MCA | RESTAURANT MARKET REPORT © 2016brakes-source.co.uk/assetfiles/MCA---Restaurant... ·...

MCA | RESTAURANT MARKET REPORT © 2016

Disclaimer

Copyright: MCA, September 2016.

All rights reserved. No part of this publication may be reproduced or stored in a retrieval system, in any form or by any means, electrical, mechanical, photocopying or otherwise without the prior consent of the publishers. The views and forecasts presented in this report represent independent findings and conclusions drawn from a study of the Restaurant market by MCA. Main sources of information include published information, opinions and information shared by interviewees with MCA during the period of study.

This report has been produced under significant time constraints to ensure that the information contained is as up-to-date as possible. Great care has been taken to ensure that all information contained in this report is accurate, free from bias, and fully describes the latest developments in the UK Restaurant market, as of September 2016.

However, MCA can accept no responsibility for any investment decision made on the basis of this information or for any omissions or inaccuracies that may be contained in this report.

This report has been produced in good faith and independently of any operator or supplier to the industry. We trust that it will be of significant value to all readers.

MCA10 Ely PlaceLondon EC1N 6RYPart of William Reed Business Media Ltd.

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Contents

Introduction and background

Executive summary

Market

Competitive landscape

Consumer insight

Consumer typology analysis

Bespoke consumer research

Future outlook


Report scope

• Detailed market sizing of the UK Restaurant market –current and projected.

• Analysis of the size and growth of different Restaurant market segments.

• Analysis of consumer participation, frequency, spend and behaviours over time.

• Comprehensive overview of competitive landscape, including physical expansion and financial performance of leading brands over time, KPI rankings and operator profiles.

• Consumer typology analysis.

• Bespoke consumer survey on restaurant visit habits.

Research methodology

• 36,000 online surveys (6,000 per month) through MCA Eating Out PanelTM, Q2 2015 and Q2 2016.

• 1,000 online interviews with UK consumers on their eating out habits.

• Extracts from MCA Brands & Corporates service and synthesis with wider market sizing databases.

• Desk research: news articles and trade press, company websites and industry associations.

Publish details

• 30 September 2016

INTRODUCTION AND BACKGROUND


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Key terms and definitions


Term Definition

All-day dining Food and drink offer from breakfast through to late-night.

Branded contemporary fast food Food served quickly at the counter and has healthy or ‘newer’ cuisine focus, e.g. Itsu, Leon, Pod and Wasabi.

Branded delivery-focused fast food Branded fast food operators with no or very limited seating in outlets, e.g. Domino’s, Papa John’s and Pizza Hut Delivery.

Branded restaurant market Branded/managed/franchised pubs, branded fast food and branded full-service restaurants.

Branded traditional fast food Food served quickly; typically served at the counter; predominantly burger, chicken or pizza, e.g. Domino’s, KFC, McDonald's.

Branded/managed pubs Owned by managed pub groups and restaurant groups, with consistent brand and/or menu, e.g. Beefeater, JD Wetherspoon.

Branded service-led restaurants / Casual restaurants / Chain restaurants

Sit-down meal in a casual environment; fast efficient table service or counter ordering, e.g. Nando's, PizzaExpress, Prezzo.

Coffee shops, sandwich bars, cafés Brands and independents serving espresso-based beverages and food, e.g. Caffè Nero, Costa, Pret, Starbucks.

Contract catering On site catering provided within public sector and workplace environments. Typically canteen restaurant catering.

Fine dining restaurants High quality establishments; staff are highly trained and wear more formal attire. Michelin starred or AA Rosette.

Grab & Go Food that can be purchased off the shelf and taken out to eat, typically from supermarkets and convenience stores.

Independents Owned by one person or group; not part of a branded chain and often ethnic cuisine or fast food.

Leisure Food offer secondary to activity e.g. cinema, hotels, fitness.

NPSNet Promoter Score is a customer recommendation metric. It can be as low as -100 (everybody is a detractor) or as high as +100 (everybody is a promoter). An NPS that is positive is felt to be good, and an NPS of 50+ is excellent.

Revisit IntentionConsumers are asked “How likely are you to revisit on a scale of 1-10, where 1 = not at all likely and 10 = extremely likely”. This is a customer loyalty metric. A score over 8 is good and over 9 is excellent.

Service-led restaurants Branded, independent and fine dining restaurants with table service or at the very least semi-counter service.

Small chain Five or less outlets with consistent branding and/or food offer. Also applies to international brands with five or less UK outlets.

Street food Freshly prepared, authentic, good quality food sold in a street, often from a portable stall and at value prices.

Tenanted/leased pubs Owned by pub companies and leased/licensed to individuals or small franchisees. The manager is often tied to the brewery.

Travel Motorway service areas, petrol stations, train stations, airports and ferry ports.

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Channel Operator Examples

Chain restaurants/Branded casual restaurants

Carluccio’s, Gourmet Burger Kitchen, Nando’s, PizzaExpress, Prezzo, Wagamama, etc.

Coffee shops/Cafés Caffè Nero, Costa Coffee, Starbucks, Independent coffee shops, etc.

Contemporary chains Branded restaurant chains that launched after 2006, e.g. Byron, Franco Manca and Wahaca.

Department Stores/Garden Centres/Supermarket Cafés

M&S Café, Debenhams Café, Tesco Café, etc.

Fast Food Restaurants Burger King, KFC, McDonald’s, Wasabi, Independent take-away/fast food, etc.

Fine Dining Restaurants Michelin starred, AA Rosette, Premium dining experience venues, etc.

Hotels Independent and group managed hotels

Leisure Facilities Facilities where dining was not the primary activity: at a cinema, leisure centre, sports centre, gym, etc.

Independent Restaurants Chinese, Indian, Italian, Thai, etc.

Pub Restaurants Beefeater, Brewers Fayre, Gastro Pub, Harvester, Wetherspoon, Toby Carvery, Local pub, etc.

Sandwich Retailers Boots, Greggs, Pret A Manger, petrol station operators, etc.

Street Food Vendors Stall vendors in food courts, markets, festivals and other outdoor locations

Supermarkets To-Go Food To-Go sections of Asda, M&S, Sainsbury's, Tesco, Waitrose, etc.

Vending MachinesStandard Vending Machine (e.g. Klix, Cold Drinks machine, snack machine, etc.)Gourmet Vending Machine (e.g. Starbucks To-Go, Costa Express, Simply Coffee, etc.)

Workplaces Offices, industrial units and schools/universities: restaurant, canteen, on-site café, etc.

Key terms and definitions – consumer insight channels



Term Definition

Average spend Typical spend per person per eating out occasion, including food and drink (based on bill/receipt).

Breakfast Food and/or beverage consumed, usually first meal of the day.

Day-partsSix defined times of day when food is typically consumed: breakfast, morning snack, lunch, afternoon snack, dinner and late night snack.

Dinner Food eaten in the evening, usually third meal of the day.

Average number of visits per head per month

The average number of visits per person per month, derived from asking consumers how often they visit different types of establishment and for different meal times (day-parts).

Incidence By day-part: share of visits on which a food or drink item is consumed.

Lunch Food consumed in the middle of the day, usually second meal of the day.

Millennials Adults currently aged 18-34.

MissionsDerived from the following single choice question: “Which of the following best describes the primary reason for eating/drinking out of the home on this occasion?”.

NeedsDerived from the following multiple choice question: “Why did you choose this establishment for your breakfast/lunch/dinner/snack? (Please rank the Top 3 reasons)”.

NPSNet Promoter Score: taken from consumers ranking the likelihood of recommending a brand/operator from 0-10; scoring 0 = highly unlikely to 10 = highly likely; scores of 7 &8 are removed, the detractor sub-total score (ranked 0-6) is subtracted from the promoter sub-total score 9+10 to give a net figure .

Participation Number of consumers who eat out (defined as all except those claiming to ‘rarely’ or ‘never’ eat out).

Revisit IntentionConsumer scoring to indicate how likely they are to revisit a brand/operator; scoring 1 = highly unlikely to 10 = highly likely. This is a customer loyalty metric. A score over 8 is good and over 9 is excellent.

Key terms and definitions – consumer insight terms



Term Definition

Millennials – The Explorers 18-24 year olds across different social grades and with or without children.

Millennials – The New Parents 25-34 year olds across different social grades with children.

Millennials – The Home Builders 25-34 year olds across different social grades with or without children.

Generation X – Established families 35-54 year olds in the ABC1 social grade with children.

Generation X – Humble households 35-54 year olds in the C2DE social grade with children.

Generation X – Aspiring Child Free 35-54 year olds in the ABC1 social grade without children.

Generation X – Functional Child Free 35-54 year olds in the C2DE social grade without children.

Grey Pound – Greying Generation 55-65 year olds across different social grades and with or without children.

Grey Pound – Golden Oldies 65+ year olds across different social grades and with or without children.

Key terms and definitions – consumer typology



Contents


Executive summary

Market


Consumer insight



Future outlook


Executive summary

EXECUTIVE SUMMARY

Growth continues for Branded restaurant market, but at slowing rates of physical expansion, indicating the ‘space race’ has peaked.

• The Branded restaurant market is forecast to grow by an annual turnover growth rate of 4.7% in 2016 to reach a value of £21.1bn, significantly ahead of the 1.1% for the total Restaurant market, and a total value of £53.9bn. Branded traditional and contemporary fast food, branded restaurants and managed pubs are all seeing robust growth this year, outpacing independent segments.

• Yet growth in the Branded restaurant market is expected to slow down, from a turnover growth rate of 5.5% in 2015 to 4.7% in 2016, in part due to outlet growth declining from 3.8% to 3.3%. Many pub and restaurant brands have expanded rapidly in recent years and are curbing growth, indicating the ‘space race’ of the last few years may have peaked.

• As expansion rates falter, restaurant operators must place greater emphasis on delivering a contemporary experience and better execution to drive growth, particularly those brands looking to appeal to the lucrative and more youthful, millennial market.

Branded restaurant growth waning as expansion falters and competition tightens.

• Turnover growth for Branded service-led restaurants is set to decrease from 6.8% in 2015 to 5.3% in 2016. Similarly, outlet growth is set to slow down from 4.0% to 2.9%. A number of established players – not least Café Rouge, Frankie & Benny’s and Strada – are the focus of estate rationalisation this year. Competition in the market is tighter than ever, and established brands need to refresh their offers to meet contemporary demands.

• Macroeconomic factors around weakening business confidence are contributing to operators scaling back expansion plans, as is the increasing difficulty of securing sites. Yet growth in the branded segment is still among the strongest in the Eating Out market, fuelled by a sizeable group of rapidly expanding, newer players.

Emerging brands showing strongest growth, increasing marketplace dynamism.

• Brands with less than 100 outlets are set to grow turnover and outlets by 9.7% and 7.8% on average, respectively, compared with an average of 5.8% and 3.5% for all leading brands in the market. In contrast, brands with over 200 outlets are in line to grow by 4.2% and 2.0% for turnover and outlets, respectively, underperforming against the average.

• The fastest growing brands – CAU, Five Guys, Franco Manca, Turtle Bay and Leon – are examples of brands offering a contemporary experience through specialisation in a product, adventurous cuisine or healthier eating focus. Service, environments and atmosphere are equally important to capture the minds of contemporary consumers.

Key consumer metrics rise for restaurants and pubs, with contemporary restaurant brands stealing share of visits.

• Average visit spend has risen in all restaurant channels at all day-parts, with fine dining at lunch the only exception. Higher spend levels relate, in-part, to a more affluent customer profile in all key restaurant channels. Female spend has increased most, with 25-49s driving rising levels in chain restaurants.

• Contemporary chain restaurants (opened in the last 10 years) have played a crucial role in growth of the restaurant chain channel, accounting for a rising share of lunch and dinner visits. Contemporary chains, such as Byron, Côte and Wahaca, attract a larger share of 18-24s and higher earning consumers than chains in general, with the food quality, environment and atmosphere being much bigger draws.

• 22% of contemporary chain visits are get togethers, but it is special occasions that stand out, accounting for 18% of contemporary chain visits, which is double the proportion in total chain restaurants. The brands are providing the experiences that modern consumers seek.

Millennials and Established Families are the most valuable customers.

• Three Millennial segments (18-34s) account for 29% of UK adult population but represent 46% of the total visits and 43% of the total spend in the restaurant market.

• Established Families (ABC1 35-54, children at home) account for 10% of adult population but contribute 14 % of total visits and 14% of total expenditure. 55+ account for 36% of adult population however only contribute 18% of total visits and 21% of the total spend.

Experience and execution increasingly important as expansion rates decline.

• MCA expects the Branded restaurant market to continue seeing annual sales growth of c.4.7% between 2016-2019, but this is down from the 2015 peak of 5.5%. The slowing 3.3% average annual outlet growth is significant and will focus more attention on existing store growth and passing on price rises to offset increasing cost pressures.

• The impact of rising National Living wage rates, higher business rates and food input costs will highlight the need for more skilful management of menu prices and also, of consumers’ value perceptions of restaurant brands.

• Contemporisation, both in terms of proposition execution and consumer experience, is becoming increasingly central to driving growth. Exploring new trading formats, hybridisation, premiumisation and faster NPD will also become more important levers for growth in the post-space race market.

Road to growth changing lanes from expansion to contemporary experiences and execution.

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Contents


Executive summary

Market

Section summary

Market analysis


Consumer insight



Future outlook

11


Market – section summary

12

MARKET

Growth continues for Branded restaurant market, but at a slowing rate.

• The Branded restaurant market is forecast to grow by an annual turnover growth rate of 4.7% in 2016 to reach a value of £21.1bn, compared with 1.1% for the total Restaurant market, and a total value of £53.9bn. Branded traditional and contemporary fast food, branded restaurants and managed pubs are all seeing robust growth this year, outpacing independent segments.

• Yet growth in the Branded restaurant market is expected to slow down, from a turnover growth rate of 5.5% in 2015 to 4.7% in 2016, and an outlet growth rate of 3.8% to 3.3%. Many pub and restaurant brands have expanded very rapidly in recent years and are now slowing down, indicating the ‘space race’ of the last few years may have peaked.

• Overall the Total Restaurant market continues to experience a net decline in outlets, with outlets set to decrease by -0.8% to 119,491 in 2016. This is driven by ongoing closures at independent restaurants and tenanted & leased pubs, two large segments that have a major impact on the overall market.

Brands beating independents across all segments.

• Branded segments account for 16.2% of outlets and 39.2% of turnover in the total Restaurant market, up from 15.5% and 36.9% in 2015, respectively. Managed pubs in particular have increased their share of the market, driven primarily by accelerating conversions of tenanted pubs. Branded segments continue to achieve considerably higher sales per store, on the back of greater economic resources of parent companies, better capabilities for attracting investment, and consequently, greater access to more expensive, higher-footfall sites.

Fast food winning share from pubs and restaurants.

• Fast food accounts for 22.4% of total value in the Restaurant market, up 1.2pp year-on-year. The low-ticket segment’s share of outlets is also up 1.9pp to 32.4%. The fast food channel is buoyed by a relatively better-performing independent component. The continuing net decline in outlets of independent restaurants and tenanted & leased pubs is dragging down their respective segments.

• Pubs are still the largest segment, claiming c.40% of both outlets and turnover. Service-led restaurants account for 28% of outlets and 38% of sales.

Growth slowing down for restaurant chains as established brands see mixed performance.

• Turnover growth for Branded service-led restaurants is set to decrease from 6.8% in 2015 to 5.3% in 2016. A number of established players –not least Café Rouge, Frankie & Benny’s and La Tasca – are rationalising their estates this year. Competition in the market is tighter than ever, and established brands need to refresh their offers to meet contemporary demands.

• Macroeconomic factors around weakening business confidence are also contributing to operators scaling back expansion plans, as is the increasing difficulty of securing sites. Yet growth in the branded segment is still among the strongest in the Eating Out market, fuelled by a sizeable group of rapidly expanding, newer players.

Latin American cuisine to see strongest growth, followed by South East Asian and Burger brands.

• Branded operators serving food from Latin/South America are expected to see outlet growth of 35% in 2016, reaching a total of 135 outlets. The formidable growth in this segment is spearheaded by Rodizio Preto, expected to double in outlets to 10, CAU, set to grow by 57% to 22 outlets, and Turtle Bay, expected to expand by 48% to 37 outlets. However, Latin American food is still only expected to account for 2.8% of the Branded casual restaurant market. Strong growth is also forecast for South East Asian (22%) and Burgers (20%).

• The largest cuisine segment continues to be Pizza/pasta, which holds a 30% share of the total Branded service-led market. All leading brands in this segment are expected to continue to expand this year, including PizzaExpress, Pizza Hut Restaurants and Prezzo, as well as smaller players Franco Manca and Wildwood.

• MCA expects the appetite for more exotic cuisines to continue over the next few years, fuelled by greater consumer food knowledge and demand for adventurousness.


Contents


Executive summary

Market

Section summary

Market analysis


Consumer insight



Future outlook

13


UK Eating Out market landscapeUK Eating Out market value to reach £87bn in 2016. MCA forecasts the total UK Eating Out market to reach a value of £87.2bn in 2016, comprising a total of 331,293 outlets by December 2016. The market consists of three main sub-sectors: Retail, Travel & Leisure; Hotels, Pubs & Restaurants; and Contract Catering. Hotels, Pubs & Restaurants is easily the largest sub-sector, accounting for 72% of total turnover.

MARKET

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UK Eating Out Market 2016E: £87.2bn – 331,293 (Value – Outlets)

Retail, Travel & Leisure: £19.5bn – 100,825

Retail

Coffee Shops

Sandwich Bars

Bakery Stores

Dep’t Stores/ Supermarket

Cafés

Supermarket Grab & Go

Convenience Store Grab & Go

Travel

Roadside & MSA

Petrol Forecourts

Railway Stations

Airports

Ports

Leisure

Sports Clubs

Event Catering

Stadia

Visitor Attractions

Entertainment Venues

Hotels, Pubs & Restaurants: £62.9n – 167,383

Hotels

Full Service

Budget

Guest Houses

Holiday Parks

Conference Centres

Pubs & Bars

Managed, Branded & Franchised

Tenanted and Leased

Independent & Free of tie

Social clubs

Restaurants

Service-Led

Fine Dining

Independent

Branded

Fast Food

Branded Traditional

Branded Contemporary

Independent inc. Street Food

Contract Catering: £4.8bn – 63,084

Business & Industry

Contracted

In-House

Public Sector

Defence

Justice

Healthcare

Local Authorities

Oil Rigs

Education


UK Eating Out market – Hotels, Pubs & Restaurants

MARKET

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Hotels, Pubs & Restaurants £62.9bn – 167,383 (value – outlets)

Hotels £9.0bn – 47,893

Full service

£7.7bn – 10,618

Budget

£0.6bn – 3,675

Guest houses & lodges

£0.6bn – 30,832

Holiday parks

£0.1bn – 2,410

Conference centres £0.01bn – 358

Pubs & Bars £21.5bn – 47,458

Managed, Branded & Franchised

£9.9bn – 9,318

Tenanted & Leased £4.2bn – 17,510

Independent & Free of tie

£7.3bn – 17,900

Social Clubs

£0.2.bn – 2,730

Restaurants £32.4bn – 72,033

Service-Led £20.3bn – 33,348

Fine Dining

£0.8bn – 350

Independent £14.4bn – 28,273

Branded / Casual restaurants

£5.2bn – 4,725

Fast Food

£12.0bn – 38,685

Branded Traditional

£4.0bn – 3,031

Branded Delivery-Focused

£1.3bn – 1,776

Branded Contemporary £0.7bn – 560

Independent inc. take-away

£4.9bn – 25,834

Street Food & Mobile Vans

£1.1bn – 7,483

The largest sector in the Eating Out market. The Hotels, Pubs & Restaurants sector is valued at £62.9bn in 2016, comprising 167,383 outlets. The sector accounts for 72% of turnover in the Eating Out market. Restaurants, including fast food and service-led restaurants, are the largest component, making up 52% of value in the sector.

Note: Hotels are not including in the Restaurant market analysis. Totals are affected by rounding.


Analysis of growth in UK Restaurant market vs branded restaurantsBranded restaurants outperform wider market but growth slowing down. The Branded restaurant market is forecast to reach an annual turnover growth rate of 4.7% in 2016, compared with 1.1% for the total Restaurant market. Branded contemporary fast food is enjoying the strongest growth in the Eating Out market, and the Managed, branded & franchised pubs segment is expanding on the back of accelerating conversions of Tenanted pubs. However, growth of Branded casual restaurants is expected to slow down, from a turnover growth rate of 6.8% in 2015 to 5.3% in 2016, having an impact on the overall Branded market. Many casual restaurant brands have expanded very rapidly in recent years, and are now slowing down or in some cases rationalising their estates, indicating the ‘space race’ of the last few years has peaked.

