café Rouge • Zizzi

QSR• Greggs • Subway • McDonald's • Costa Coffee • KFC • Starbucks • Burger King • Domino's Pizza • Caffè Nero • Ben & Jerry's

Who have outperformed their sector?

1. Carluccio’s• Sales: +8.0%• Sector: -1.1%• Maximise revenue – cover

costs throughout the day

2. JD Wetherspoon• Sales: +1.2%• Sector: -1.5%• Maximise customer spend

on profitable lines

3. Domino’s• Sales: +17.5%• Sector: +2.1%• Increase sales by being

available everywhere, all the time

• The lessons?• It’s possible to grow in

the midst of a recession• Be available• Offer what the customer

wants

Source: Market Dynamics Toolbox, Key Brands and Accounts

How big is foodservice in the UK?

• Food, drink sales to consumers £42.0 Bn• Food sales £31.2 Bn• Drink sales – alcoholic & soft drinks £10.8 Bn• Share of Retail + Foodservice 30%

• Food sales to operators £10.1 Bn

• Food ex-factory shipments £7.1 Bn

• Per year, it serves 8.3 Bn meals

• Number of outlets 259,000

Pricing

£3.00

£4.00

£5.00

£6.00

£7.00

£8.00

£9.00

'Jan 06 'Jan 07 'Jan 08 'Jan 09 'Jan 10

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rice

Starter Main Course Dessert

Dish prices

Source: Menurama

Starters, DessertsPrices go upConsumers stay away

Price of a 3 course meal Widening difference

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£5.00

£10.00

£15.00

£20.00

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Restaurant

Pub

Source: Menurama

Promotions

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Other offers

%/£ off

Meal Deals

2 for 1

Meal Deals

21%

Meal Deals

36%

Still eaten there

Gone somewhere else

Not eaten out

What would you have done if you hadn’t used a discount voucher?

Source: QuickBite1,000 adultsJuly 2010

• 10% of adults used a voucher in last 2 weeks

• Especially in pizza restaurants and take aways

Inflation: The Margin Squeeze

-8%

-3%

2%

7%

12%

2006

2007

2008

2009

2010

Input prices

Output prices

Margin squeeze

Drivers – consumer issues

• More change• Fickle consumers – more choice• Changes in lifestyle• Demand for “comfort”• More “on the go”

• More eating out – at expense of at home• Health/wellness vs obesity/heart disease• Price

• Meeting (lower) price expectations

Food and Marketing

Top 5 dishesSource: Menurama Winter 2009/2010

Restaurants• Pizza• Beef/cheeseburger• Steak• Chicken pasta• Chicken breast

Pubs• Beef/cheeseburger• Steak• Fish & chips• Chicken breast• Chicken burger

QSR (S’wich/coffee shops)• Sandwich• Muffin• Panini• Baguette• Croissant

Hotels• Steak• Beef/cheeseburger• Fish & chips• Pizza• Grilled salmon

2009

• Fairtrade• Farm assured• Local• Organic• Sustainable

2010

• Fairtrade• Farm assured• Five-a-day• Local (grown or sourced)• Line-caught fish• Rustic• Slow cooked / roasted• Sustainable

2008

• Dolphin-friendly• Organic• Vegetarian

Dixie Fish and Chips:Battered cod fillets served with fries, lemon and a side of creamy Trinity dressing

Source: Menurama

Meeting changing ethical trends

Hand Battered Fish and ChipsFillets of battered Pacific cod from sustainable sources, served with peas, fries, lemon and a side of our own Trinity dip

Hand Battered Fish and ChipsFillets of hand battered cod from sustainable sources served with peas, fries a side of our own creamy Trinity dressing

Fish and Chips – at Old Orleans

Quality Assurance / Responsible Production• Consumers increasingly demanding about their food

• Demand fuelled by celebrity chefs, press, documentaries

• Sales of premium foods suffered in the recession

• Top terms on menus - January 2010:• “Free range” (eggs, chicken, sausages)• “Organic” (meat, fish, vegetables, cheese, bread, ice cream, biscuits,

baby food)• “Home made” (meat, fish, soup, ‘English’ dishes: crumble, cottage pie,

roast Sunday lunch)• “Farm assured” (chicken, meat)• “Corn fed” (chicken, eggs)• RSPCA “Freedom Food” (chicken): on menus since 2006• “Sustainable” (fish, seafood)• “Outdoor reared”, “Outdoor bred” (meat)• “Fairtrade” (coffee): on menus since 2004• “Dolphin friendly” (tuna)• “Local”, “Farm fresh” (cheese, meat)• “Red Tractor” (meat): on menus since 2005

Quality Assurance / Responsible Production

other 2%

local /farmfresh2%

dolphin friendly2%

outdoor rearedbred /

3%

organic26%

fairtrade2%

sustainable3%

free range30%RSPCA Freedom

Food4%

corn fed5%

farm assured5%

home made16%

“Other” includes Red Tractor, hand selected, hormone free, traceable etc

Source: Menurama

J D Wetherspoon’s Curry Club

• Direct engagement with and feedback from consumers

• Targeted channel for operators to spread promotional messages

• Resulting in increased brand loyalty

Social Networking

Giraffe

Scream pubs (Mitchells & Butlers)

• Pre-dining research• at outlet, dish and nutritional level• 80% have online menus, 66% downloadable menus

Impact of the internet: fixed and mobile

Nando’s

Source: Menurama

Structure of the Market

A 25 year trend

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Billions

of m

eals

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year

Source: Horizons

Long term trends shown in terms of volume (Meals) rather than purchases (£) because inflation can distort the picture

+0.8% pa growth in numbers of meals served

Numbers of meals

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1981

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2007

Mill

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s

Commercial

Non-commercial

Source: Horizons

Decline in Non -Commercial sector:Staff cateringHealth careEducationServices

Increase in Commercial sector:RestaurantsQSRPubsHotelsLeisure

During 2010

• People continue to eat out• But spend less

• Meal deals help• Operators facing a squeeze on their margins

• Inflation helped them get out over it in early 2009• 2010

• January snow – down dramatically• From mid January – market picked up slowly• Spring – generally better than expected but not great• Summer - disappointing

Beyond 2010

• Next few months - continuing modest growth• But stones in the road:

• Impact of summer budget• More taxes• Cost sector cutbacks• Less to spend• Inflation• Economic fragility• Rising unemployment

• Leading to:• Market uncertainty• Possible decline• Non-commercial sector – will decline

Distribution to the foodservice sector

Ambient

Chilled

Fresh

Frozen

Temperature profile of food purchases

Total Food purchases 2009:

Total £10.1 billion

Source: Horizons

Del Whlsl

Contract

C&C

Retail/Other

Distribution channels for food purchases

Total Food purchases 2009:

Total £10.1 billion

Source: Horizons

Brakes 3663

Booker Country Range

DBC Fairway

Caterforce Other contract

All Others

• Fragmented• Top 2 have 36%• The next 5 have 17%

• But• Sector/temperature

concentration

The major players in food distribution

£10.1 Billion

Source: Horizons