MARKET

Comparative analysis of growth in outlets and turnover across the UK Restaurant market and branded restaurant market, 2012-2016E

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-1.5%

-0.8 -0.7%-0.4%

-0.8%

3.3%

2.6%

3.2%

3.8%

3.3%

2012 2013 2014 2015 2016E

UK Restaurant market Branded restaurant market

Outlets Turnover

0.1% 0.2% 0.6%

1.4%1.1%

4.5%

3.9%

4.5%

5.5%

4.7%

2012 2013 2014 2015 2016E

UK Restaurant market Branded restaurant market


Analysis of growth in Eating Out marketMarket growth rate to slow down in 2016. After years of incremental growth, turnover growth in the Eating Out market is slowing down from 2.5% to 2.2% in 2016. The market is being hit by weakening business and to an extent, consumer confidence. The Eating Out market is outperforming the total Restaurant market, which is seeing turnover growth of 1.1% and outlet growth of -0.8% in 2016. However, the Branded restaurant market is experiencing considerably stronger growth, at rates of 4.7% and 3.3%, for turnover and outlets respectively.

MARKET

Comparative analysis of growth in outlets and turnover across the total Eating Out market, 2009-2016E

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0.1%-0.1%

0.3%0.4%

1.0%0.9%

1.0%0.8%

-1.1%

-0.3%

0.9%

1.4%1.6%

1.9%

2.5%

2.2%

2009 2010 2011 2012 2013 2014 2015 2016E

Outlet growth Turnover growth


Market growth matrix, 2013-2016E

MARKET

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INTERNAL EXTERNAL

HIGH IMPORTANCE

LOW IMPORTANCE

MCA has identified the following sources of growth in the current market. Internal factors are ones which operators can control internally. External factors are outside the control of operators, and are shaped by the economy, by technological developments and by changing consumer preferences.

PHYSICALEXPANSION

DISCOUNTS & PROMOTIONS

MARKETING INITIATIVES

LONGER TRADING HOURS

PREMIUMISATION HYBRIDISATIONNEW TRADING FORMATS

PACE OF NPD SOCIAL MEDIA

INFLATION

TOURISM & STAYCATIONS

EXPERIENTIAL SHARE OF SPEND

FOODIE CULTURE

DELIVERY

TRADING-UP

POPULATION GROWTH

ALTERNATIVE FUNDING SOURCES

EARLY CAPTURE OF DIGITAL NATIVES


Share of UK total Restaurant market by segmentFast food gaining share in Restaurant market. Fast food accounts for 22.4% of total value in Restaurant market, up 1.2pp year-on-year. The low-ticket segment’s share of outlets is also up 1.9pp to 32.4%. This growth is coming at the expense of pubs in particular, and to a lesser extent, service-led restaurants. Pubs are still the largest segment, claiming c.40% of both outlets and turnover. Service-led restaurants are dragged down by independent restaurants, set to see net closures in 2016, but also to an extent by the slowing growth of branded restaurants.

MARKET

Share of total Restaurant market outlets and turnover, with year-on-year changes, Dec 15-Dec 16E

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Market sector UK Restaurant market Pubs Service-led restaurants Fast food outlets

Outlets

Total no. of outlets – Dec 16E 119,491 47,458 33,348 38,685

Annual growth Dec 15-Dec 16E -0.8% -2.9% -1.0% 2.2%

Share of UK Restaurant market 100% 39.7% 27.9% 32.4%

Turnover

Total turnover – 2016E £53,853 £21,469 £20,337 £12,048

Annual growth 2015-2016E 1.1% 0.7% -0.2% 4.3%

Share of UK Restaurant market 100% 39.9% 37.8% 22.4%

-1.7pp -0.2pp +1.9pp

-0.9pp -0.3pp +1.2pp


3,060 2,901 2,730 8,100 8,688 9,318

18,757 17,345 17,900

24,780 22,370 17,510

4,555 5,832

7,483

244 350 560

25,162 25,475 25,834

1,179 1,475 1,776

2,571 2,770 3,031

32,825 29,987 28,273

251 296

350

3,920 4,249 4,725

2010 2013 2016E

Branded service-led restaurants

Fine dining

Independent restaurants

Branded traditional fast food

Branded delivery-focused fastfood

Independent fast food/take-away

Branded contemporary fast food

Street food & Mobile vans

Tenanted & leased pubs

Independent & Free of tie pubs

Managed, branded & franchisedpubs

Social clubs

UK Restaurant market – outlets, 2010-216ESlowdown in net closures. The CAGR of the Total Restaurant market for 2013-2016 is -0.6%, up from -1.0% between 2010-2013. The market continues to experience a net closure of outlets, driven by Tenanted & leased pubs and Independent restaurants in particular. Yet the rate of closures has slowed down, with Branded casual restaurants and Branded fast food having accelerated their physical expansion over the last three years. Operators have been racing to secure sites before their competitors do, but slowing growth at several leading operators this year suggests this pace may have been too high for some.

MARKET

Total outlets of UK Restaurant market by segment, 2010, 2013 & 2016E

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CAGR 2010-2013 CAGR 2013-2016E

-1.0% -0.6%

2.7% 3.6%

5.7% 5.6%

-3.0% -1.9%

2.5% 3.1%

7.8% 6.4%

0.4% 0.5%

12.8% 17.0%

8.6% 8.7%

-3.4% -7.8%

-2.6% 1.1%

2.4% 2.4%

-2.1% -2.6%

Total Restaurant market125,403

121,738 119,491


£184 £174 £164

£8,141 £8,992 £9,932

£7,690 £7,059 £7,213

£5,699 £5,145 £4,177£488 £723 £1,094£259 £393 £702

£4,800 £4,857 £4,942£713 £936 £1,275£3,121 £3,652

£4,035

£16,775 £15,292£14,410

£512 £649 £777£3,712 £4,308

£5,150

2010 2013 2016E

Branded service-ledrestaurants

Fine dining



Branded delivery-focused fastfood

Independent fast food/take-away

Branded contemporary fastfood




Managed, branded &franchised pubs

Social clubs

UK Restaurant market – turnover, 2010-216EStrong growth for contemporary fast food, delivery-focused fast food and street food. The three lower-ticket segments have all seen double-digit growth on average between 2013-2016. The fastest turnover growth has been seen at Branded contemporary fast food, an impressive annual average rate of 21%. Concepts such as Leon and Itsu have tapped into the growing demand for healthier and more adventurous products at affordable prices, and Five Guys has expanded at an astronomical rate. Delivery-focused fast food brands, not least Domino’s, have benefitted from the growing demand for convenience and from longer working hours.

MARKET

Total turnover of UK Restaurant market by segment, 2010, 2013 & 2016E

21

CAGR 2010-2013 CAGR 2013-2016E

0.1% 1.1%

5.1% 6.1%

8.2% 6.2%

-3.0% -2.0%

5.4% 3.4%

9.5% 10.8%

0.4% 0.6%

14.9% 21.3%

14.0% 14.8%

-3.4% -6.7%

-2.8% 0.6%

3.4% 3.4%

-0.5% 0.3%

Total Restaurant market

£52,094 £52,182£53,853


Share of branded restaurants within market segmentsBrands winning share across all segments. Branded segments account for 16.2% of outlets and 39.2% of turnover in the total Restaurant market, up from 15.5% and 36.9%, respectively. Managed, branded & franchised pubs in particular have increased their share of the Pub market, driven primarily by accelerating conversions of tenanted pubs. Branded segments continue to achieve considerably higher sales per store across segments, on the back of greater economic resources of parent companies, better capabilities for attracting investment, and consequently, greater access to higher-footfall sites.

MARKET

Share of branded restaurants within market segments, 2016E, with year-on-year changes

22

Market segment2016E outlet

numbers2016E annual turnover £m

Service-led restaurants

Independents 28,273 £14,410

Fine dining 350 £777

Branded service-led 4,725 £5,150

Total 33,348 £20,337

Branded share of segment 14.2% 25.3%

Pubs

Tenanted/leased 17,510 £4,177

Independents/free of tie 17,900 £7,196

Branded/managed/franchised 9,318 £9,932

Social clubs 2,730 £164

Total 47,458 £21,469



numbers2016E annual turnover £m

Fast food

Independents 25,834 £4,942

Street food & mobile vans 7,483 £1,094

Branded traditional fast food 3,031 £4,035

Branded delivery-focused fast food 1,776 £1,275

Branded contemporary fast food 560 £702

Total 38,685 £12,048



Independents/Non-branded/Non-managed

100,081 £32,759

Branded/Managed 19,410 £21,094

Total 119,491 £53,853

Branded share 16.2% 39.2%

+0.6pp +1.3pp

+1.4pp +2.7pp

+0.4pp +2.4pp

+0.7pp +2.3pp


Service-led restaurant market landscapeService-led restaurant market valued at £20.3bn in 2016. Service-led restaurants, which comprise branded, independent and fine dining restaurants with table service or at the very least semi-counter service, are estimated to reach a value of £20.3bn in 2016, comprising 33,348 outlets. Independent restaurants remain the largest segment in the market, despite ongoing closures, and account for 85% of all outlets and 71% of sales.

MARKET

23

Service-led Restaurant market 2016E:£20.3bn – 33,348

Branded restaurants£5.2bn – 4,725


£14.4bn – 28,273

Fine dining£0.8bn – 350


Analysis of growth in Service-led restaurant marketGrowth slowing down for Branded service-led restaurants, but still outpacing wider market. Turnover growth for Branded casual restaurants is set to decrease from 6.8% in 2015 to 5.3% in 2016. A number of established players – not least Frankie & Benny’s, Giraffe and La Tasca – are rationalising their estates this year. Competition in the market is tighter than ever, and established brands need to refresh their offers to meet contemporary demands. Macroeconomic factors around weakening business confidence are also contributing to operators scaling back expansion plans, as is the increasing difficulty of securing sites. Yet growth in the branded segment is still among the strongest in the Eating Out market, fuelled by a sizeable group of rapidly expanding, newer players.

MARKET

Comparative analysis of growth in outlets and turnover in the service-led restaurant market, 2012-2016E

24

-2.9%

-1.7% -1.6%

-0.7%-1.1%

-0.7% -0.6%-0.3%

1.0%

-0.2%

1.4%

3.4%3.8% 4.0%

2.9%3.4%

5.2%

6.3%6.8%

5.3%

2012 2013 2014 2015 2016E

Total service-led outlet growth Total service-led turnover growth

Branded service-led outlet growth Branded service-led turnover growth


251 296 350

32,825 29,987 28,273

3,920

4,249 4,725

2010 2013 2016E

Branded restaurants

Independentrestaurants

Fine dining

Service-led restaurant market – outletsNet closures to continue, but at a slowing pace. The rate of outlet closures at service-led restaurants has slowed down from a CAGR of -2.3% between 2010-2013 to a CAGR of -1.2% between 2013-2016. The expansion of Branded restaurants accelerated between 2013-2016, as brands aggressively set out to secure sites before their competitors did. The rate of closures at independent restaurants, fuelled by a growing consumer preference for brands and a chef shortage affecting many ethnic restaurants in particular, has also slowed down in recent years, but continues to drag down the wider restaurant market.

MARKET

Analysis of growth in outlets across the service-led restaurant market, 2010-2016E

25

34,532

36,996

33,348

SegmentCAGR

2010-2013CAGR

2013-2016E

Total Service-led restaurants

-2.3% -1.2%

Branded restaurants 2.7% 3.6%

Independent restaurants -3.0% -1.9%

Fine dining 5.7% 5.6%


£512 £649 £777

£16,775£15,292 £14,410

£3,712£4,308 £5,150

2010 2013 2016E

Branded restaurants


Fine dining

Service-led restaurant market – turnoverVery modest positive sales growth emerging, driven by branded restaurants. The CAGR for turnover growth in the Service-led restaurants market is 0.1% between 2013-2016E, up from -1.2% between 2010-2013E. The strong turnover growth at Branded restaurants, estimated at a CAGR of 6.1% for 2013-2016E, has been fuelled primarily by rapid physical expansion, but also rising consumer numbers and visit frequencies driving like-for-like growth.

MARKET

Analysis of growth in turnover across the service-led restaurant market, 2010-2016E

26

SegmentCAGR

2010-2013CAGR

2013-2016E

Total Service-led restaurants

-1.2% 0.1%

Branded restaurants 5.1% 6.1%

Independent restaurants -3.0% -2.0%

Fine dining 8.2% 6.2%

£20,249£20,999

£20,337


Analysis of service-led restaurant market by segment, 2016EIndependents losing share to branded restaurants. Independent restaurants remain the mainstay of the service-led market, accounting for 85% of outlets and 71% of sales, but they are losing share in both. Branded operators now account for over a quarter of turnover in the market. Chain restaurants typically have access to better sites and higher sales per store. Fine dining, defined as either Michelin-starred or AA Rosette awarded, is a minor part of the market.

MARKET

Share of service-led restaurant market outlets and turnover by segment, 2016E

27


numbersShare of service-led restaurant market

2016E annual turnover £m

Share of service-led restaurant market

Service-led restaurant market 33,348 100% £20,337 100%

Branded restaurants 4,725 14.2% £5,150 25.3%

Independent restaurants 28,273 84.8% £14,410 70.9%

Fine dining 350 1.0% £777 3.8%

+0.6pp +1.3pp

+0.1pp

-0.6pp -1.5pp

+0.0pp


Analysis of annual outlet growth by cuisine, 2016ELatin/South American cuisine seeing strongest growth. Branded concepts serving food from Latin/South America are expected to see outlet growth of 35% in 2016, reaching a total of 135 outlets. The formidable growth in this segment is spearheaded by Rodizio Preto, expected to double in outlets to 10, CAU, set to grow by 57% to 22 outlets, and Turtle Bay, expected to expand by 48% to 37 outlets. However, Latin American food is still only expected to account for 2.8% of the Branded casual restaurant market. Strong growth is also forecast for South East Asian (22%) and Burgers (20%). Pizza/pasta is the largest cuisine segment by outlets, holding a 30% share.

MARKET

28

Cuisine segment2016E outletgrowth rate

Number of outlets, December 2016EShare of Branded

service-led restaurant market outlets, 2016E

American (excluding fast food) 5.0% 472 10.0%

Asian (excluding Japanese or South East Asian) 8.8% 37 0.8%

British 9.4% 210 4.4%

Burger 19.9% 217 4.6%

Chicken 11.3% 384 8.1%

French 4.2% 221 4.7%

Italian 1.6% 261 5.5%

Japanese 6.0% 228 4.8%

Latin/South American 35.0% 135 2.9%

Mexican (excluding burrito fast food chains) 2.8% 145 3.1%

Pizza/Pasta 7.9% 1,457 30.1%

South East Asian 22.3% 126 2.7%

Steak house 18.9% 88 1.9%

Others -21.3% 744 15.2%

TOTAL 2.9% 4,725 100%

Annual outlet growth of branded service-led restaurants by leading cuisine, with share of outlets of branded service-led market, 2016E

+0.06pp

+0.04pp

+0.23pp

+0.62pp

+0.55pp

+0.03pp

-0.05pp

+0.11pp

+0.67pp

-0.02pp

+1.14pp

+0.50pp

+0.34pp

-4.21pp

Note: Outlet counts for segments listed above only include brands with 5 or more outlets. The ‘Others’ segment includes smaller brands as well (2 or more outlets).



Executive summary

Market


Section summary

Financial performance and outlet growth

Key performance indicators

Profiles of the top 20 restaurant brands


Consumer insight



Future outlook

Contents


Competitive landscape – Section summaryLower ticket brands top the restaurant market.

• McDonald’s is the leading brand by sales, with turnover expected to reach £2.1 billion in 2016, attributed to ongoing expansion and refurbishments, including rolling out table service to selected stores. Wetherspoon and KFC follow in turnover, with £1.4 and £1.0 billion estimated for 2016, respectively. Growth at Wetherspoon is set to slow this year, with the brand recently putting 90 pubs on the market.

• In casual restaurants, Nando’s continues its winning streak, expected to overtake Burger King in turnover and forecast to reach £579 million in 2016. The brand continues to have widespread appeal amongst consumers.

• Fault lines are opening up in bigger brands, with the Top 10 brands by turnover all set to lose market share this year, aside from Nando’s.

Emerging brands showing strongest growth.

• Brands with less than 100 outlets are set to grow turnover and outlets by 9.7% and 7.8% on average, respectively, compared with an average of 5.8% and 3.5% for all leading brands in the market. In contrast, brands with over 200 outlets are in line to grow by 4.2% and 2.0% for turnover and outlets, respectively. This is resulting in growing dynamism in the Restaurant market, with a number of newer brands expanding rapidly while the establishment is slowing down.

• Brands appealing to millennial consumers by offering ethnic cuisine or specialisation are seeing the most robust growth. Latin/South American themed brand, Turtle Bay, is set to see 66% sales growth to £42 million, and pizza brand, Franco Manca, is expected to grow by 50% to 27 outlets.

Contemporary fast food is teaching traditional new tricks.

• Contemporary fast food brands Itsu, Five Guys, Leon and Wasabi are all gaining market share in outlets through rapid physical expansion. In contrast, McDonald’s, KFC, Burger King and Wimpy are losing share.

• Five Guys is set to see the highest percentage sales growth of any restaurant brand, of 67% to £70 million in 2016, led by strong outlet growth of 50% to 60 outlets. The contemporary fast food brand is on track to increase turnover market share from 1.0% to 1.5% this year in the fast food segment.

COMPETITIVE LANDSCAPE

Côte, Cosmo and Five Guys outperform in KPIs.

• Eating Out Panel data shows customers rate Côte and Cosmo highly among restaurant brands, with the brands achieving the highest NPS scores. Cosmo’s Pan-Asian cuisine and extensive menu appeal to a wide demographic. Côte, known for its French bistro style, offers all-day service, a key growth area.

• Among fast food brands, Five Guys tops the KPI charts for overall experience. The brand appeals to an extensive customer base with its mid-market prices and high food quality perceptions.

• In pub brands, O’Neill’s preforms well, attaining top position for overall experience and food quality. Sizzling Pubs, the family-friendly pub chain, scores 8.8 in value for money, ranking highest among pub brands.

Premium growing at the expense of value in pubs.

• The Branded pub market is experiencing a shift away from the heavy value focus seen in previous years, to more premium pubs. Greene King has identified Chef & Brewer as a growth brand, and is converting Fayre & Square outlets to the format. M&B is converting Crown Carveries pubs into its new, more premium Sizzling Pubs format, Stonehouse Pizza & Carvery.

• Net closures are expected for value-led Wetherspoon and low-mid market Harvester. In contrast, premium brand, Vintage Inns, makes the list of Top 10 fastest growing restaurant brands with 100-200 outlets. Similarly, Miller & Carter ranks eighth for outlet grow among restaurant brands with less than 100 sites.

Dynamism and premiumisation key growth trends for next few years.

• The Restaurant market competitive landscape is marked by three key current trends: fault lines emerging in the establishment, growing dynamism from small brands expanding rapidly, and a shift from value to premium in the pub and, to an extent, fast food space.

• MCA expects these trends to accelerate over the next few years, resulting in a more fragmented, more competitive and, ultimately, more diverse marketplace, where physical expansion will increasingly involve brands growing at the expense of each other, rather than alongside each other.

30



Executive summary

Market


Section summary





Consumer insight



Future outlook

Contents


Turnover – Top 10 fast food, pub and restaurant companies


Positive growth seen across the Top 10 groups. All leading groups, with the exception of Marston’s and Enterprise Inns, are seeing turnover growth year on year. McDonald’s is the leading restaurant company in the UK by sales, with 2016 turnover expected to reach £2.12bn, up from £2.09bn in 2015. Greene King will see the strongest growth among the Top 10 groups over 2016, of £1,072m, primarily due to the acquisition of Spirit Pub Company.

Top 10 fast food, pub and restaurant groups by turnover, £m, 2012-2016E

32

McDonald'sMitchells &

ButlersGreene King Wetherspoon YUM! Brands

TheRestaurant

GroupMarston's

EnterpriseInns

Nando's Stonegate

FY 2012 £1,944 £1,889 £803 £1,197 £1,179 £533 £605 £711 £374 £484

FY 2013 £1,967 £1,895 £864 £1,281 £1,201 £580 £656 £692 £431 £470

FY2014 £2,026 £1,970 £963 £1,409 £1,233 £635 £655 £639 £470 £557

FY 2015 £2,085 £2,101 £1,001 £1,514 £1,259 £685 £676 £632 £523 £562

FY 2016E £2,116 £2,106 £2,073 £1,595 £1,287 £696 £658 £625 £579 £579

Note: Turnover is reported total group turnover to financial year, and estimated where 2016 results are not yet available. YUM! Is an estimate based on combined turnover of its individual brands.


Turnover – Top 10 brandsTraditional fast food brands lead in top five. McDonald’s, KFC and Burger King all feature in the Top five brands by turnover, with Wetherspoon representing the leading pub brand. Growth is slowing down at Wetherspoon, which has put a total of 90 pubs on the market in the last 12 months. Chicken brand Nando’s is set to overtake Burger King in turnover in 2016. All the leading brands are forecast to enjoy net turnover growth in 2016.


Top 10 fast food, pub and restaurant brands by turnover, £m, 2012-2016E

33

McDonald's Wetherspoon KFC Nando's Burger King PizzaExpress HarvesterFrankie &Benny's

Hungry HorsePizza Hut

Restaurants

2012 £1,944 £1,017 £910 £374 £464 £362 £281 £243 £185 £251

2013 £1,967 £1,080 £924 £431 £471 £369 £307 £273 £229 £230

2014 £2,026 £1,199 £931 £470 £533 £380 £322 £291 £252 £225

2015 £2,085 £1,413 £964 £523 £544 £407 £324 £317 £276 £225

2016E £2,116 £1,426 £994 £579 £576 £427 £329 £318 £299 £235

Note: Turnovers are annualised estimates based on average weekly sales.


£2,116 £1,426 £994 £579 £566 £427 £329 £325 £299 £235

10.1%

6.8%

4.7%

2.8% 2.7%2.0%

1.6% 1.5% 1.4% 1.1%

McDonald's Wetherspoon KFC Nando's Burger King PizzaExpress Harvester Frankie &Benny's

Hungry Horse Pizza HutRestaurants

Turnover 2016E Percentage market share & Movement YoY

↔0.0pp

Market share – Top 10 brands

Top 10 brands make up 35% of the branded restaurant market. McDonald's leads with a turnover of over £2.1 billion making up 10.1% of the branded market, down from 10.4% in 2015. Nando’s, forecast to grow to 375 outlets in December 2016, holds an impressive 2.8% market share compared to 452-outlet PizzaExpress’s 2.0% share. Nando’s is the only leading brand in the Top 10 expected to see market share growth, highlighting the growing dynamism and fragmentation in the market.

Top 10 fast food, pub and restaurant brands by turnover, £m, with total branded restaurant market share shown in percentages, 2016E

34

Notes: Turnover figures estimated for calendar year. Branded restaurant market includes fast food, pub and restaurant brands.

↓0.3pp

↓0.4pp

↓0.1pp↔0.0pp

↑0.2pp

↓0.1pp

↔0.0pp

↔0.0pp

↔0.0pp



Operating margin – Top 10 groupsHigher operating margins at pub groups. Young’s and Whitbread have achieved consistently high operating margins, above 20% every year since 2011. Young’s recorded an impressive operating margin of 24% in its FY 2016, the highest among surveyed groups, driven by positive like-for-like sales and cost management. The Restaurant Group has achieved the highest operating margin for restaurant companies for the past four years, but this has decreased to 10.5% in H1 2016 due to operational difficulties and decreasing like-for-likes.

Operating margins of leading pub and restaurant companies, 2011-2015

35

Notes: Pub group operating margins are based on the following: M&B – total group revenue; JD Wetherspoon – sales of food, beverages, hotel rooms, and machine income; Young’s – sales of drink, food and accommodation for managed pubs; Greene King – retail; Whitbread – hotel and restaurant division. Only companies with official figures available were considered. Figures are to financial year. *Note: Azzurri Group was Gondola Group prior to 2015.

Whitbread Young's Greene KingMitchells &

Butlers

TheRestaurant

GroupFuller's Prezzo Group

AzzurriGroup*

Wetherspoon Stonegate

FY 2011 24% 23% 19% 16% 13% 11% 13% 8% 10% 0%

FY 2012 24% 21% 19% 16% 13% 12% 13% 7% 9% 5%

FY 2013 23% 22% 19% 17% 13% 11% 12% 5% 9% 4%

FY 2014 23% 22% 20% 16% 13% 11% 12% 8% 8% 4%

FY 2015 24% 23% 19% 16% 13% 11% 11% 9% 7% 6%

FY 2016 23% 24% 19% 11% 7%N/A N/A N/A N/A N/A

Operating margins of leading pub and restaurant companies, 2011-2016



Sales growth – Top 10 brands with over 200 outlets, 2015-2016ENando’s leading sales growth. The five brands expected to see the strongest growth in 2016 in absolute terms are all value-led, including Nando’s, leading ahead of fast food giants, McDonald’s and KFC. Nando’s is expected to see impressive percentage growth of 10.7% and absolute growth of £55.8 million. Sizzling Pubs is set to see the second highest percentage turnover growth of 9.4%, benefitting from conversions of Crown Carveries sites.


Top 10 brands with over 200 outlets ranked by UK sales growth in absolute terms with percentage growth rates, 2015-2016E

36

Brand Nando's McDonald's KFC Hungry Horse Sizzling Pubs Burger King PizzaExpress Prezzo WetherspoonPizza Hut

RestaurantsTurnover growth

10.7% 2.7% 3.1% 8.1% 9.4% 4.0% 4.9% 8.3% 0.9% 1.8%

Outlet growth 10.0% 1.6% 2.2% 8.2% 8.7% 1.6% 2.3% 7.8% -2.0% 1.8%

Crude like-for-like

0.7% 1.1% 0.9% -0.1% 0.7% 2.4% 2.6% 0.5% 2.9% 0.0%

£55.8 £55.1

£30.3

£22.5 £22.5 £21.8 £20.1£14.9 £12.8

£9.8

10.7%

2.7% 3.1%

8.1%

9.4%

4.0% 4.9%

8.3%

0.9%

1.8%

Nando's McDonald's KFC Hungry Horse Sizzling Pubs Burger King PizzaExpress Prezzo Wetherspoon Pizza HutRestaurants

Absolute growth Percentage growth


Sales growth – Top 10 brands with 100-200 outlets, 2015-2016EBella Italia ranks highest. Bella Italia is expected to see turnover percentage growth of 34%, on the back of 22 new openings predominantly in retail parks. Flaming Grill Pubs is seeing to a see high crude like-for-like score, 5.3%, and is third highest for absolute turnover growth of £9.4 million.


Top 10 brands with 100-200 outlets ranked by UK sales growth in absolute terms with percentage growth rates, 2015-2016E

37

Bella Italia Wagamama Flaming Grill Toby Carvery Beefeater Carluccio’s ZizziBrewers

FayreChef & Brewer

Vintage Inns

Turnover growth

33.6% 10.5% 7.4% 3.6% 4.5% 6.8% 5.3% 3.5% 4.0% 2.5%

Outlet growth 22.9% 5.1% 2.1% 0.0% 5.6% 6.1% 5.8% 3.1% 3.7% 3.1%

Crude like-for-like

10.7% 5.4% 5.3% 3.6% -1.1% 0.7% -0.5% 0.4% 0.3% -0.6%

£28.8

£18.2

£9.4 £9.3 £9.2 £8.8 £7.7 £7.6 £7.2 £6.0

33.6%

10.5%7.4%

3.6% 4.5%

6.8%

5.3%3.5% 4.0%

2.5%

Bella Italia Wagamama Flaming Grill Toby Carvery Beefeater Carluccio's Zizzi BrewersFayre

Chef &Brewer

Vintage Inns



Sales growth – Top 10 brands with under 100 outlets, 2015-2016EFive Guys leading sales growth for smaller brands. Five Guys is set to see impressive percentage turnover growth of 67% in 2016 to £70.2 million. The brand continues to expand rapidly throughout the UK. Miller & Carter’s turnover is expected to increase by 27% to £14.2mn, driven by conversions of Harvester units.


Top 10 brands with under 100 outlets ranked by UK sales growth in absolute terms with percentage growth rates, 2015-2016E

38

Five Guys Côte Leon T.G.I. Fridays Turtle BayJamie's Italian

Miller & Carter

Bill’s Loungers Byron

Turnover growth

66.7% 20.1% 54.9% 9.1% 63.2% 12.5% 26.8% 16.5% 27.9% 20.2%

Outlet growth 50.0% 12.3% 48.5% 6.9% 48.0% 9.5% 30.8% 5.6% 16.7% 12.7%

Crude like-for-like

16.7% 7.8% 6.4% 2.2% 15.2% 3.0% -4.0% 10.9% 11.2% 7.5%

£28.1

£22.0

£18.8£17.2 £16.2

£14.2 £14.2 £13.4 £13.0£12.8

66.7%

20.1%

54.9%

9.1%

63.2%

12.5%

26.8%

16.5%

27.9%

20.2%

Five Guys Côte Leon T.G.I. Fridays Turtle Bay Jamie'sItalian

Miller &Carter

Bill's Loungers Byron



3.5%

7.8%

0.9%

2.0%

5.8%

9.7%

4.8%

4.2%

Average <100 100-200 >200

Outlet growth Turnover growth

Sales growth summary, 2015-2016EHighest growth seen in brands with less than 100 outlets. Brands with less than 100 sites are set to grow turnover and outlets by 9.7% and 7.8%, compared with an average of 5.8% and 3.5% for all leading brands in the market. In contrast, brands with over 200 outlets are in line to grow by 4.2% and 2.0% for turnover and outlets, respectively, this year.


Average outlet and sales growth for brands by outlet count, turnover in billions, 2015-2016E

39

<100 100-200 >200

Total brands 109 13 12

Total outlets 3,250 1,838 5,974

Total turnover £3,992 £2,231 £7,853

Note: Brand performance is focused on MCA’s Brands & Corporates database of 110 leading operators, with inclusion requiring a minimum of 5 outlets and a distinct, single brand consistency

AVG TURNOVER GROWTH

AVG OUTLET GROWTH


27.9% 27.6% 27.4%

16.6% 17.4% 17.1%

5.9% 6.4% 6.9%2.5% 2.7% 3.0%1.4% 1.5% 1.5%

2014 2015 2016E

Top 10 Next 25 Next 25 Next 25 Bottom 25

Turnover market share Outlet market share

Fast food, pub and restaurant brands by market share, 2014-2016E

Market share of leading restaurant brands by outlets

Note: Brand performance is focused on MCA’s Brands & Corporates database of 110 leading operators, with inclusion requiring a minimum of 5 outlets and a distinct, single brand consistency.


Outlet numbers 250+ 77-249 35-76 16-34 5-15

Brand examples

35.3% 34.6% 32.4%

16.9% 17.6%17.5%

6.0% 7.3%7.9%

2.6% 2.9% 3.1%1.6% 1.8% 2.0%

2014 2015 2016E



Top 10 brands losing market share. The Top 10 brands by outlets are seeing continued decrease in both turnover and outlet market share. Brands with 35-77 outlets are seeing highest increase in turnover and outlet market share. The smaller groups are both also set to increase their share of sales and outlets in the total market this year, highlighting growing dynamism in the Restaurant market.


Percentage sales growth – Top 10 brands, 2015-2016E• Five brands seeing turnover growth of over 50%. The fastest growing brands – CAU, Five Guys, Franco Manca, Turtle Bay and Leon – are examples of

brands offering a contemporary experience through specialisation in a product, adventurous cuisine or healthier eating focus. Service, environments and atmosphere are equally important to capture the minds of contemporary consumers.


Top 10 fastest growing brands ranked by percentage growth rates with UK sales growth in absolute terms, 2015-2016E

41

£8.2 £28.1 £6.2 £16.1 £19.0 £7.2 £7.6 £2.6 £3.2 £8.4

67% 67%64% 63%

55%

48%45%

42% 41%38%

CAU Five Guys Franco Manca Turtle Bay Leon Cosy Club Coast To Coast Koh ThaiTapas

Barburrito MEATliquor

Absolute Growth Percentage Growth


Outlets – Top 20 restaurant, fast food and pub brands by outlets Fast food brands and Wetherspoon stand out. McDonald’s has the highest number of outlets and is set to experience continued strong expansion over 2016. Chicken giant Nando’s is set to see the highest percentage growth of 10%, on the back of 34 net new openings.


Top 20 fast food, pub and restaurant brands by outlets, December 2015-December 2016E

42

Brand Segment Outlets Dec-15 Outlets Dec-16E Net New openings % growth

McDonald's Traditional fast food 1,277 1,297 20 1.6%

KFC Traditional fast food 832 850 18 2.2%

Wetherspoon Pub restaurant 789 773 -16 -2.0%

Burger King Traditional fast food 502 518 16 3.2%

PizzaExpress Casual restaurant 442 452 10 2.3%

Nando's Casual restaurant 341 375 34 10.0%

Pizza Hut Restaurants Casual restaurant 280 285 5 1.8%

Frankie & Benny's Casual restaurant 253 252 -1 -0.4%

Hungry Horse Pub restaurant 245 265 20 8.2%

Harvester Pub restaurant 231 220 -11 -4.8%

Sizzling Pubs Pub restaurant 230 250 20 8.7%

Prezzo Casual restaurant 230 248 18 7.8%

Vintage Inns Pub restaurant 191 197 6 3.1%

Toby Carvery Pub restaurant 173 173 0 0.0%

Fayre & Square Pub restaurant 164 114 -50 -30.5%

Brewers Fayre Pub restaurant 161 166 5 3.1%

Two for One Pub restaurant 150 142 -8 -5.3%

Flaming Grill Pubs Pub restaurant 142 145 3 2.1%

Beefeater Pub restaurant 142 150 8 5.6%

Zizzi Casual restaurant 139 147 8 5.7%

Sub-total 6,914 7,019 105 1.5%


Outlet growth – Top 20 brands Dec 2015-Dec 2016ENando’s leads in outlet growth, followed by Bella Italia and Hungry Horse. Bella Italia is growing on the back of Café Rouge conversions, and also a revitalised offer. Barburrito is seeing the strongest growth, though from a relatively low base.


Top 20 fast food, pub and restaurant brands by forecast net outlet growth, Dec 2015-Dec 2016E, with percentage growth rates

43

34

2220 20 20 20

18 1816

12 12 11 10 9 9 9 9 8 8 810%

23%

8%

50%

2%

9%

2%8%

48%

22%

48%

17%

2%

12%

50%

13%

23%

6%2%

67%

Outlet growth Percentage growth


Top 20 casual restaurant brands with under 60 outlets, 2015-2016EEmerging brands lead casual restaurants. Turtle Bay, Coast to Coast and Franco Manca are among newer brands set to see strong outlet growth. Both Turtle Bay and Coast to Coast have well-developed cocktail menus alongside their food offers. La Tasca and Strada are undergoing estate rationalisation.


Top 20 casual restaurant brands under 60 outlets, ranked by outlets with turnover, 2015-2016E

44

Brand:Outlets Dec-

15Outlets Dec-16E

Year on Year % growth

Turnover FY 2015 (m)

Turnover FY 2016E (m)

Year on year % growth

Ed's Easy Diner 58 61 5.2% £50.2 £52.9 5.4%

Byron 55 67 21.8% £63.5 £76.3 20.2%

Las Iguanas 47 55 17.0% £60.2 £72.0 19.6%

Jamie's Italian 42 46 9.5% £113.8 £128.0 12.5%

Strada 42 32 -23.8% £48.6 £40.8 -16.0%

Loch Fyne 41 37 -9.8% £48.5 £47.1 -2.9%

Harry Ramsden's 39 48 23.1% £19.0 £25.2 32.6%

Chimichanga 38 38 0.0% £45.1 £45.2 0.2%

La Tasca 37 12 -67.6% £22.3 £21.6 -3.1%

Wildwood 31 38 22.6% £22.3 £29.3 31.4%

Le Pain Quotidien 26 27 3.8% £33.8 £34.8 3.0%

Handmade Burger Company 25 25 0.0% £17.4 £18.6 6.9%

Turtle Bay 25 37 48.0% £25.5 £41.6 63.2%

Piccolino 22 22 0.0% £33.1 £34.4 3.9%

Wahaca 21 21 0.0% £37.1 £42.8 15.4%

Brasserie Blanc 19 18 -5.3% £31.9 £30.6 -4.1%

Coast To Coast 18 25 38.9% £17.3 £25.1 45.1%

Cosmo 18 20 11.1% £32.6 £36.8 12.9%

Franco Manca 18 27 50.0% £9.7 £15.9 63.9%

Giggling Squid 16 19 18.8% £10.3 £14.1 36.9%

Sub-total 661 709 7.3% £741.9 £833.9 12.4%

UK Branded casual restaurant market 4,590 4,725 £4,890 £5,150



Executive summary

Market


Section summary





Consumer insight



Future outlook

Contents


Top 15 Casual restaurant brands by outlets – market positioning map


46

High Price

Low Price

Narrow Focus Broad focus


Market share of Top 15 casual restaurant brandsPizzaExpress and Nando’s fight for leadership. PizzaExpress and Nando’s top the charts by outlets, with 452 and 375 respectively, Nando’s leading by turnover, holding an 11.2% market share. At 0.6pp Nando’s has seen the biggest increase in turnover share from 2015, attributed to continued rapid expansion.


Top 15 branded casual restaurants, market share by UK store numbers and turnover, December 2016E

47

Outlets December 2016E Turnover 2016E

Casual Restaurant brand UK Dec 16EShare of Branded casual restaurant

market

Change in % from 2015

Est. Turnover (£m)Share of Branded casual restaurant

market


PizzaExpress 452 9.6% 0.0pp £427 8.3% 0.0pp

Nando's 375 7.9% 0.4pp £579 11.2% 0.6pp

Pizza Hut Restaurants 285 6.0% -0.1pp £235 4.6% 0.0pp

Frankie & Benny's 252 5.3% -0.2pp £318 6.2% -0.3pp

Prezzo 248 5.2% 0.2pp £194 3.8% 0.1pp

Zizzi 147 3.1% 0.1pp £152 3.0% 0.0pp

Wagamama 124 2.6% 0.0pp £189 3.6% 0.1pp

Bella Italia 118 2.5% 0.4pp £115 2.2% 0.5pp

ASK Italian 117 2.5% 0.0pp £93 1.8% 0.0pp

Carluccio's 104 2.2% 0.0pp £140 2.7% 0.0pp

Café Rouge 90 1.9% -0.2pp £103 2.0% -0.3pp

Chiquito 86 1.8% 0.0pp £114 2.2% 0.0pp

Côte 82 1.7% 0.1pp £132 2.6% 0.3pp

Gourmet Burger Kitchen 78 1.6% 0.1pp £64 1.2% 0.1pp

T.G.I. Friday's 77 1.6% 0.0pp £208 4.0% 0.1pp

Sub-total 2,635 55.4% 1.0pp £3,063 59.4% 0.3pp

UK Branded casual restaurant market 4,725 100% £5,150 100%


Restaurant brands NPS – lunch & dinner, 2016Côte performs well in NPS score. Côte, Cosmo and Loch Fyne top the charts for NPS scores. Loch Fyne and La Tasca receive high NPS scores despite having modest or negative turnover growth, highlighting a loyal core customer base. At the other end of the spectrum are

Harry Ramsden’s, Chiquito and Jamie’s Italian.


Leading restaurant chains ranked by Revisit Intention and NPS, lunch & dinner combined, 2016

48

Source: MCA Eating Out Panel, 12 months to June 2016 & minimum sample size of 30 applies. Note: Sales growth is categorised as turnover percentage growth, less than 5% is low, 5-10% medium and more than 10% is high.

Top 10 Net Promoter Scores 2016 Score Bottom 10 Net Promoter Scores 2016 Score

Côte 62 Harry Ramsden's 0

Cosmo 59 Chiquito 9

Loch Fyne 53 Jamie's Italian 9

La Tasca 42 Giraffe 9

Las Iguanas 41 Gourmet Burger Kitchen 10

Bella Italia 39 Ed's Easy Diner 12

Nando's 38 Bill's 19

Prezzo 36 T.G.I. Friday's 21

Wagamama 36 ASK 24

Carluccio's 35 Handmade Burger Co. 24

Key: High sales growthMedium sales growthLow sales growth


KPIs of casual restaurant brands (1 of 2) – lunch & dinner, 2016Among restaurant chains, Cosmo ranks highest. Most notably, Cosmo scores 8.7 for value for money and 9.0 for speed of service. YO! Sushi achieves the highest score for food quality/taste.


KPIs of restaurant brands – lunch & dinner combined, 2016

49

Rank Convenient locationAtmosphere/ environment

Value for money Low Prices Speed of Service Friendly service Food quality/ taste

1 Côte 8.9 Loch Fyne 8.7 Cosmo 8.7 Cosmo 8.5 Cosmo 9.0 Côte 8.8 YO! Sushi 8.9

2 Las Iguanas 8.8 Côte 8.6 Côte 8.2 Las Iguanas 7.5 Las Iguanas 8.6 Las Iguanas 8.8 Côte 8.8

3 Prezzo 8.7 Café Rouge 8.4 Las Iguanas 8.2 Bella Italia 7.5 Wagamama 8.6 La Tasca 8.7 Cosmo 8.8

4 Cosmo 8.7 Las Iguanas 8.4 La Tasca 8.1Pizza Hut Restaurant

7.5 Wasabi 8.3 Bella Italia 8.6 Wagamama 8.8

5 Bella Italia 8.7 Bella Italia 8.4 Loch Fyne 8.1 La Tasca 7.4 Côte 8.1 Wagamama 8.6 La Tasca 8.6

6 ASK 8.6 Zizzi 8.3 Bella Italia 8.1 Nando's 7.4 YO! Sushi 8.1 Zizzi 8.5 Las Iguanas 8.6

7Jamie's Italian

8.6 Cosmo 8.2 Wagamama 7.9 Wasabi 7.3 Prezzo 8.1 Cosmo 8.5 Bella Italia 8.6

8 Chiquito 8.5 Prezzo 8.2 Prezzo 7.9 Prezzo 7.2 Nando's 8.0 Loch Fyne 8.5 Prezzo 8.5

9 Zizzi 8.5Frankie & Benny's

8.2Pizza Hut Restaurant

7.9 ASK 7.2 Bella italia 8.0 Carluccio's 8.5 Loch Fyne 8.5

10 PizzaExpress 8.5 ASK 8.2 Nando's 7.9 PizzaExpress 7.1 La Tasca 8.0 Café Rouge 8.5 Nando's 8.5

Source: MCA Eating Out Panel, 12 months to June 2016. Minimum sample size of 30 applies. KPIs are based on a scale of 1-10 (from very poor to excellent).


KPIs of casual restaurant brands (2 of 2) – lunch & dinner, 2016Cosmo ranks highest for overall experience. Cosmo achieves continually high scores across the board, including outperforming other branded restaurants in overall experience. Loch Fyne follows in second place for overall experience and is also ranked first for freshness.


KPIs of restaurant brands – lunch & dinner combined, 2016

50

Rank Drink quality/ taste Freshness Menu Choice CleanlinessEthical practice/

productsFamily friendly Overall experience

1 Cosmo 8.8 Loch Fyne 9 Cosmo 9.3 Côte 8.9 Loch Fyne 7.9 Cosmo 8.8 Cosmo 8.9

2 La Tasca 8.8 Côte 8.8 Wagamama 8.6 Loch Fyne 8.9 Wagamama 7.9Ed's Easy Diner

8.4 Loch Fyne 8.8

3Ed's Easy Diner

8.6 Wagamama 8.7 YO! Sushi 8.5 Cosmo 8.8 Cosmo 7.8Pizza Hut Restaurants

8.4 Côte 8.7

4 Côte 8.6 YO! Sushi 8.7 Bella Italia 8.5 La Tasca 8.7Jamie's Italian

7.8Frankie & benny's

8.4 Las Iguanas 8.5

5 Las Iguanas 8.5 Bella Italia 8.6 Las Iguanas 8.5 Prezzo 8.6 Bella Italian 7.8 Nando's 8.3 Bella Italia 8.5

6 Café Rouge 8.5 Zizzi 8.5 Loch Fyne 8.5 Wagamama 8.6Handmade Burger Co.

7.7 Wagamama 8.2 La Tasca 8.5

7 Bella Italia 8.4 Las Iguanas 8.5 Côte 8.5 Las Iguanas 8.6Ed's Easy Diner

7.6 Bella Italia 8.2 Wagamama 8.5

8 Wagamama 8.4 Cosmo 8.5 La Tasca 8.5 Zizzi 8.5 Nando's 7.6 PizzaExpress 8.1 Prezzo 8.4

9 Prezzo 8.4 Prezzo 8.5 Prezzo 8.4 Bella Italia 8.5 Las Iguanas 7.6T.G.I. Fridays

8.1 Zizzi 8.3

10 Zizzi 8.4Jamie's Italian

8.5 PizzaExpress 8.2 Café Rouge 8.5 YO! Sushi 7.5Jamie's Italian

8.1 Café Rouge 8.3



8.8 8.8 8.6 8.6 8.6 8.8 8.5 8.5 8.5 8.5

8.7 8.2 8.1 8.2 8.1 7.9 8.1 7.9 7.9 7.7

Cosmo Côte La Tasca Las Iguanas Bella Italia Wagamama Loch Fyne Prezzo Nando's Zizzi

Food quality/taste Value for money

KPI case study – Top 10 restaurant brands, lunch & dinner, 2016

Cosmo achieves the highest combined score. Cosmo achieves the highest combined score for the key metrics of food quality and value for money. Côte and Wagamama achieve the same scores as Cosmo in food quality, but Wagamama underperforms in value for money.


Top 10 restaurant brands, lunch & dinner combined, KPIs of food quality and value for money, ranked combined score, 2016

51

17.5 16.716.8 16.716.717.0 16.416.5 16.216.7

Source: MCA Eating Out Panel, 12 months to June 2016 & minimum sample size of 30 applies


Top 10 Fast food brands by outlets – market positioning map


52

High Price

Low Price

Traditional Emerging


Market share of branded fast food chainsTraditional fast food brands losing share. McDonald’s, KFC and Burger King are all expected to see a decrease in both the market share of outlets and turnover. McDonald’s alone is forecast to see a drop of 1.2pp in turnover share. Although contemporary fast food is a rapidly growing segment, it is still a relatively minor player in the total fast food market, with five largest brands making up less than 6% of outlets.


Top 10 branded fast food restaurants, market share by UK store numbers and turnover, December 2016E

53

Outlets December 2016E

Turnover 2016E

Branded Chains Traditional/Cont. Outlets Share of UK Branded fast food market


Turnover (£m)Share of UK Branded fast food market


McDonald's Traditional 1,297 36.1% -1.1pp £2,116 44.7% -1.2pp

KFC Traditional 850 23.7% -0.6pp £1,064 22.5% -0.5pp

Burger King Traditional 518 14.4% -0.2pp £576 12.2% 0.0pp

Wimpy Traditional 86 2.4% -0.2pp £49 1.0% -0.1pp

Itsu Contemporary 73 2.0% 0.1pp £90 1.9% 0.2pp

Five Guys Contemporary 60 1.7% 0.5pp £70 1.5% 0.5pp

Leon Contemporary 49 1.4% 0.4pp £53 1.1% 0.4pp

Wasabi Contemporary 49 1.4% 0.1pp £87 1.8% 0.1pp

Roosters Piri Traditional 35 1.0% -0.1pp £22 0.5% 0.0pp

Tortilla Contemporary 31 0.9% 0.1pp £27 0.6% 0.1pp

Sub-total 3,048 84.9% -1.0pp £4,154 87.7% -0.5pp

UK Branded fast food market (excl. delivery segment)

3,591 100% £4,737 100%

Note: Contemporary fast food is defined as food served quickly at the counter and has healthy or ‘newer’ cuisine focus.


Fast food NPS – lunch & dinner, 2016Wasabi tops the charts. Out of leading brands, Wasabi holds the highest score for NPS, followed by Five Guys and KFC. The top 2 brands are also set to enjoy strong sales growth of over 10% this year.


Leading fast food chains ranked by revisit intention and NPS, lunch & dinner combined

54

Net Promoter Score 2016 Score

Wasabi 24

Five Guys 15

KFC 15

McDonald's 14

Burger King -1

Key: High sales growthMedium sales growthLow Sales growth

Source: MCA Eating Out Panel, 12 months to June 2016 & minimum sample size of 30 applies. Note: Sales growth is categorised as turnover percentage growth, less than 5% is low, 5-10% medium and more than 10% is high.


KPIs of fast food brands (1 of 2) – lunch & dinner, 2016Wasabi ranks highest for food quality. Wasabi achieves the highest scores for speed of service and food quality. McDonald's performs highest in value for money and low prices, with entry menu prices starting at £0.89 for a Hamburger.


KPIs of fast food brands – lunch & dinner combined, 2016

55


Value for money Low prices Speed of service Friendly service Food quality/ taste

1 McDonald's 8.4 Five Guys 7.7 McDonald's 8.0 McDonald's 7.8 Wasabi 8.3 Five Guys 8.2 Wasabi 8.3

2 KFC 8.2 Chicken Cottage 7.6 KFC 7.8 Dixy Chicjken 7.7 Five Guys 8.1 McDonald's 7.8 Five Guys 8.2

3 Five Guys 8.2 Dixy Chicken 7.6 Dixy Chicken 7.7Chicken Cottage

7.6 McDonald's 8.0 KFC 7.8 KFC 8.2

4 Burger King 8.1 KFC 7.5 Wasabi 7.7 KFC 7.5 KFC 7.9 Chicken Cottage 7.8 McDonald's 7.9

5 Wasabi 8.1 McDonald's 7.4 Chicken Cottage 7.6 Burger King 7.3 Burger King 7.7 Wasabi 7.7 Burger King 7.8



KPIs of fast food brands (2 of 2) – lunch & dinner, 2016

Five Guys ranks highest in overall experience. The fast growing burger brand also outperforms in freshness and cleanliness. McDonald’s achieves the highest rating for menu choice and family friendliness.


KPIs of fast food brands – lunch & dinner combined, 2016

56

Rank Drink quality/ taste Freshness Menu choice CleanlinessEthical practices/


1 Five Guys 8.1 Five Guys 8.2 McDonald's 8.0 Five Guys 8.1 Dixy Chicken 7.7 McDonald's 8.0 Five Guys 8.1

2 McDonald's 7.9 KFC 8.0 KFC 8.0 McDonald's 7.8 Chicken Cottage 7.6 Five Guys 7.9 Wasabi 8.0

3 KFC 7.9 Wasabi 8.0 Five Guys 8.0 KFC 7.8 Five Guys 7.6 KFC 7.9 McDonald's 8.0

4 Dixy Chicken 7.8 McDonald's 7.8 Wasabi 7.9 Wasabi 7.7 Wasabi 7.6 Chicken Cottage 7.7 KFC 8.0

5 Burger King 7.7 Burger King 7.7 Burger King 7.7 Dixy Chicken 7.6 KFC 7.3 Burger King 7.7 Chicken Cottage 7.8



8.2 8.3 7.9 8.2 7.8

7.8 7.7 8.0 7.5 7.7

KFC Wasabi McDonald's Five Guys Dixy Chicken


KPI Case study – Top 5 fast food brands, lunch & dinner, 2016KFC leads in combined score. KFC achieves the highest score, though this is virtually on par with Wasabi and McDonald’s. Five Guys scores well for food quality but underperforms in value for money.


Leading fast food brands lunch and dinner KPIs of food quality and value for money, ranked by combined score, 2016

57

15.9 15.9 15.715.9 15.5



Leading pub restaurants – market positioning map


58

High Price

Low Price

Destination FocusLocal Focus


Market share of pub brandsWetherspoon leads in outlets and turnover. Wetherspoon has the largest estate with 773 outlets (not including Lloyds No. 1 or JJ moons pubs) and a turnover of £1.4 billion, but its turnover share has decreased by 1.5pp year-on-year on the back of pubs being put on the market. Although ranking fourth for outlet numbers, Harvester has the second highest turnover of £329 million.


Top 10 pub brands, market share by UK pub numbers and turnover, December 2016E

59

Outlets December 2016E Turnover 2016E

Pub Brands UK Dec 16E Share of UK Pub marketChange in % from 2015

Est. Turnover (£m) Share of UK Pub marketChange in % from 2015

Wetherspoon 773 8.3% -0.8pp £1,426 14.4% -1.5pp

Hungry Horse 265 2.8% 0.1pp £299 3.0% 0.1pp

Sizzling Pubs 250 2.7% 0.1pp £262 2.6% 0.1pp

Harvester 220 2.4% -0.2pp £329 3.3% -0.1pp

Vintage Inns 197 2.1% 0.0pp £242 2.4% 0.0pp

Toby Carvery 173 1.9% -0.1pp £269 2.7% 0.0pp

Brewers Fayre 166 1.8% 0.0pp £222 2.2% 0.0pp

Beefeater 150 1.6% 0.0pp £211 2.1% 0.0pp

Flaming Grill Pubs 145 1.6% 0.0pp £139 1.4% 0.1pp

Two for One 142 1.5% -0.1pp £142 1.4% 0.0pp

Subtotal 2,481 26.6% -0.9pp £3,541 35.7% -1.3ppManaged, branded & franchised pub market 9,318 100% £9,932 100%


Pub NPS – lunch & dinner, 2016Eating Inn performs well. Eating Inn attains the highest NPS score of 51, followed by Miller & Carter, 49, and Sizzling Pubs, 48. The bottom 10 NPS scores are almost exclusively made up of low or medium sales growth brands.


Leading pub chains revisit intention and NPS, lunch & dinner, 2016

60

Net Promoter Score top 10 2016 Score Net Promoter Score bottom 10 2016 Score

Eating Inn 51 Fuller's 6

Miller & Carter 49 Chef & Brewer 17

Sizzling Pubs 48 Beefeater 22

Toby Carvery 47 Fayre & Square 23

Crown Carveries 46 Yates's 23

O'Neill's 43 Ember Inns 23

Table 41 All Bar One 26

Vintage Inns 41 Harvester 26

Marston's 39 Two for One 28

Slug & Lettuce 38 Flaming Grill 33

Key: High sales growthMedium sales growthLow Sales growth

Source: MCA Eating Out Panel, 12 months to June 2016 & minimum sample size of 30 applies. Note: Sales growth is categorised as percentage turnover growth, less than 0% is low, 0-5% medium and more than 5% is high.


KPIs of pub brands (1 of 2) – lunch & dinner, 2016Sizzling Pubs leads in value for money. Miller & Carter performs well in atmosphere and food quality, scoring 8.5 and 8.7 respectively.


KPIs of pub brands – lunch & dinner combined, 2016

61


Value for money Low prices Speed of service Friendly service Food quality/ taste

1 Eating Inn 9.0Miller & Carter

8.5 Sizzling Pubs 8.7Crown Carveries

8.6 Toby Carvery 8.3 Table 8.7Miller & Carter

8.7

2 Sizzling Pubs 8.9 Eating Inn 8.5Crown Carveries

8.7 Wetherspoon 8.5Crown Carveries

8.2 Marston's 8.7 O'Neill's 8.6

3 Ember Inns 8.9 Vintage Inns 8.4 Eating Inn 8.6 Sizzling Pubs 8.5 Yates's 8.2 Sizzling Pubs 8.7 Sizzling Pubs 8.5

4 Flaming Grill 8.8 Marston's 8.4 Wetherspoon 8.6 Toby Carvery 8.4 Sizzling Pubs 8.2 Eating Inn 8.7 Marston's 8.5

5 Marston's 8.8 O'Neill's 8.4 Toby Carvery 8.6 Yates's 8.3 Wetherspoon 8.1 Fuller's 8.5 Eating Inn 8.5

6 Table 8.7 Table 8.4 Flaming Grill 8.5 Flaming Grill 8.2 Eating Inn 8.1 Flaming Grill 8.5 Toby Carvery 8.5

7 Wetherspoon 8.7 Two for One 8.3 Marston's 8.5 Hungry Horse 8.2 Marston's 8.1 Vintage Inns 8.5 Table 8.5

8Crown Carveries

8.7 Fuller's 8.2 Hungry Horse 8.4Fayre & Square

8.1 Fuller's 8.1 Two for One 8.5Slug & Lettuce

8.4

9Slug & Lettuce

8.7 Sizzling Pubs 8.2Fayre & Square

8.4 Eating Inn 8.1 Flaming Grill 8.1Brewers Fayre

8.4Crown Carveries

8.3

10 Vintage Inns 8.6 Flaming Grill 8.2 Brewers Fayre 8.3 Marston's 8.1 O'Neill's 8.0Crown Carveries

8.4 Flaming Grill 8.3



KPIs of pub brands (2 of 2) – lunch & dinner, 2016O’Neill’s ranks highest for overall experience. Among branded operators, Miller & Carter and O’Neill’s rank highly for key metrics including freshness and overall experience. Value pub chain, Sizzling Pubs, comes second for overall experience and first for menu choice.


KPIs of pub brands – lunch & dinner combined, 2016

62

Rank Drink quality/ taste Freshness Menu choice CleanlinessEthical practices/


1 Fuller's 8.6Miller & Carter

8.8 Sizzling Pubs 8.5Miller & Carter

8.7 O'Neill's 8.0Two for One

8.6 O'Neill's 8.7

2 Sizzling Pubs 8.6 Table 8.6 Flaming Grill 8.5 Eating Inn 8.6 Yates's 7.9Sizzling Pubs

8.5 Sizzling Pubs 8.7

3 Marston's 8.6Sizzling pubs

8.4 Marston's 8.4 Marston's 8.6Two for One

7.6 Marston's 8.5Miller & Carter

8.7

4 Flaming Grill 8.5 Marston's 8.4 O'Neill's 8.4 Table 8.6 Fuller's 7.6Hungry Horse

8.4 Eating Inn 8.6

5 Table 8.5 O'Neill's 8.4 Hungry Horse 8.4 Fuller's 8.5 All Bar One 7.6Toby Carvery

8.4 Marston's 8.6

6 Eating Inn 8.5Toby Carvery

8.4 Eating Inn 8.3Vintage Inns

8.5Miller & Carter

7.6Crown Carveries

8.4 Toby Carvery 8.5

7 Toby Carvery 8.4Vintages Inns

8.4Chef & Brewer

8.3Slug & Lettuce

8.4 Marston's 7.5Fayre & Square

8.3 Table 8.4

8 O'Neill's 8.4 Eating Inn 8.3 Wetherspoon 8.3Sizzling Pubs

8.4Sizzling Pubs

7.5 Eating Inn 8.3 Brewers Fayre 8.4

9 Wetherspoon 8.4Crown Carveries

8.3Fayre & Square

8.3 O'Neill's 8.4 Table 7.5 Table 8.3 Wetherspoon 8.4

10 Vintage Inns 8.4Slug & Lettuce

8.3Slug and Lettuce

8.3Flaming Grill

8.4 Beefeater 7.5Brewers Fayre

8.3Crown Carveries

8.3



8.5 8.5 8.5 8.3 8.5 8.6 8.3 8.2 8.5 8.2

8.7 8.6 8.6 8.7 8.5 8.3 8.5 8.6 8.2 8.4

Sizzling Pubs Eating Inn Toby Carvery CrownCarveries

Marston's O'Neill's Flaming Grill Wetherspoon Table Table Hungry Horse


KPI case study – pub brands, lunch & dinner, 2016Sizzling Pubs achieves the highest combined score for value for money and food quality/taste. O’Neill’s performs well in food quality but has one of the lowest scores for value for money. Crown Carveries performs well in value for money but scores comparatively low in food quality.


Leading pub brands, lunch & dinner combined, KPIs of food quality and value for money, ranked by combined score, 2016

63

17.2 16.816.917.017.017.017.1 16.616.716.8




Executive summary

Market


Section summary





Consumer insight



Future outlook

Contents


Profiles of the top 20 restaurant brands by turnover


65

Rank Brand

1 McDonald's

2 Wetherspoon

3 KFC

4 Nando's

5 Burger King

6 PizzaExpress

7 Harvester

8 Frankie & Benny's

9 Hungry Horse

10 Pizza Hut Restaurants

11 Toby Carvery

12 Sizzling Pubs

13 Vintage Inns

14 Brewers Fayre

15 Beefeater

16 T.G.I. Friday's

17 Prezzo

18 Chef & Brewer

19 Wagamama

20 Zizzi


McDonald’sFast food burger brand with a global presence, McDonald’s is the largest UK restaurant brand. Approximately 30% of UK restaurants are company owned, and the rest franchised. McDonald’s is a UK fast food pioneer in local sourcing, with a commitment to using British and Irish farmers for its ingredients. Restaurants are located across UK High Streets, in airports, out-of-town sites, service stations and shopping centres. In early 2016 McDonald’s announced plans to roll out table service to 400 UK restaurants.


66

Company and management

Cuisine Burger

Category Traditional fast food

Service style Counter service

Parent company

McDonald’s Corporation

Head office11-59 High RoadEast FinchleyLondon N2 8AW

Website www.mcdonalds.co.uk

OwnershipCompany owned and franchised

Senior Management UK

• CEO, Paul Pomroy• COO, Richard Forte• Chief Marketing Officer, Alistair Macrow

Estate size and financials

Dec 2013

Dec 2014

Dec 2015

Dec 2016E

UK outlets 1,230 1,255 1,277 1,297

London outlets 270 274 275 279

Regional outlets 960 981 1,002 1,018

Annualised estimated turnover (m)

2013 2014 2015 2016E

£1,967 £2,026 £2,085 £2,116

NotesTurnover figures include company-owned and franchised stores, and are based on average weekly sales.

Estimated avg. weekly sales per outlet (ex-VAT)

£31,600

Avg. diner spend £5

Q2 2015 Q2 2016YoY growth

NPS 12 15 ↑25%

Revisit intention 8.4 8.5 ↑1%

Pricing and marketing activities

Entry Typical Exit

Starter dish N/A N/A N/A

Main course £0.89 £2.99 £4.09

Side dish £0.89 £1.09 £1.39

Dessert £0.79 £0.89 £0.99

Take-away Yes

Breakfast Yes

Mailing list/loyalty scheme and recent marketing activity

• McCafé Loyalty Card• Chicken legend range• Premium ranges

Future plans

• Launching smartphone coupon app across Europe

• Doubling the number of restaurants using digital menus

• Refranchise at least 1,500 restaurants by 2016


WetherspoonWetherspoon is the leading UK branded chain of pubs offering traditional pub food and drink at highly competitive prices. The group has extended its menu to include premium burgers and international cuisine dishes. Outlets have extended opening hours, opening from 7am, serving coffee and breakfast options. Sites are located on High Streets in town and city centres, and appeal to a wide, value-conscious demographic.


67


Cuisine Pub food

Category Pub restaurant

Service style Semi-counter service

Parent company

JD Wetherspoon Plc

Head officeWetherspoon HouseReeds CrescentWatford, WD24 4QL

Website www.jdwetherspoon.co.uk

Ownership Company owned

Senior Management

• Tim Martin, Chairman• John Hutson, CEO


Dec 2013

Dec 2014

Dec 2015

Dec 2016E

UK outlets 750 782 789 773


Regional outlets 617 643 649 633


2013 2014 2015 2016E

£1,080 £1,199 £1,413 £1,426

NotesOutlet and turnover figures do not include Lloyds No. 1 bars.


£35,100



NPS

Revisit intention

39 35 ↓10%

8.7 8.7 ↔0%


Entry Typical Exit

Starter dish £3.55 £4.10 £4.80

Main course £5.75 £7.19 £13.99

Side dish £0.95 £3.10 £3.70

Dessert £2.50 £2.50 £4.10

Take-away Yes

Breakfast Yes


• Various weekday clubs• Give feedback online and

claim a free drink• Deli deals, deli item and a

drink for £3.99 available all day every day

Future plans

• Wetherspoon looking to dispose of a further 33 pubs in 2016

• Wetherspoon staff to keep bonuses and free shares despite living wage increase


KFCAmerican fast food chicken concept, owned by YUM! Brands and famed for its ‘Colonel’ logo and Kentucky Fried Chicken product. KFC was the first US fast food brand to enter the UK, when it opened in 1965. Restaurants are situated on major UKHigh Streets, in airports, motorway service stations and in out-of-town locations (increasingly with drive-thru facilities). KFC’s bucket deals have strong appeal among families and young and middle-aged adults. In 2015 KFC began to roll out a major refurbishment programme across its UK estate.


68


Cuisine Chicken



Parent company

YUM! Brands International

Head office32 Goldsworth RoadWokingSurrey, GU21 6BR

Website www.kfc.co.uk

OwnershipCompany owned and franchised

Senior Management

• Martin Shuker, MD, KFC UK• David Timm, Marketing Chief, KFC UK• Russel Smith, Chief Operating Officer, KFC

UK


Dec 2013

Dec 2014

Dec 2015

Dec 2016E

UK outlets 798 815 832 850




2013 2014 2015 2016E

£924 £931 £964 £994

NotesTurnover figures are for company-owned and franchised restaurants.


£22,700



NPS 18 15 ↓17%

Revisit intention 8.4 8.4 ↔0%


Entry Typical Exit


Main course £3.55 £4.99 £6.99

Side dish £0.99 £1.49 £1.69

Dessert £0.89 £1.69 £1.89

Take-away Yes

Breakfast Selected stores only


• Colonel’s Club: collect Chicken Stamps to earn rewards

• KFC Fast Track mobile ordering app

• 10% off for Armed Forces

Future plans• Smaller footprint concept

for city center, intention of opening up to 200 new sites


Nando’sRenowned casual chicken concept with an almost cult following. Nando’s sits between a fast food and casual concept, with semi-counter service, competitive prices and a relaxed and fun environment, attracting young (18-35-year-old) customers. Restaurants are located across the UK in leisure parks, premium shopping centres and high-footfall High Streets.


69


Cuisine Chicken

Category Casual restaurant


Parent company

Nando’s Group Holdings

Head officeSt Marys House,42 Vicarage Crescent, London SW11 3LD

Website www.nandos.co.uk

Ownership Company owned in the UK

Senior Management

• Robbie Brozin, Co-founder and CEO • Robby Enthoven, Principal, Capricorn

Ventures UK• Andrew Rayner, Marketing Director


Dec 2013

Dec 2014

Dec 2015

Dec 2016E

UK outlets 290 319 341 375




2013 2014 2015 2016E

£431 £470 £518 £579

NotesTurnover figures are based on company accounts.


£31,100



NPS

Revisit intention

34 35 ↑3%

8.7 8.6 ↓11%


Entry Typical Exit

Starter dish £2.40 £3.55 £3.55

Main course £4.40 £9.95 £14.60

Side dish £2.40 £2.95 £4.40

Dessert £1.95 £2.95 £4.30

Take-away Yes

Breakfast No (except airport sites)


• Nando's Card: earn points and redeem rewards

• 20% off for all British Emergency Services and military forces employees

Future plans• Further focus on regional

expansion


Burger KingAmerican fast food chain, Burger King, is the UK’s second largest burger brand. All UK restaurants are owned and operated byindependent franchisees. The business aims to differentiate itself from leading rivals by focusing on high quality burgers and,as a result, is less family-orientated. Restaurants are located in prime locations throughout the UK. In 2016 Burger King began serving alcohol at selected UK sites and rolled out delivery to 40 stores.


70


Cuisine Burger



Parent company

Restaurant Brands International/Burger King Corporation

Head office15 Bath Road, SloughBerkshireSL1 3UF

Website www.burgerking.co.uk

Ownership Franchised

Senior Management

• Bruno Lino, President EMEA • Daniel S. Schwartz, CEO


Dec 2013

Dec 2014

Dec 2015

Dec 2016E

UK outlets 480 471 502 518




2013 2014 2015 2016E

£471 £533 £544 £576

NotesTurnover figures are based on estimated average weekly sales.


£21,500



NPS

Revisit intention

0 -1 N/A

7.9 7.9 ↔0%


Entry Typical Exit


Main course £1.89 £3.89 £7.29

Side dish £1.49 £1.99 £3.49

Dessert £0.89 £1.39 £1.39

Take-away Yes

Breakfast Yes


• Sign up to database to receive latest offers

• Mobile app for iOS and Android: Vouchers, store locator and menu

Future plans• Exploring options of alcohol

and delivery after successful trials


PizzaExpressPizzaExpress is the leading UK Italian pizzeria, with the greatest number of outlets of any UK casual restaurant brand. PizzaExpress is a high profile user of promotional discounting, and is combining this with more sophisticated customer relationship management. In July 2014, Pizza Express was sold by the Gondola Group to Beijing based private equity firm Hony Capital for £900m. In 2016 PizzaExpress acquired the fledgling premium pizza delivery chain, Firezza.


71


Cuisine Italian – Pizza/Pasta


Service style Table service

Parent company

Hony Capital

Head office5th Floor,2 Balcombe StreetLondon, NW1 6NW

Website www.pizzaexpress.com


Senior Management

• Richard Hodgson, CEO, PizzaExpress• Andy Pellington, Chief Financial Officer,

PizzaExpress


Dec 2013

Dec 2014

Dec 2015

Dec 2016E

UK outlets 410 427 442 452




2013 2014 2015 2016E

£369 £380 £407 £427



£18,400



NPS 30 32 ↑7%

Revisit intention 8.5 8.4 ↓1%


Entry Typical Exit

Starter dish £3.95 £5.25 £7.75

Main course £8.95 £10.95 £14.45

Side dish £3.35 £3.95 £5.25

Dessert £3.95 £5.95 £6.45

Take-away Yes

Breakfast Selected international outlets


• Starter & main for £9.95• 40% off food bill• 3 courses for £12.95• O2 priority: £5 main course

every week

Future plans• Expanding delivery at both

PizzaExpress sites and by growing Firezza


HarvesterLong-established farmhouse-style pub restaurant, owned by Mitchells & Butlers. Harvester is a favourite among families and older consumers, with traditional pub food and its famous salad bar. Restaurants are located across the UK in out-of-town locations, with some branches close to an Innkeeper’s Lodge, also owned by M&B.


72


Cuisine Pub food



Parent company

Mitchells & Butlers Plc

Head office27 Fleet StreetBirminghamB3 1JP

Website www.harvester.co.uk


Senior Management

• Phil Urban, CEO, M&B• Bob Ivell, Non-Executive Chairman, M&B• Catriona Kempston, Marketing Director,

M&B • Tim Jones, Finance Director, M&B


Dec 2013

Dec 2014

Dec 2015

Dec 2016E

UK outlets 210 217 231 220




2013 2014 2015 2016E

£296 £307 £322 £329



£28,100



NPS

Revisit intention

35 26 ↓26%

8.5 8.4 ↓1%


Entry Typical Exit

Starter dish £2.99 £3.69 £5.29

Main course £4.99 £7.99 £18.49

Side dish £1.99 £2.49 £3.99

Dessert £3.79 £4.49 £4.99

Take-away Yes

Breakfast Yes


• Register email address and/or mobile number to receive news and offers

• Harvester app: exclusive offers and rewards

Future plans

• Invest in digital technology after launching contactless payments across sites

• Continue selected site conversions to Miller & Carter


Frankie & Benny’sFrankie & Benny’s serves classic Italian-American cuisine in a 1950s New York themed atmosphere. The restaurant chain is family-friendly with its wide menu choice and lively environment. Frankie & Benny’s outlets are found in out-of-town retail and leisure park sites across the UK.


73


Cuisine Italian American

Category Casual


Parent company

The Restaurant Group Plc

Head office5-7 Marshalsea RoadBoroughLondon, SE1 1EP

Website www.frankieandbennys.com


Senior Management

• Danny Breithaupt, CEO, TRG• Stephen Critoph, Financial Director, TRG• Alan Jackson, Non-executive chairman, TRG


Dec 2013

Dec 2014

Dec 2015

Dec 2016E

UK outlets 227 244 253 252




2013 2014 2015 2016E

£273 £291 £317 £318



£24,700



NPS

Revisit intention

27 28 ↑4%

8.3 8.3 ↔0%


Entry Typical Exit

Starter dish £4.95 £5.95 £6.45

Main course £8.95 £11.95 £21.95

Side dish £1.95 £3.95 £4.35

Dessert £4.45 £5.95 £8.95

Take-away Yes

Breakfast Yes


• F&B Rewards, sign up online• Midweek Menu: 2 courses for

£11.95

Future plans• Greater focus on arresting

like-for-like sales decline


Hungry HorseGreene King’s family-friendly, value-focused pub/restaurant chain. With renowned weekly themed promotions, Hungry Horse pubs have a strong value for money proposition. With entertainment including televised events, pub quizzes and children’s play areas, establishments have broad appeal across the mass middle market. The brand has a predominantly regional focus, with outlets situated on large out-of-town sites with extensive car parking.


74


Cuisine Pub food



Parent company

Greene King Plc

Head officeWestgate BreweryBury St EdmundsSuffolk, IP33 1QT

Website www.hungryhorse.co.uk


Senior Management

• Rooney Anand, CEO, GK• Kirk Davis, Finance Director, GK• Ian Durant, Non Executive Director


Dec 2013

Dec 2014

Dec 2015

Dec 2016E

UK outlets 210 236 245 265




2013 2014 2015 2016E

£229 £252 £276 £299



£22,500



NPS

Revisit intention

29 23 ↓21%

8.4 8.5 ↑1%


Entry Typical Exit

Starter dish £1.79 £3.99 £3.99

Main course £2.99 £7.99 £12.99

Side dish £0.79 £1.99 £2.59

Dessert £1.49 £3.79 £3.99

Take-away No

Breakfast Yes


• Themed daily specials e.g. ‘Curry Club Wednesday’

• Sign up online and get a £5 giftcard

• 2 meals for £9.99 Monday to Friday

• Free soft drinks for designated drivers

Future plans

• Roll out of pizza offer• Identified as one of Greene

King’s growth brands post-spirit acquisition


Pizza Hut RestaurantsPizza Hut features competitive price points, with the chain targeting families and C1/C2/D consumers. Restaurants are often located in high footfall shopping districts, in leisure parks and at leading airports and high streets across the UK. Pizza Hut UK consists of two separate businesses – dine-in restaurants owned by Rutland Partners, comprising approximately 285 units, and a delivery service operated by YUM! Brands


75


Cuisine Pizza



Parent company

Rutland Partners

Head office1 Imperial PlaceBorehamwoodHertfordshire, WD6 5XX

Website www.pizzahut.co.uk


Senior Management

• Jens Hofma, CEO, Pizza Hut Restaurants UK• Victoria Simspson Clarke, Marketing

Director, Pizza Hut UK


Dec 2013

Dec 2014

Dec 2015

Dec 2016E

UK outlets 285 280 280 285




2013 2014 2015 2016E

£230 £225 £225 £235

NotesFigures refer to Pizza Hut UK dine in restaurants only


£18,700



NPS

Revisit intention

30 21 ↓30%

8.4 8.2 ↓2%


Entry Typical Exit

Starter dish £2.95 £4.75 £5.25

Main course £8.75 £9.99 £11.55

Side dish £2.95 £4.75 £5.25

Dessert £3.45 £4.75 £5.45

Take-away Yes

Breakfast No


• Sign up to mailing list for latest news and offers

• Unlimited Lunch Buffet £6.99, Weekdays until 3pm

• Free unlimited salad• Two’sday Tuesday: Buy one

pizza get one free

Future plans• Completion of refurbishment

programme


Toby CarveryA market leader in carvery dining for over 30 years, offering traditional British dishes in a relaxed and family-friendly environment. The brand boasts higher than average sales per pub and features extensive vegetarian options as well. Toby Carvery restaurants have a strong nationwide presence, located in out of town sites, with extensive car parking facilities.


76


Cuisine British


Service style Buffet

Parent company



Website www.tobycarvery.co.uk


Senior Management

• Phil Urban, CEO, M&B• Bob Ivell, Non-Executive Chairman, M&B • Tim Jones, Finance Director, M&B


Dec 2013

Dec 2014

Dec 2015

Dec 2016E

UK outlets 154 161 173 173




2013 2014 2015 2016E

£237 £245 £260 £269



£29,900



NPS

Revisit intention

49 43 ↓12%

8.9 8.8 ↓1%


Entry Typical Exit

Starter dish £2.89 £3.59 £3.89

Main course £4.19 £6.29 £8.29

Side dish £1.00 £1.60 £1.99

Dessert £2.99 £3.79 £5.99

Take-away Yes

Breakfast Yes


• 2 courses for 2 people for £12.50

• 25% off Monday to Thursday• Free back to school sundaes• Free ice cream sundae when

you sign up for offers and news

Future plans

• M&B has partnered with South African Winery Gabb Family Vineyards to develop a range of complimentary wines for the menus of its Toby Carvery pubs


Sizzling PubsIndividually named family-friendly, local pubs with a community feel. Broad menus offer value-for-money food suited to all tastes. Grilled steaks and burgers sit alongside pastas, fajitas and British pub classics. Sizzling Pubs are located in suburban areas widely spread across the UK with clusters in the midlands.


77


Cuisine Pub food



Parent company



Website www.sizzlingpubs.co.uk


Senior Management

• Phil Urban, CEO, M&B• Bob Ivell, Non-Executive Chairman, M&B • Tim Jones, Finance Director, M&B


Dec 2013

Dec 2014

Dec 2015

Dec 2016E

UK outlets 219 222 230 250




2013 2014 2015 2016E

£231 £232 £240 £262



£21,000



NPS

Revisit intention

38 47 ↑24%

8.6 8.9 ↑3%


Entry Typical Exit

Starter dish £2.29 £2.99 £3.49

Main course £3.29 £6.49 £13.49

Side dish £1.00 £1.50 £2.49

Dessert £0.99 £3.79 £4.19

Take-away No

Breakfast Selected branches


• Sign up for newsletter and get £5 off food

• Weekday deals e.g. Thursday Grill club

• Burger and drink deal from £4.49

Future plans

• M&B is in the process of converting Crown Carveries and Sizzling Pub formats into a broader concept called Stonehouse Pizza & Carvery


Vintage InnsVintage Inns is a mid-upper market country pub chain operated by Mitchells & Butlers. The pubs are predominantly food-led with a traditional menu featuring seasonal pub classics, as well as weekly themed menus such as ‘Wednesday Vintage Pie day’. Vintage Inns are destination pubs, usually found in attractive rural areas.


78


Cuisine Pub Classics



Parent company



Website www.vintageinn.co.uk


Senior Management

• Bob Ivell, Chairman, M&B• Phil Urban, Chief Executive Officer, M&B• Tim Jones, Finance Director, M&B


Dec 2013

Dec 2014

Dec 2015

Dec 2016E

UK outlets 194 195 191 197




2013 2014 2015 2016E

£234 £238 £236 £242

NotesTurnover figures are for company-owned and franchised restaurants.


£24,000



NPS 41 48 ↑17%



Entry Typical Exit

Starter dish £3.50 £4.95 £5.95

Main course £5.50 £10.95 £17.49

Side dish £2.00 £2.50 £2.95

Dessert £4.25 £5.25 £5.95

Take-away Yes

Breakfast Selected stores only


• Sign up and receive a free bar snack voucher

• 3 courses from £20 on a Saturday

• Fizz Friday: discounted Champagne, Prosecco and sparkling wine

Future plans• M&B plans to install pizza

ovens in all Vintage Inns pubs


Brewers FayrePub restaurant owned by the Whitbread Group, present in out-of-town locations and often close to partner budget hotel chain, Premier Inn. Pubs are named individually but operate under the Brewers Fayre brand. The chain has a family-friendly focus, with many pub restaurants featuring play areas. Brewers Fayre is most popular with middle aged, C1/C2 consumers, with low prices and themed evenings, such as ‘curry night’.


79


Cuisine Pub food



Parent company

Whitbread Group Plc

Head office

Whitbread CourtBusiness ParkPorz Avenue, DunstableBedfordshire, LU5 5XE

Website www.brewersfayre.co.uk


Senior Management

• Andy Harrison, CEO, Whitbread• Paul Flaum, MD of Restaurants


Dec 2013

Dec 2014

Dec 2015

Dec 2016E

UK outlets 150 158 161 166




2013 2014 2015 2016E

£175 £205 £214 £222



£26,100



NPS

Revisit intention

39 32 ↓18%

8.9 8.7 ↓2%


Entry Typical Exit

Starter dish £2.99 £3.99 £4.99

Main course £6.99 £8.49 £15.99

Side dish £1.49 £2.49 £3.99

Dessert £2.69 £3.99 £4.49

Take-away Pizza only



• ‘Bonus Club’ – collect points and exchange for vouchers

• Disco night: Fridays and Saturdays

• 2 meals for £10.99 Monday to Friday

• Kids eat free at breakfast

Future plans• Integration of Taybarn

conversions into estate• Roll-out of new format


BeefeaterMid-market chain of grill restaurants owned by Whitbread. Beefeater pubs have a nationwide presence and are often found in out of town locations, motorways service stations and business parks. Established in the 1970s, Beefeater appeals to middle-aged, traditional consumers. In 2015 Whitbread opened the first site of its new-look Beefeater concept, Beefeater Bar + Block, in central Birmingham.


80


Cuisine Pub food



Parent company

Whitbread Group Plc

Head office

Whitbread CourtBusiness ParkPorz Avenue, DunstableBedfordshire, LU5 5XE

Website www.beefeater.co.uk


Senior Management

• Alison Brittain, CEO, Whitbread• Paul Flaum, MD of Hotels and Restaurants


Dec 2013

Dec 2014

Dec 2015

Dec 2016E

UK outlets 140 143 142 150




2013 2014 2015 2016E

£193 £198 £204 £213



£27,800



NPS

Revisit intention

24 28 ↑17%

8.2 8.4 ↑2%


Entry Typical Exit

Starter dish £4.29 £4.99 £5.99

Main course £8.49 £10.99 £21.49

Side dish £1.99 £2.89 £3.99

Dessert £3.99 £4.99 £5.29

Take-away No

Breakfast Yes


• The Reward Club: collect points and turn into vouchers

• Unlimited Breakfast £8.25 and Kids Eat Free

• Steak and Unlimited chips from £10.99

Future plans

• Whitbread is rolling out an evolved version of its Beefeater brand – Beefeater Bar + Block – to widen appeal to younger demographics


T.G.I. Friday’s All-American casual restaurant and bar strongly associated with its red and white striped branding. Offering a large cocktail menu and lively atmosphere, the chain is popular with large dining parties of 18-30-year-olds. T.G.I. has a nationwide presencein both central and out-of-town locations. Restaurants can be found in city centres, retail parks, shopping centres and airports.


81


Cuisine American

Category Casual


Parent company

Electra Partners

Head officeTGI Friday’s (HO) 253-254 Capability Green Luton Bedfordshire LU1 3LU

Website www.tgifridays.co.uk


Senior Management

• Karen Forrester, MD• Darrell Wade, Chief Operating Officer• Alex Fortescue, Chief Investment Partner of

Electra Partners


Dec 2013

Dec 2014

Dec 2015

Dec 2016E

UK outlets 60 66 72 77


Regional outlets

50 55 61 65


2013 2014 2015 2016E

£162 £174 £191 £208



£53,600


Q2 2015 Q2 2016 YoY growth

NPS

Revisit intention

33 24 ↓27%

8.5 8.3 ↓2%


Entry Typical Exit

Starter dish £3.49 £5.49 £6.99

Main course £8.99 £10.99 £29.49

Side dish £1.99 £3.49 £4.99

Dessert £4.99 £5.49 £5.99

Take-away Yes



• Sign up for mailing list online• Birthday Club membership

includes free treats• 2-4-1 cocktails

Future plans

• New generation sites, ‘Generation F’, with a wider cocktail menu and live music to be rolled out


PrezzoPrezzo restaurants offer a contemporary dining experience with a broad menu including non-Italian items, such as burgers and chips, attracting a younger crowd than its direct competitors. Prezzo has a strong regional city bias and targets buildings of architectural interest.


82


Cuisine Italian

Category Casual


Parent company

TPG

Head office8 Johnston RoadWoodford GreenEssex IG8 0XA

Website www.prezzorestaurants.co.uk


Senior Management

• Jon Hendry-Pickup, CEO• Alan J Millar, Finance Director• Michael Carlton, Chairman• Abel Halpbern, Partner, TPG Capital


Dec 2013

Dec 2014

Dec 2015

Dec 2016E

UK outlets 198 218 230 248




2013 2014 2015 2016E

£145 £166 £179 £194



£15,600



NPS

Revisit intention

30 47 ↑57%

8.6 8.9 ↑3%


Entry Typical Exit

Starter dish £4.95 £5.95 £6.10

Main course £7.49 £12.19 £15.19

Side dish £3.45 £3.75 £3.95

Dessert £3.75 £5.65 £5.95

Take-away Yes



• Sign up to Prezzo Club for news and offers

• Prezzo App allows customers to view their bill live and pay with their mobiles

• 40% off main courses • Children’s meal deal: 3

courses and a drink for £3.95

Future plans• Continued expansion via TPG

funding


Chef & Brewer Owned and managed by Greene King, Chef & Brewer serves pub food with a focus on fresh ingredients, freshly cooked. The traditional pub outlets are individually named and occupy attractive sites across the UK. Chef & Brewer runs various food-themed evenings, such as ‘Fish Night’, as well as everyday meal deals and daily specials alongside British pub drink offerings.


83


Cuisine Pub food



Parent company

Greene King

Head office

Sunrise HouseNinth AvenueBurton-upon-TrentStaffordshire, DE14 3JZ

Website www.chefandbrewer.com


Senior Management

• Rooney Anand, CEO of Greene King• Kirk Davis, CFO of Greene King• John Forrest, COO of Greene King


Dec 2013

Dec 2014

Dec 2015

Dec 2016E

UK outlets 137 133 136 141




2013 2014 2015 2016E

£168 £180 £180 £187



£26,000



NPS

Revisit intention

29 24 ↓17%

8.5 8.0 ↓6%


Entry Typical Exit

Starter dish £3.49 £4.49 £6.49

Main course £8.49 £10.99 £19.99

Side dish £1.29 £2.99 £2.99

Dessert £3.49 £4.79 £5.99

Take-away No



• Join email club and get free starter or pudding

• Evening set menu: 2 courses from £12.50 from 4pm Monday to Thursday

• Swap Tesco Clubcard points• Fizz Friday: £5 off a bottle of

fizz

Future plans

• Identified as a growth brand by parent company, Greene King. Expected to expand estate to 180-220 sites over the next five years


WagamamaPan-Asian noodle concept created by restaurant industry tycoon, Alan Yau. Restaurants feature long communal tables and simple industrial-style interiors. The brand appeals to a wide demographic but is particularly popular with young, urban consumers. Restaurants are located in high footfall areas on the High Street and in major shopping centres.


84


Cuisine Asian

Category Casual


Parent company

Duke Street Capital/Hutton Collins

Head officeWaverley House7-12 Noel StreetLondon, W1F 8GQ

Website www.wagamama.com


Senior Management

• David Campbell, CEO• Jane Holbrok, Chief Financial Officer


Dec 2013

Dec 2014

Dec 2015

Dec 2016E

UK outlets 102 112 118 124




2013 2014 2015 2016E

£141 £159 £173 £188



£29,400



NPS 47 28 ↓40%



Entry Typical Exit

Starter dish £4.35 £4.95 £6.75

Main course £7.95 £9.25 £14.95

Side dish £1.00 £1.00 £2.00

Dessert £1.65 £4.95 £5.75

Take-away Yes

Breakfast Selected airport branches


• Sign up to the newsletter for exclusive offers

• Qkr! with Masterpass app, allows customers to pay for meal and split bill

Future plans

• Development of flagship site in St Paul’s

• Roll out of new style restaurants


ZizziItalian chain Zizzi offers an upper-middle market dining experience which caters for both couples and families. With a localised strategy, each site has a unique touch in terms of architecture and menu. Restaurants are positioned on major UK high streets and in suburban areas. Brand is targeted at more special and weekend occasions than alternatives such as ASK.


85


Cuisine Italian

Category Casual


Parent company

Azzurri Restaurants Limited

Head office

3rd Floor Capital HouseChapel StreetLondonNW1 5DH

Website www.zizzi.co.uk


Senior Management

• Steve Holmes, CEO• Johanna Fawcett, Marketing Director• Jim Pickworth, Chief Financial Officer


Dec 2013

Dec 2014

Dec 2015

Dec 2016E

UK outlets 136 138 139 147




2013 2014 2015 2016E

£117 £121 £145 £152

NotesTurnover figures relate to total sales across all franchised stores.


£20,400



NPS 17 11 ↓35%

Revisit intention 8.5 8.5 ↔0%


Entry Typical Exit

Starter dish £4.35 £5.55 £7.55

Main course £7.95 £10.25 £15.25

Side dish £3.00 £3.50 £4.35

Dessert £4.45 £5.95 £5.95

Take-away Yes

Breakfast No


• 20%-40% off all food in selected outlets

Future plans• Expansion of allergen offering



Executive summary

Market


Consumer insight



Future outlook

Contents


Consumer Insight – section summaryCONSUMER INSIGHT

Roaring restaurant trade as all key consumer metrics rise for chains, independents and pubs.

• Participation and visit frequency have increased in all restaurant channels except for fast food over the past year. The share of UK consumers participating in fast food fell three percentage points to 71.9%, while the average no. of meals per head per month dropped from 2.1 down to 2.0.

• The rise in restaurant participants has been greatest in chain and fine dining restaurants, up three percentage points for both to 73.4% and 57.3%. Chain, independent and pub restaurants all achieved frequency growth of 0.2 visits per head per month to 1.5, 1.6 and 2.0, with pub levels now equal to fast food.

• Average visit spend has risen in all restaurant channels at all day-parts, with fine dining lunch the only exception. Higher spend levels relate, in-part, to a more affluent customer profile in all key restaurant channels. Female spend has increased most, with 25-49s driving rising levels in chain restaurants and 18-24s driving growth in independents, fast food and fine dining.

Family social and treat occasion opportunity in chain restaurants.

• The growth in visits to chain restaurants has been driven by a rise in occasions involving 25-49s and women, with a particular increase in family visits with the kids for get togethers and treat occasions. Low prices and fresh products are growing needs for increasingly stretched and health conscious parents, but satisfaction levels have grown, with customer scores rising for the freshness, family friendliness and food quality experienced in chain restaurants.

• Contemporary chain restaurants (opened in the last 10 years) have played a crucial role in growth of the channel, accounting for a rising share of lunch and dinner visits. Contemporary chains, such as Byron, Côte and Wahaca, attract a larger share of 18-24s and higher earning consumers than chains in general, with the food quality, environment and atmosphere being much bigger draws. 22% of contemporary chain visits are get togethers, but it is special occasions/celebrations that stand out, accounting for 18% of contemporary chain visits, which is double the proportion in total chain restaurants.

Pubs can benefit from budding female customer presence.

• As pubs have become more food-led and restaurant-like, women have become a growing and vitally important part of the customer mix, now accounting for half of all visits, equal to levels in the total Eating Out market.

• Increases in both pub restaurant visits and average spend have been driven by women, increasingly choosing pubs for low tempo, relaxing meal occasions, citing pubs’ familiarity and service as key reasons for visiting.

Fast food must modernise to win back younger consumers.

• Falling visitor participation and visit frequency levels in fast food have been due to a decrease among 18-34s. In an Eating Out market rife with intensifying cross-channel competition and a growing variety of options targeting the young and adventurous, traditional and independent fast food operators offering specific, but well-trodden cuisine (e.g. burgers, fish & chips and kebabs) without offering anything new or to differentiate themselves, are losing out as younger consumers are tempted elsewhere.

• Despite falling participation and frequency, average spend has risen on fast food visits and it is the remaining 18-24 year old occasions that have driven this the most. Contemporary fast food outlets that offer good quality food, service and an attractive environment are attracting the young to visit and spend more on more premium occasions.

Growing diversity of chain restaurant cuisine attracting greater range of consumers, on variety of missions, for wide mix of needs.

• British food tends to be consumed by an older 50+, low-mid income consumer on more everyday missions, such as when doing other shopping. At the other end of the age scale, Japanese is most likely to be eaten by 18-24s, with a bias to treat missions and a greater need for fresh products.

• Restaurants offering French and Pan-Asian cuisine appeal more to women and on more sociable missions. South American appeals equally to women, but of a more affluent profile and on more functional shopping missions.

87


CONSUMER INSIGHT

88

Eating out participationParticipation has increased at all restaurant channels but fast food. The proportion of UK consumers visiting chain, independent, fine dining and pub restaurants has risen over the last year, with the biggest increases for chain restaurants and fine dining, both up by three percentage points to 73% and 57% respectively. The only decrease in restaurant participation has been at fast food outlets, where levels have dropped from 75% to 72%.

70.8%75.6%

54.0%

85.0%

75.1%73.4%77.8%

57.3%

85.8%

71.9%

Chain restaurants Independent restaurants Fine dining restaurants Pub restaurants Fast food restaurants

Q2 2015 Q2 2016

Participation: % of UK adults visiting – Q2 2016 vs. Q2 2015

Note: Data includes all those who claim to visit more often than ‘rarely’.


Average meal frequency

CONSUMER INSIGHT

Of the restaurant channels, average visit frequency has increased everywhere except fast food. Pubs and fast food outlets are visited most often for a meal, with consumers on average making two visits per head per month. The average number of meals per head per month has grown at chain, independent, fine dining and pub restaurants compared to a year ago, but fallen in fast food. A year ago, fast food was the most frequently visited restaurant channel, but pub restaurants are now visited just as often after levels rose from 1.8 to 2.0 as fast food frequency fell slightly from 2.1 to 2.0.

89

1.31.4

0.9

1.8

2.1

1.51.6

1.0

2.0 2.0

Chain restaurants Independent restaurants Fine dining restaurants Pub restaurants Fast food restaurants

Q2 2015 Q2 2016

Frequency: average no. of out of home meals per head per month – Q2 2016 vs. Q2 2015

Note: Data includes breakfast, lunch and dinner.

+0.2

+0.2

+0.1

+0.2-0.1


Average spend per meal

CONSUMER INSIGHT

Average spend on a restaurant meal visit has grown over the past year. There has been an 8.7% increase in average restaurant meal visit spend over the last 12 months, just slightly behind total Eating Out market growth of 8.8%. Spend on restaurant meal visits has risen for every channel but fine dining, where levels dropped by 5.5%. Of the restaurant channels, the greatest increase in average meal spend has been in independent restaurants, with levels up 11% to £12.62.

90

£8.84£10.13

£12.91

£11.36

£21.65

£11.27

£6.26

£9.61£11.01

£13.51£12.62

£20.56

£11.80

£6.86

Total market Total restaurants Chain restaurants Independentrestaurants

Fine diningrestaurants

Pub restaurants Fast food restaurants

Q2 2015 Q2 2016

Average spend per head per meal visit – Q2 2016 vs. Q2 2015

+8.8%+8.7%

+4.7%+11.0%

-5.5%

+4.7%

+9.6%



Average spend per meal by day-part

CONSUMER INSIGHT

Average spend rising for all restaurant meals except fine dining lunches. Growth in average meal spend has occurred in all restaurant channels at all day-parts, except fine dining restaurants at lunch. Chain restaurants achieve a higher average meal spend than independent and pub restaurants at breakfast and lunch, but spending levels are higher in independent restaurants at dinner. Fast food is the lowest spend restaurant channel at all day-parts.

91

£16.24

£16.66

£19.65

£19.47

£36.50

£16.65

£9.26

£17.44

£17.92

£19.90

£20.93

£37.46

£17.21

£10.06

Total market

Totalrestaurants

Chainrestaurants



Pubrestaurants

Fast foodrestaurants

Q2 2015

Q2 2016

£7.09

£9.30

£12.66

£9.91

£20.83

£11.32

£5.73

£7.74

£10.12

£13.41

£11.34

£18.56

£11.84

£6.30

Total market

Totalrestaurants

Chainrestaurants



Pubrestaurants


£4.53

£4.93

£6.36

£5.74

£5.58

£4.17

£4.96

£5.47

£7.08

£6.35

£6.11

£4.56

Total market

Totalrestaurants

Chainrestaurants



Pubrestaurants


n/an/a

Note: Average meal spend at breakfast unavailable for fine dining restaurants due to low sample size (<100).

Average spend per head per meal visit by day-part – Q2 2016 vs. Q2 2015


Women and 18-24s key groups driving increase in average meal spend. Across all four of the major restaurant channels, the average amount spent per meal visit has risen faster among women than men. In pubs, fast food and independent restaurants, the biggest growth in average meal spend has been from 18-24s, while levels have increased fastest for 25-49s in chain restaurants.

CONSUMER INSIGHT

Average spend per meal by gender and age

92

£13.39 £13.66

Male Female

£12.05 £13.16 £13.58 £14.19

18-24 25-34 35-49 50+

3% 7%

3% 7% 7%

£12.72 £12.56

Male Female

£11.50 £12.18 £12.68 £12.82

18-24 25-34 35-49 50+

10% 12%

24% 17% 12%

£12.04 £11.56

Male Female

£10.61 £11.51 £12.09 £11.81

18-24 25-34 35-49 50+

4% 5%

12% 1% 6%

£6.80 £6.91

Male Female

£6.93 £7.45 £7.01 £6.09

18-24 25-34 35-49 50+

8% 11%

15% 12% 10%8%

4%

Change vs. Q2 2015

Average spend per head per meal visit by gender and age – Q2 2016



Average spend rising fast on chain restaurant special occasions. The biggest rise in chain restaurant spend has been on special occasions, with levels up 21% to £17.43 per meal visit. The strongest growth in average meal spend in independent restaurants has been among consumers out shopping, while for pubs it has been on treat missions.

CONSUMER INSIGHT

Average spend per meal by mission (primary reason for eating out)

93

£17.43

£13.29

£14.38

£12.85

£14.65

Special occasion

Having a treat

Get together

While shopping

Spend time withpartner

7%

11%

21%

1%

£9.06

£9.89

£16.99

£13.06

£11.14

While shopping

Not bothered to cook

Special occasion

Leisure-based journey

Wanted specific cuisine

£12.31

£12.28

£12.69

£10.68

£10.92

Having a treat

Get together

Time with partner

At leisure activity


£7.51

£8.13

£7.25

£7.10

£7.02

Work/study break

Get together

While shopping


Because I had to

15%

16%

17%

13%

11%

5%

6%

13%

5%

3%

19%

19%

38%

18%

12%

Note: Data includes breakfast, lunch and dinner. Only missions with sample size of 100+ included.

Change vs. Q2 2015

Average spend per head per meal visit by consumer mission, ranked by % growth in average spend – Q2 2016


Age of consumer

CONSUMER INSIGHT

25-49s becoming more important for chain restaurants. 53% of chain restaurant visitors are aged 25-49, up from 50% a year ago and compared to 49% in total restaurants. Independent and pub restaurants have an older consumer profile, with 51% and 53% of meal visits respectively accounted for by consumers aged 50 and above, compared to 41% for restaurants in total. Chain restaurants and fast food skew towards consumers aged 18-24, but less so than a year ago, with 35-49s key and gaining importance in fast food outlets.

94

11% 11% 11% 10%16% 14%

7% 7%13% 12%

7% 7%15% 14%

18% 19% 18% 18%

20% 22%

15% 15%

21% 20%

13% 13%

23% 22%

32% 32% 31% 31%

30% 31%

28% 27%

23% 28%

27% 27%

37% 39%

39% 39% 40% 41%34% 32%

50% 51%44% 40%

53% 53%

26% 25%

Q22015

Q22016

Q22015

Q22016

Q22015

Q22016

Q22015

Q22016

Q22015

Q22016

Q22015

Q22016

Q22015

Q22016

50+

35-49

25-34

18-24

Age profile % of meal visits – Q2 2016 vs. Q2 2015


Total restaurants Chain restaurants Pub restaurantsFine dining restaurants


Fast food restaurants

Total market


Gender of consumer

CONSUMER INSIGHT

Growing share of female consumers in chain restaurants and pubs. Women account for 56% of chain restaurant visits, up from 53% a year ago, and 50% in pub restaurants, up from 48% a year ago. While chain restaurants bias strongly towards female consumers compared to restaurants overall, fast food outlets and fine dining restaurants have a greater than average share of male consumers.

95

50% 50% 51% 51% 47% 44%49% 50% 53% 53% 52% 50% 53% 54%

50% 50% 49% 49% 53% 56%51% 50% 47% 47% 48% 50% 47% 46%

Q22015

Q22016

Q22015

Q22016

Q22015

Q22016

Q22015

Q22016

Q22015

Q22016

Q22015

Q22016

Q22015

Q22016

Female

Male

Gender profile % of meal visits – Q2 2016 vs. Q2 2015





Total market


Combined household income per annum

CONSUMER INSIGHT

The consumer profile for restaurants is becoming more affluent. For all restaurant channels except fast food, there has been a growing share of visits accounted for by those living in households earning £40K or above per annum. As you would expect, fine dining restaurants have the most affluent consumer profile of all restaurant channels, while fast food consumers are most likely to live in households earning under £20k per annum.

96

28% 25% 28% 25% 23% 19%25% 22%

14% 17%

29% 25%31% 29%

40%40%

41%40%

39%38%

40%42%

38%37%

41%43%

41%37%

20%21%

20%21%

22%25%

21% 21%

26% 24%

20% 21%19%

21%

12% 14% 11% 14% 16% 18% 14% 16%22% 22%

10% 11% 9% 12%

Q22015

Q22016

Q22015

Q22016

Q22015

Q22016

Q22015

Q22016

Q22015

Q22016

Q22015

Q22016

Q22015

Q22016

Over £60K

£40-£60K

£20-£40K

Under £20K




Total market

Combined household income profile % of meal visits – Q2 2016 vs. Q2 2015



Consumer mission (primary reason for eating out)

CONSUMER INSIGHT

Growing get together mission in chain and independent restaurants. A get together with friends or family is the key consumer mission for restaurants, particularly pubs in which it accounts for a quarter of meal visits. The importance of the get together mission has increased over the past year for chain and independent restaurants, rising 2pp and 4pp respectively. Fast food has a greater skew to treat missions and when the consumer can’t be bothered to cook.

97

16% 17% 19% 21% 19% 23% 19% 19%25% 25%

5% 6%

15% 14% 13%13% 15%

14%12% 12%

13% 12%

18% 18%

9% 9%5% 4% 7% 6%

1% 2%

6% 7%

15% 15%

8% 8%9% 10%

9% 9%

13% 14%

11% 11%

3% 3%

6% 6%7%

7% 4% 4%

1% 1%

4% 5%

8% 8%

6% 5% 9% 8% 7% 7%17% 18%

7% 6%

2% 2%

5% 5% 4% 3% 4% 5% 5% 4% 5% 7%

5% 5%

5% 5% 3% 2%5% 5% 3% 4% 5% 5%

6% 6%

4% 4%4% 4%

5% 4% 2%3%

5% 4%

4% 4%

5% 4%4% 4%

7% 5%4%

4%2% 1%

6% 5%

4% 4% 6% 6%

3% 3%3%

3% 3% 4%

3% 4%

3% 3% 1% 2%2% 2%

1% 0%2% 2%

5% 5%

3% 3% 2% 2%2% 2%

1% 1%2% 2%

4% 4%

3% 3% 2% 2%1% 1%

0% 1%

1% 1%6% 5%

2% 2% 3% 4% 1% 1%

2% 2%

2% 2% 2% 2%2% 2% 3% 2% 2% 2%

6% 6%2% 2% 2% 2%

7% 6% 7% 5% 7% 7% 9% 7% 6% 5% 6% 7%

Q22015

Q22016

Q22015

Q22016

Q22015

Q22016

Q22015

Q22016

Q22015

Q22016

Q22015

Q22016

Other

To have better quality food

Promotional offer

Work-based journey

Break from work/study

While shopping for groceries

At another leisure activity

Wanted specific type of food


Part of regular routine

To wind down or relax

Special occasion

While doing other shopping

Spend time with partner


Having a treat

Get together with friends orfamily




Mission profile % of meal visits – Q2 2016 vs. Q2 2015



Consumer needs (reasons for choosing meal establishment)

CONSUMER INSIGHT

Food quality/taste is the most important consumer need for restaurants to deliver. The quality or taste of the food is a key reason for choosing a restaurant on two-fifths of visits, and has remained the most common consumer need over the last four quarters. Having been before/previous experience and cheap/inexpensive prices grew in importance slightly in the latest quarter, in the lead up to and immediate aftermath of the Brexit vote.

40%33%

29%22%22%

19%17%

14%14%13%

10%9%9%7%6%5%5%4%4%3%3%3%3%2%2%

Food quality/tasteBeen beforeGood value

Convenient - homeConvenient - otherCheap/inexpensive

Fast serviceAtmosphere

Wide menu choiceFriendly Service

RecommendationProduct freshness

Family friendlyConvenient - work

PromotionCleanliness

Healthy optionsNot national chain

Beverage qualityOutdoor areas

OtherLoyalty programme

Low noise levelsNo children

Additional facilities

40%33%

28%22%22%

19%17%

14%13%13%

10%9%9%8%7%5%5%4%4%3%3%3%2%2%2%


Convenient - otherConvenient - homeCheap/inexpensive

Fast serviceWide menu choice

AtmosphereFriendly Service

RecommendationFamily friendly

Product freshnessConvenient - work


Healthy optionsBeverage quality

Not national chainLow noise levels

Loyalty programmeNo children

Additional facilitiesOther

Outdoor areas

39%33%

28%22%21%

19%19%

14%14%14%

10%9%9%8%7%

5%4%4%4%3%2%2%2%2%2%


Convenient - homeConvenient - otherCheap/inexpensive

Fast serviceWide menu choice

AtmosphereFriendly Service

RecommendationFamily friendly

Product freshnessConvenient - work


Healthy optionsBeverage quality

Not national chainLow noise levels

Loyalty programmeNo children

OtherAdditional facilities

Outdoor areas

39%34%

28%21%21%20%

17%14%14%13%

10%9%9%8%7%5%4%4%4%3%3%2%2%2%2%


Convenient - otherConvenient - homeCheap/inexpensive

Fast serviceAtmosphere

Wide menu choiceFriendly Service

RecommendationProduct freshness

Family friendlyConvenient - work


Not national chainHealthy options

Beverage qualityOutdoor areas

Loyalty programmeLow noise levels

No childrenOther

Additional facilities

Q3 2015 Q2 2016Q1 2016Q4 2015

Needs profile % of meal visits (multiple choice up to 3 per visit) – Q3 2015-Q2 2016

Note: Data includes breakfast, lunch and dinner. No Q2 2015 data available due to changes in the questionnaire from Q3 2016 onwards.

98


Consumer needs by restaurant channel

CONSUMER INSIGHT

Visitors choosing practical experience over perceptions of quality in pub restaurants. For chain restaurants, independent restaurants and fast food outlets, food quality/taste is key to attract customers, but been before/previous experience is most important for pub visitors. Over the past year, food quality has become slightly less important for pubs and independent restaurants, while been before/previous experience is accounting for a growing share of visits.

Needs profile % of meal visits (multiple choice up to 3 per visit) Q3 2015-Q2 2016

44%

34%

23%

12%

18%

39%

34%

24%

12%

17%

42%

35%

24%

13%

16%

43%

34%

24%

14%

14%

Food quality/taste

Been before

Good value

Recommendation

Wide menu choice

50%

36%

24%

17%

20%

51%

37%

23%

18%

20%

49%

37%

24%

18%

17%

49%

37%

23%

19%

17%

Food quality/taste

Been before

Good value

Food safety/cleanliness

Convenient - to work

35%

37%

33%

8%

24%

36%

36%

33%

9%

22%

36%

35%

33%

9%

23%

37%

36%

31%

9%

22%

Been before

Good value

Food quality/taste

Fast service

Convenient - other

38%

36%

28%

24%

24%

37%

34%

29%

24%

23%

36%

38%

28%

25%

23%

37%

35%

29%

26%

22%

Food quality/taste

Fast service

Been before

Cheap/inexpensiveprices

Convenient - to home

Biggest fall: Biggest fall:Biggest fall:Biggest fall:

Biggest growth: Biggest growth:Biggest growth:Biggest growth:

Q3 2015Q4 2015Q1 2016Q2 2016

Note: Data includes breakfast, lunch and dinner. No Q2 2015 data available due to changes in the questionnaire from Q3 2016 onwards..

Most important: Most important: Most important: Most important:

99


Key performance indicator scores

CONSUMER INSIGHT

Chains driving greater appeal for freshness, family friendliness, low prices and ethical practices/products. Average customer scores for chain restaurants in freshness, family friendliness, low prices and ethical practices/products all increased slightly by 0.1 points over the past year. Scores for ethical practices/products rose in all restaurant channels and for family friendliness in all but independent and pub restaurants. Independent restaurants achieved slight gains in freshness and cleanliness, pubs in fast and friendly service and for their convenient locations.

8.4

8.4

8.7

8.9

8.4

8.1

Total restaurants

Chains

Independents

Fine dining

Pubs

Fast food

8.1

7.9

8.2

8.2

8.3

7.9

8.2

8.2

8.4

8.6

8.2

8.0

8.3

8.4

8.6

8.8

8.5

7.9

Total restaurants

Chains

Independents

Fine dining

Pubs

Fast food

8.3

8.3

8.4

8.7

8.4

7.9

8.4

8.3

8.7

8.8

8.4

8.1

Food quality/taste Value for money Menu choice

Friendly service Drink quality/taste Overall experience

-0.1

-0.1

-0.1

-0.1

-0.1

-0.2

-0.1

+0.1

8.0

8.1

8.3

8.7

8.2

7.5

8.5

8.5

8.6

8.4

8.6

8.4

Atmosphere/environment

Convenient location

+0.1

+0.1

8.1

8.0

8.3

8.4

8.1

8.0

8.3

8.3

8.6

8.8

8.3

7.9

Speed of service

Cleanliness

8.3

8.4

8.7

8.9

8.3

8.0

8.1

8.1

8.1

7.9

8.1

8.0

Freshness

Family friendly

+0.1

+0.1

+0.1

+0.1

+0.1

+0.1

+0.1

+0.1

+0.1

+0.1

7.7

7.4

7.6

7.1

7.9

7.7

7.5

7.5

7.7

8.1

7.5

7.3

Ethical practices/products

+0.1

+0.1

+0.1

+0.1

+0.1

Low prices

+0.3

+0.1

+0.1

Average customer scores for key performance indicators (average out of 10) – Q2 2016 Change vs. Q2 2015


100


Burger (standard) 30.6%

Chicken (fast food) 18.0%

Burger (premium)8.6%

Ice cream 7.5%

Fish & chips 6.9%

Pizza3.3%

Wrap2.8%

Apple tart 2.2%

Apple pie 2.2%

Baguette2.1%

Fish & chips 13.2%

Roast 9.3%

Steak6.7%

Chicken dish 6.5%

Burger (premium) 6.5%

Ice cream 5.5%


Cheesecake 3.5%

Fish dish 3.2%

Baguette2.6%

Fish dish 13.1%

Chicken dish 11.1%

Steak8.5%

Ice cream6.5%

Pizza 6.5%

Cheesecake6.5%

Seafood dish 5.9%

Roast 5.2%

Crème brulee 5.2%

Curry3.9%

Pizza 14.2%

Chicken dish 10.5%

Pasta9.9%

Ice cream 7.6%


Fish & chips 4.1%

Steak3.3%

Cheesecake 3.3%


Roast3.0%

Sandwich12.7%

Burger (standard)6.8%

Fish & chips 6.0%

Baguette5.0%

Chicken (fast food)3.7%

Ice cream 3.7%


Chicken dish 3.2%

Cake3.0%

Salad2.9%

Food incidence: Q2 2016

CONSUMER INSIGHT

A standard burger is the most common lunch item to be consumed in a restaurant. A standard burger is consumed on 12% of restaurant lunch visits and 31% in fast food, compared to just 7% in the total Eating Out market. Fish & chips is the 2nd most popular lunch dish in restaurants and the most popular in independents and pubs.

Total market Total restaurants Chains Independents Fine dining Pubs Fast food

Top 10 lunch food items, incidence % of visits – Q2 2016

Burger (standard)12.4%

Fish & chips 9.1%


Ice cream 6.2%


Chicken dish5.1%

Roast 4.0%

Pizza 3.7%

Steak3.2%

Sandwich2.7%

Fish & chips 8.8%

Chicken dish5.8%

Curry5.2%

Sandwich5.1%

Ice cream 4.6%

Pizza4.3%

Pasta 3.7%

Vegetarian dish 3.7%

Fish dish 3.4%

Cake3.1%

1

2

3

4

5

6

10

9

8

7

101


Fish & chips 20.4%



Pizza11.7%

Ice cream 5.4%


Chicken dish 4.0%

Kebab 3.3%

Curry2.2%

Chicken dish 1.9%

Steak13.1%

Chicken dish 13.1%

Fish & chips10.4%


Ice cream 7.6%

Roast7.0%

Beef dish 6.7%

Fish dish 4.4%

Soup4.4%

Cheesecake4.3%

Chicken dish 20.0%

Pizza 19.4%

Bread10.1%

Ice cream9.0%

Pasta 9.0%


Cheesecake5.9%

Steak 4.5%

Chicken dish 4.5%

Seafood dish 4.3%

Chicken dish 11.5%

Fish & chips9.7%

Pizza6.8%

Ice cream6.4%


Steak6.0%

Curry5.7%


Beef dish 5.0%


Food incidence: Q2 2016

CONSUMER INSIGHT

Chicken dish most popular for dinner in restaurants. 12.3% of restaurant visits involve a chicken dish and levels rise to 15.3% in independent restaurants and 20% in chains. Steak is the top dish in fine dining and pub restaurants, consumed at 13.8% and 13.1% of visits respectively. Fish & Chips is the key dinner dish in fast food outlets, accounting for 20.4% of visits.

Top 10 dinner food items, incidence % of visits – Q2 2016


Chicken dish12.3%

Fish & chips 10.2%

Pizza7.5%

Ice cream 7.0%

Steak6.5%


Curry6.1%



Beef dish 4.9%

Chicken dish 15.3%

Curry 14.4%

Pizza6.8%

Ice cream 6.5%

Fish & chips 6.3%

Fish dish 5.9%

Seafood dish 5.8%

Chicken dish 5.7%

Beef dish 5.6%

Soup5.2%

Steak13.8%

Chicken dish 11.6%

Fish dish 11.3%

Soup10.1%

Seafood dish 9.9%

Lamb dish 8.9%

Ice cream8.1%

Beef dish 7.6%

Bread6.4%

Curry6.2%

1

2

3

4

5

6

10

9

8

7

102


Cola 27.6%

Diet cola 15.4%

Coffee9.2%

Bottled water – still 6.7%

Milkshake/milk drink 5.9%

Lemonade 5.3%

Tea 3.4%

Bottled water – sparkling 2.3%

Fruit juice 2.3%

Diet lemonade1.6%

Beer/cider 27.6%

Wine 13.6%

Diet cola 10.4%

Cola 10.3%

Coffee8.5%


Juice drink 4.1%

Tap water 3.5%

Tea 3.0%

Lemonade 2.8%

Wine32.7%


Cola 13.1%

Tap water 11.8%

Diet cola 9.8%

Coffee9.2%


Beer/cider5.2%

Juice drink 4.6%

Spirits/cocktails4.6%

Coffee 17.5%

Tea 13.0%

Wine11.1%

Bottled water – still10.3%

Diet cola 9.4%

Cola 8.0%

Beer/cider 7.9%

Tap water 7.2%


Fruit juice 3.6%

Diet cola15.0%

Cola 14.0%

Wine11.0%

Tap water 10.4%

Coffee 7.6%


Beer/cider 6.1%

Lemonade 5.1%


Tea 3.3%

Cola 16.2%

Diet cola 12.4%

Beer/cider 11.9%

Coffee 10.4%

Wine8.8%


Tea5.1%

Tap water 4.1%

Lemonade4.0%


Coffee16.1%

Cola 12.0%

Diet cola 10.1%


Tea 8.0%

Beer/cider6.4%

Wine4.9%

Tap water 3.7%

Bottled water – sparkling3.1%

Lemonade2.8%

Drink incidence: Q2 2016

CONSUMER INSIGHT

Cola is the No. 1 restaurant lunch drink. 16% of lunch visits to restaurants involve cola, which is particularly key within fast food outlets where it is consumed on 28% of visits. In chain restaurants, diet cola accounts for 15% of lunch visits, ahead of regular cola on 14%. Beer/cider is most popular with lunch in pubs and wine in fine dining restaurants.

Top 10 drinks with lunch, incidence % of visits – Q2 2016


1

2

3

4

5

6

10

9

8

7

103


Cola22.3%

Diet cola 12.1%


Beer/cider4.6%

Coffee 4.5%

Tea 4.1%

Milkshake/milk drink4.0%

Lemonade 3.6%


Wine 2.6%

Beer/cider 33.2%

Wine 20.7%

Cola 9.4%

Diet cola 9.2%

Coffee 5.0%

Juice drink4.4%

Tap water 4.3%

Spirits/cocktails 3.3%

Lemonade 2.8%


Wine45.3%

Beer/cider 16.5%



Tap water 9.1%

Cola6.2%

Coffee 5.7%


Diet cola 4.2%

Juice drink 3.2%

Wine27.6%

Beer/cider 20.4%

Cola 8.8%

Tap water 7.3%


Coffee6.0%

Diet cola 5.9%

Spirits/cocktails 3.6%

Fruit juice 3.5%

Tea3.5%

Wine17.9%

Cola 15.5%

Beer/cider14.5%

Diet cola 13.5%

Tap water 8.5%


Coffee 4.7%

Lemonade 4.6%


Juice drink 3.5%

Beer/cider 19.7%

Wine 19.1%

Cola13.0%

Diet cola9.4%

Tap water 5.3%

Coffee5.1%


Lemonade 3.3%

Juice drink 3.3%


Beer/cider18.1%

Wine 17.9%

Cola 12.5%

Diet cola 9.2%

Coffee 5.9%


Tap water 5.2%

Lemonade 3.4%

Juice drink 3.3%


Drink incidence: Q2 2016

CONSUMER INSIGHT

Beer/cider and wine are the key drinks in restaurants at dinner. Wine is the top dinner drink in chain restaurants, independent restaurants and fine dining restaurants, but in pubs beer/cider is most important, drunk with a third of all evening meals. A soft drink is only the No. 1 in fast food, where Cola is most popular, consumed on 14% of dinner visits.

Top 10 drinks with dinner, incidence % of visits – Q2 2016


1

2

3

4

5

6

10

9

8

7

104


CONSUMER INSIGHT

Growth in all key metrics for chain restaurants: More customers, visiting more often and paying

more on each visit.

Chain restaurants – drivers of performance

70.8% 73.4%

Q2 2015 Q2 2016

1.3 1.5

£6.37£12.67

£19.60

£7.05£13.42

£19.92

Breakfast Lunch Dinner

Change drivers

47% 44%

53% 56%

Q2 2015 Q2 2016

Female

Male

16% 14%

20% 22%

30% 31%

34% 32%

Q2 2015 Q2 2016

50+35-4925-3418-24

23% 19%

39% 38%

22% 25%

16% 18%

Q2 2015 Q2 2016

Over £60K£40-£60K£20-£40KUnder £20K

25-49s, women and affluent visitors drive visit growth: 56% of visitors now women,

53% 25-49 and 43% earning £40k+.

18%

13%

20%

15%

Get togetherwith friends or

family

Having a treat

25-49s Change drivers

Missions – % of visits 8.2

7.9

7.9

8.2

8.4

8.1

8.1

8.4

Freshness

Family friendly

Ethical practices/products

Food quality/taste

KPI scores (avg. out of 10)

Needs10%

11%

12%

11%

15%

9%

13%

13%

Cheap/inepensive

Productfreshness

Q3 2015

Q4 2015

Q1 2016

Q2 2016

Family visits (w/kids)

34%36%

£40k+ Change drivers

16%

9%

18%

12%

Get together withfriends or family

Time with partner

Missions – % of visits

KPI scores (avg. out of 10)7.3 8.5 7.9 8.3 8.1 8.37.5 8.6 8.0 8.4 8.2 8.4

Ethicalpractices

Conv.location

Familyfriendly

Foodquality/

taste

Drinkquality/

taste

Freshness

More informal social occasions, especially with family: Improvements in quality, freshness, ethical practices and family friendliness encouraging more informal get-togethers and family treat occasions.

Age - % of visits

Gender - % of visits

Total household income - % of visits

Note: Profile data includes breakfast, lunch and dinner. Change drivers shown selected based on greatest year on year change.

105


CONSUMER INSIGHT

Positive period for pub restaurants: Pubs competing strongly on meal visits, with growing

participation, frequency and average spend.

Pub restaurants – drivers of performance

85.0% 85.8%

Q2 2015 Q2 2016

1.8 2.0

£5.58

£11.32

£16.65

£6.11

£11.84

£17.21


Change drivers

52% 50%

48% 50%

Q2 2015 Q2 2016

Female

Male

70% 68%

30% 32%

Q2 2015 Q2 2016

£40K+

Under £40K

Pubs growing appeal to female customers and those earning higher

incomes: Half of pub restaurant meal visitors are now women, while the

proportion earning £40k+ per annum has also increased.

Female Change drivers


Needs – % of visits

£40k+ Change drivers


KPI scores (avg. out of 10)8.27 8.11 7.248.34 8.18 7.32

Friendly service Cleanliness Ethical practices/products

Low tempo ‘wind down’ missions gaining popularity in pubs: Consumers increasingly

choosing pubs they have been to before, with good service and a clean environment, where they will

be able to wind down and relax.

Gender - % of visits


4%

6%Wind down or relax

35%

11%

36%

13%

38%

14%

39%

13%

Beenbefore

FriendlyService

Q3 2015

Q4 2015

Q1 2016

Q2 2016

6%

3%

8%

4%

Wind downor relax

At anotherleisureactivity

31%

7%

32%

10%

34%

9%

34%

10%

Beenbefore

Fastservice

Q3 2015

Q4 2015

Q1 2016

Q2 2016



106


CONSUMER INSIGHT

39.1%

40.6%

£20-40k

19% 23%

Average spend rising fastest in independent restaurants: 11% overall rise in average meal spend is unmatched, while participation and frequency have also increased.

Independent restaurants – drivers of performance

75.6% 77.8%

Q2 2015 Q2 2016

1.4 1.6

£5.74£9.91

£19.47

£6.35£11.34

£20.93


Change drivers

Growing get together occasion driving more and higher spend visits: Almost a quarter of all independent restaurant

occasions are now sociable get-togethers.

Get together Change drivers

KPI scores (avg. out of 10)8.56 7.46 8.57 8.508.74 7.57 8.65 8.57

Convenientlocation

Low prices Menu choice Drinkquality/taste

25-34s, women and mid-income consumers visiting for price and value-led occasions: Despite average spend rises,

independent restaurants are increasingly chosen for get-togethers due to low prices and good value.

Mission:Get together with friends or family -% of visits


13.0%

14.4%

25-34

Age – % of visits

Income – % of visits

22%

8%

24%

9%

23%

9%

26%

12%

Good value

Cheap/inexpensive

Q3 2015

Q4 2015

Q1 2016

Q2 2016

61.4%

62.1%

Female

Gender – % of visits


107


CONSUMER INSIGHT

38% 36%

62% 64%

Q2 2015 Q2 2016

35+

18-34

31% 29%

41% 37%

19% 21%

9% 12%

Q2 2015 Q2 2016

Over £60K£40-£60K£20-£40KUnder £20K

Participation and frequency down for fast food: Fewer consumers visiting and those who do are visiting less often, but average spend has risen.

Fast food – drivers of performance

75.1% 71.9%

Q2 2015 Q2 2016

2.1 2.0

£4.17 £5.73£9.26

£4.56 £6.30£10.06


Causes of

decline

Millennials and less affluent consumers causing decrease in fast food visits: Consumers aged 18-34 account for a

falling share of visits to fast food outlets, as do those earning under £40k per

annum.

Age - % of visits


Fewer visits for the specific cuisine and quality of food on offer: Among 18-34s and less affluent

customers, fewer are choosing a fast food outlet for a particular type of food – with independents (e.g. fish & chips, kebab shops) some of the hardest hit.

Change drivers


38%

40%

36%

36%

Foodquality/

taste

Q3 2015

Q4 2015

Q1 2016

Q2 2016

7.0%

3.7%

4.7%

2.6%

Wanted a specificcuisine

Because I had to


6.6%

5.4%

Wanted aspecific cuisine



24%

23%

23%

23%

Convenientlocation - to

home

Q3 2015

Q4 2015

Q1 2016

Q2 2016

18-34 Change drivers

Under £40K

Changedrivers


108


CONSUMER INSIGHT

Contemporary chains – Y/E June 2016

5.1% 6.7%

Q2 2015 Q2 2016

Contemporary chains playing key role in restaurant growth. 18-24s and more affluent consumers are being attracted into modern chains by the food quality and environment. Contemporary brands have greater appeal on special occasions and celebrations, but less so for treats and family visits.

4.0%6.6%

% share of total chain restaurant visits

WHO?

44% 42%

56% 58% Female

Male

14% 18%21% 18%31% 32%

34% 32% 50+

35-49

25-34

18-24

20% 18%

39% 32%

25% 28%16% 22%

Total chains Contemp. chains

Over £60K£40-£60K£20-£40KUnder £20K

MISSIONS?

21% 22%

9%18%

9%

8%7%

7%12%7%7%6%4%4%4% 3%4% 3%2% 3%2% 3%4% 2%4% 2%

11% 11%


Other


Discount/promotion

Try something new

Better quality food

Wanted specific cuisine


Wind down or relax

Doing other shopping

Having a treat

At other leisure activity

Time with my partner

Special occasion/celebration

Get together

NEEDS?43%

34%

17%

24%

14%

24%

17%

15%

12%

10%

16%

6%

3%

11%

11%

11%

7%

54%

34%

28%

25%

20%

20%

14%

14%

14%

11%

11%

6%

6%

6%

6%

5%

3%

Food quality/taste

Been before

Nice environment

Convenient - other

Recommendation

Good value

Wide menu choice

Convenient - to home

Friendly Service

Product freshness

Voucher/promotion

Convenient - to work

Drink quality/taste

Cheap/inexpensive

Fast service

Family friendly

Healthy food options

Totalchains

Contemp.chainsWHO WITH?

7% 7%34% 34%

33% 30%

22% 23%3% 6%


Other

ColleaguesFriendsFamilyPartner

Alone

25%

16%With kids

Total chains

Contemp. chains

PROMOTIONS?

27%

16%On promotion

Total chains

Contemp. chains

Contemporary Chains = opened in past 10 years

Note: All data is from the year ending June 2016 combining lunch and dinner, except for the share of visits data from Q2 2016 vs. Q2 2015 and split by day-part.

109


CONSUMER INSIGHT

Demographics by cuisine type in chain restaurantsBritish and French cuisines attract an older consumer, Asian, South American and French are more appealing for women. Over half of British and French cuisine consumers are aged 50 or above, compared to just a third in total chain restaurants. 62% of Asian, South American and French cuisine consumers are women, compared to 56% in chain restaurants on average. South American consumers are the highest earners, with a third making £60k+.

14% 3%19% 21% 16% 7% 13% 26% 19%

21%13%

23% 21% 26%14%

18%

36%35%

31%

28%

34% 34% 40%

28%32%

26%27%

34%57%

24% 24% 18%51%

36%12% 19% 50+

35-49

25-34

18-24

20% 10% 21% 20% 25% 23% 17% 14% 16%

39% 52% 42% 39% 22% 35% 37% 29% 36%

25% 24% 24%16%

20%20% 28% 34% 28%

16% 14% 13% 25% 33% 21% 19% 23% 19%Over £60K

£40-£60K

£20-£40K

Under£20K

Gender, age and total household income profiles % of meal visits – Year to end of June 2016

Total British American S.American French Italian Japanese MexicanPan-Asian

Note: All data is from the year ending June 2016 combining lunch and dinner.

44% 43% 43% 38% 38% 38% 43% 44% 46%

56% 57% 57% 62% 62% 62% 57% 56% 54% Female

Male

110


15% 14% 12%17%

12%18% 16%

10% 12%

11% 19%14%

11%16%

13%11%

8%8%

11%8%

10%15%

8%11%

10%

16% 11%

8%8%

9%

11%

10%6%

7% 13%12%

5%4%

5%

5%

2%4%

6% 4% 7%

5% 5% 5%

4%

7%7%

4% 4% 3%

5%9%

5%

4%

4%6%

5% 5% 6%

5%

3%

4%

2%

6%5%

4%2%

5%4%

5%

4%5%

2%

5%

4%2%

2%4%

5%

5%

5%

3%

4%

4%

2%4%

4%

6%

4%

2%

5%

1%3%

4%2%

4%

2%

4%3%

6% 0%3%

9% 5%

4%0%

4%3%

2% 3% 4% 4% 3%

3%4%

3%4%

2% 3% 3% 2% 4%

3%3%

2%1%

4% 1% 5% 4% 1%

3%1%

4%4%

0% 4% 2% 4%3%

2%2%

1%1%

2%4% 3% 2% 4%

2%2%

1%1%

5% 1% 2% 3% 4%2% 0%

3% 1% 2% 2% 2% 4% 1%2% 0% 2% 1% 1% 1% 2% 1% 3% Other

Business meeting/meal

To try something new

Had to

To have better quality food

Promotion

Work-based journey

Wind down or relax

Wanted a specific cuisine

Grocery shopping

Special occasion



At another leisure activity

Spend time with partner

Part of regular routine

Work/study break

Having a treat

Doing other shopping

Get together

CONSUMER INSIGHT

Total British American S.American French Italian Japanese MexicanPan-Asian

Missions by cuisine type in chain restaurantsShopping trips are most important for British cuisine, whereas French, Asian and Italian are eaten on more sociable missions. A fifth of British food is eaten by consumers out shopping, which is also the main mission for South American cuisine. 18% of French, 17% of Asian and 16% of Italian meals respectively are eaten on get together occasions. Japanese food is most likely to be chosen for a treat and also more often picked due to a desire for the specific type of food than other cuisines.

Mission profile % of meal visits – Year to end of June 2016

Note: All data is from the year ending June 2016 combining lunch and dinner.

111


CONSUMER INSIGHT

Total

Food quality37%

Been before32%

Good value27%

Close to other*26%

Cheap/inexpensive17%

Fast service17%

Close to work16%

Atmosphere14%

Close to home13%

Wide choice13%

Food quality32% (87)

Been before32% (100)

Close to other*31% (120)

Good value29% (105)

Cheap/inexpensive17% (99)

Close to work15% (98)

Close to home15% (110)

Atmosphere15% (104)

Friendly service14% (121)

Fast service13% (79)



Good value26% (94)





Close to home 15% (111)

Atmosphere15% (105)

Wide choice14% (108)


Been before29% (92)

Good value26% (96)






Recommendation14% (144)

Freshness13% (131)


Been before27% (86)

Good value24% (90)





Atmosphere15% (107)






Good value24% (89)

Atmosphere18% (127)



Promotion15% (153)


Friendly service14% (118)



Freshness20% (199)



Healthy options19% (222)



Good value18% (64)



Been before31% (98)

Good value24% (89)

Atmosphere22% (155)








Been before31% (98)


Good value26% (94)


Promotion16% (167)


Atmosphere15% (109)



Needs by cuisine type in chain restaurantsFood quality is the most common consumer need for all the major cuisine types. Food quality accounts for the greatest share of visits for each of the major cuisine types within chain restaurants, especially Asian food, selected for its quality on 48% of visits. American cuisine consumers skew to choosing a place they have been to before, while British cuisine over-indexes for good value relative to the average for chain restaurants. Good value is least important for Japanese cuisine, for which freshness is relatively more important, accounting for a fifth of visits.

1

2

3

4

5

6

9

8

7

Top 10 consumer needs, % of visits and index relative to chain restaurants – Year to end of June 2016

10

British American S.American French Italian Japanese MexicanPan-Asian

Note: All data is from the year ending June 2016 combining lunch and dinner. *Close to other refers to a convenient location other than work or home.

Index ≤ 80 Index ≥ 120

112


Contents


Executive summary

Market


Consumer insight


Section summary

Customer typology overview

Customer profile types


Future outlook

113


Section summary

114

MCA divides eating out customers into nine segments based on age, social grades and if they have children in the household. The nine segments include three Millennial segments (the Explorers, the New Parents and the Home Builders), four Generation X segments (Established Families, Humble Householders, Aspiring Child Free and Functional Child Free) and two Grey Pound segments (Greying Generation and Golden Oldies).

Millennials and Established Families are the most valuable customers.• Three Millennial segments (18-34s) account for 29% of UK adult

population but represent 46% of the total visits and 43% of the total expenditure in the restaurant market.

• Established Families (ABC1 35-54, children at home) account for 10% of adult population but contribute 14 % of total visits and 14% of total expenditure.

• 55+ account for 36% of adult population however only contribute 18% of the total visits and 21% of the total expenditure.

The Explorers have a big budget and appetite for specific cuisines.• While all the other customer segments spend the most when have

special occasions or celebrations, the Explorers spend the most when on a mission to have a specific cuisine.

• ‘Want a specific cuisine’ is the joint fourth most important mission (6%) for the Explorers, 1pp higher than the average. Developing and advertising authentic minority cuisines is a key opportunity to encourage the Explorers to visit more often and spend more per visit.

• The Explorers(18-24s) are the most adventurous customers. They have the greatest consideration set for each visit. Promoting through social media, email contact lists and digital coupons are effective ways to target and persuade this tech-savvy generation to visit.

The New Parents are the most foodie parents ever• The parents (25-34s, with children at home) have the highest eating

out frequency across all generations. On average, they visit the restaurant market 157 times per annual for breakfast, lunch, dinner and snacking.

• Being New Parents, family friendliness is now one of the most important needs. Developing family friendly service and facilities are important selling points.

Contemporary brands are winning Millennials and Aspiring Child Free.• The Millennials’ eating out repertoires strongly over-index for

contemporary brands – Turtle Bay, Nando’s and YO! Sushi for the Explorers; BrewDog, Wasabi, Wahaca, Itsu, Five Guys and YO! Sushi for the Home Builders (25-34s, with no children at home) and Chimichanga and Wacky Warehouse for the New Parents.

• Aspiring Child Free (35-54 ABC1, with no children at home) are over-represented for the more premium contemporary brands, including Côte, Wahaca, Itsu and GBK.

Special occasions and celebrations drive the highest spend. • Customers aged over 25, either ABC1 or C2DE, having children at home or

not, all spend the highest when eating out for special occasions or celebrations. This indicates an opportunity to dig the customer pockets deeper with appropriate celebration offers.

• For all customers aged over 25, the mission for spending the second highest is to spend time with their partners. Nice environment and friendly service are important to enhance customers’ dining experiences and encourage repeat visits.

Notes: age range for the three broad segments – Millennials (18-34s), Generation Y (35-54s), Grey Pound (55+).

CONSUMER TYPOLOGY ANALYSIS


Contents


Executive summary

Market


Consumer insight


Section summary




Future outlook

115


Customer segmentation – demographics and spendMillennial segments and the ABC1 35-54 with kids are the most valuable restaurant customers*. These four segments account for 57% of total implied expenditure despite only a 39% share of the total adult population.

116

DEMOGRAPHICS

Age

Social grade

Kids at home

18-24

No limit

No limit

25-34

No limit

Have kids

25-34

No limit

No children

35-54

ABC1

Have kids

35-54

C2DE

Have kids

35-54

ABC1

No children

35-54

C2DE

No children

55-65

No limit

No limit

65+

No limit

No limit

Notes: *Restaurant customers: customers who have visit fast food, pubs, branded restaurants, local independent restaurants and fine dining for breakfast, lunch, dinner or snacking. **UK adult population: based on ONS most recently released data - population and age group (2014), social grade (2011) and children dependent in household(2011). ***Implied annual restaurant market spend is an estimated UK adult spend (inc. tax) at fast food, branded restaurants, independent restaurants and fine dining across all day-parts.N.B. ‘have kids’ means having children (under 18) in the household; ‘no children’ refers to customers who either have no children in the household or have children but over 18.

% OF UK ADULTPOPULATION**(50.9million)

12%(5.9m)

7%(3.6m)

10% (5.1m)

10%(4.9m)

8%(4.2m)

9%(4.6m)

8%(3.9m)

14% (7.4m)

22% (11.4m)

IMPLIED ANNUAL RESTAURANTMARKET SPEND***(£45.3b)

16%(£7.0b)

13%(£6.1b)

14% (£6.2b)

14%(£6.4b)

7%(£3.2b)

10%(£4.4b)

6%(£2.5b)

10% (£4.5b)

11% (£5.0b)



Customer segmentation – frequency and average spend

117

Notes: *UK adult population: based on ONS most recently released data - population and age group (2014), social grade (2011) and children dependent in household(2011). **Implied annual restaurant market spend is an estimated UK adult spend (inc. tax) at fast food, branded restaurants, independent restaurants and fine dining across all day-parts.N.B. visit frequency is the average annual visits to fast food outlets, branded restaurants, independent restaurants and fine dining restaurants for breakfast, lunch, dinner and snacking (it excludes visits to cafés, supermarkets, workplaces, hotels, etc.); Average spend is the average spend per head per restaurant market visit, including breakfast, lunch, dinner and snacking.

% OF UK ADULTPOPULATION*(50.9million)

12%(5.9m)

7%(3.6m)

10% (5.1m)

10%(4.9m)

8%(4.2m)

9%(4.6m)

8%(3.9m)

14% (7.4m)

22% (11.4m)

Visit frequency(Annual res mkt visits per person)

132(159)

178(214)

117(141)

121(146)

82(98)

82(99)

68(82)

54(64)

35(42)

Average spend(p/h per visit) £9.05

(84)

£9.38(88)

£10.50(98)

£10.79(101)

£9.45(88)

£11.71(109)

£9.60(90)

£11.47(107)

£12.64(118)

16%(£7.0b)

13%(£6.1b)

14% (£6.2b)

14%(£6.4b)

7%(£3.2b)

10%(£4.4b)

6%(£2.5b)

10% (£4.5b)

11% (£5.0b)

Millennial parents eat out most frequently. The new parents visit fast food, pubs, branded and independent restaurants 178 times for breakfast, lunch, dinner or snacking in a year. Golden oldies have the highest average spend per head per occasion, however they eat out least frequently at only 35 times a year.

IMPLIED ANNUAL RES MKT SPEND** (£45.3b)

Nat. avg = 83 (100)

Nat. avg =£10.71 (100)



Customer segmentation – segment expenditure by channelStrong branded restaurant skew for the M segments. UK adults spend £45.3 billion on restaurants in MAT June 2016. 15% of total expenditure goes to branded restaurants, with all three M segments strongly over-indexing. Fast food is broadly appealing to customers under 55 years old. Overall 30% of total expenditure goes to pub restaurants, with 35-54 no kids and 55+ in particular, strongly over-indexing.

118

30%24% 24% 26% 27% 32% 33% 36% 40% 44%

24%

17% 19%26% 23%

19%28% 23%

29%30%

23%

31%32%

22% 28% 31% 16% 25%15% 8%

14%20% 16% 17% 14%

13%14%

11% 10% 10%

8% 9% 10% 9% 8% 5% 9% 5% 7% 9%Fine dining

Brandedrestaurant

Fast food

Independentrestaurant

Pub restaurant

Total customers

IMPLIED ANNUAL

RESTAURANT MARKET SPEND*

BY SEGMENT

£7.0b £6.1b £6.2b £6.4b £3.2b £4.4b £2.5b £4.5b £5.0b£45.3b

Notes: *Implied annual restaurant market spend is a calculated total restaurant expenditure for UK adults in the restaurant market (including fast food outlets, chain restaurants, independent restaurants and fine dining restaurants) across all day-parts (breakfast, lunch, dinner and snacking). It excludes expenditure from specific segments that are excluded in the MCA Eating Out Panel consumer research, in particular children and tourists.



Customer segmentation – the expenditure matrix The Explorers are the most important contributors for fast food and chain restaurants. The Explorers spend £2.1b at fast food, accounting for 20% of the fast food outlet revenue. The Explorers also spend £1.4b on chain restaurants, accounting for 22% of the total revenue at this channel. Golden Oldies spend the most at pub restaurants and local restaurants.

119

£7.0b(16%)

£6.1b(13%)

£6.2b(14%)

£6.4b(14%)

£3.2b(7%)

£4.4b(10%)

£2.5b(6%)

£4.5b(10%)

£5.0b(11%)

£13.8b(30%)

£10.7b(24%)

£10.6b(23%)

£6.5b(14%)

£3.7b(8%)

BY CHANNEL

BY

SEG

MEN

TIMPLIED ANNUAL RESTAURANT

MARKET SPEND* £45.3b

£1.7(3.7%)

£1.5(3.2%)

£1.6(3.6%)

£1.7(3.8%)

£1.0(2.3%)

£1.4(3.2%)

£0.9(2.0%)

£1.8(3.9%)

£2.2(4.8%)

£1.2(2.6%)

£1.2(2.6%)

£1.6(3.5%)

£1.5(3.3%)

£0.6(1.3%)

£1.2(2.7%)

£0.6(1.3%)

£1.3(2.9%)

£1.5(3.3%)

£2.1(4.7%)

£1.9(4.2%)

£1.4(3.1%)

£1.8(4.0%)

£1.0(2.2%)

£0.7(1.6%)

£0.6(1.4%)

£0.7(1.5%)

£0.4(0.8%)

£1.4(3.0%)

£0.9(2.1%)

£1.1(2.4%)

£0.9(2.0%)

£0.4(0.9%)

£0.6(1.3%)

£0.3(0.6%)

£0.5(1.0%)

£0.5(1.1%)

£0.7(1.4%)

£0.6(1.3%)

£0.6(1.2%)

£0.5(1.1%)

£0.2(0.4%)

£0.4(0.9%)

£0.1(0.3%)

£0.3(0.7%)

£0.5(1.0%)

Notes: *Implied annual restaurant market spend is a calculated total restaurant expenditure for UK adults in the restaurant market across all day-parts, excluding expenditure from specific segments that are excluded in the MCA Eating Out Panel consumer research, in particular children and tourists.



Customer segmentation – Top 10 restaurant brands The M segments strongly over-index for leading fast food and casual dining brands, while the G segments are over-represented among pub brands.

120

TOP 10 RESTAURANT BRANDS

ACROSS ALL DAY-PARTS(Visit share and indices for each

segment against the average)

139 146 109 128 166 89 120 67 31

82 65 85 79 106 103 142 132 110

136 156 103 133 142 77 126 78 34

115 176 129 150 133 98 112 61 21

84 108 87 120 103 87 89 114 93

46 65 49 83 118 87 98 124 168

101 143 89 106 108 69 104 103 96

46 104 44 118 90 78 99 120 147

233 181 181 131 69 73 60 32 24

146 98 91 127 82 142 42 94 73

14.8%

7.5%

4.7%

2.6%

1.6%

1.5%

1.2%

1.2%

1.0%

0.9%

Notes: Bubble size relates to the absolute value of index. E.g. The Explorers strongly over-index on McDonald’s against the sample average of 14.8%. Colour: green (index over 110), grey (index under 110); data source: MAT June 2016, MCA EOP



Contents


Executive summary

Market


Consumer insight


Section summary




Future outlook

121


£7.0bn

Worked example and notes on calculations used

122

Participation 65% (129)

Visit frequency p/y 18 (154)

Average spend p/h £5.03 (96)(Implied annual

res. mkt expenditure)

Key messages

∆TO AVERAGETOP 10 OCCASIONS FOR THE EXPLORERS

Key messages

AVERAGE SPEND P/H

Channel visit share and average spend Consideration set and non-consideration level% who only considered 1

brand for last restaurant visit

51%

(76)

TOP 10 NEEDS FOR THE EXPLORERS

Strong day-part participation and visit frequency but low average spend

46% (127)

£6 (98)

Top brands with the highest segment skew

Population: 5.9 m

52% 57%

48% 43%

Average The Explorers

Fri-Sun

Mon-Thu

Early week v late week

(355)

∆TO AVERAGE

No. of restaurant brands considered for a visit:

1.9

(118)

15% of the Explorers eat out in the restaurant market for having a treat.(Single choice question)

The Explorers spent £7.0bn in the restaurant market in 2016

21% of the Explorers choose a venue based on food quality/taste;(multiple choice question)

Index against the average for restaurant market customers

1% higher compared to the avg. for restaurant market customers

46% of the Explorers’ restaurant market visits end up in fast food outlets. Index of 127 against the average for all the res. mkt customers

The Explorers on average spend £6 per visit at fast food outlets, with an index of 98 against the average for res. mkt customers

Turtle Bay has the strongest customer visit skew towards the Explorers, based on last month visits; a min sample size of 50 applies; index against the total res. mkt customers

65% of the Explorers have eaten out for breakfast in the past year, with an index of 129 against the average share for all adult customers

Index against the avg. for restaurant market customers who eat out on this mission

1pp higher compared to the total restaurant market customers

The average spend when eating out on this mission

The Explorers on average visit the res. mkt 18 times for breakfasts. With an index of 160 against the total customers

The Explorers on average spend £5.03 per head per visit for breakfast, under-indexing compared to the total customers



1%

2%

-3%

-1%

-2%

2%

3%

0%

-2%

1%

£ 11.06 (85)

£ 9.57 (79)

£ 13.55 (84)

£ 8.18 (85)

£ 15.87 (90)

£ 11.04 (84)

£ 17.84 (77)

£ 11.70 (98)

£ 7.89 (94)

£ 6.85 (94)

M – The Explorers (18-24s)

123

Participation 65% (129) 96% (105) 91% (106) 82% (131)

Visit frequency p/y 18 (154) 40 (144) 42 (159) 31 (186)

Average spend p/h £5.03 (96) £7.95 (82) £15.04 (86) £4.66 (84)

The Explorers are the younger Millennials, with key characteristics of strong day-part participation, frequent restaurant visits, wide eating out consideration set, but spending lower than the average compared to other generations. The opportunities to target the explorers include developing offers for authentic ethnic cuisines and promoting informal dining experiences.

(Implied annual res. mkt

expenditure)

£7.0bn

15%

15%

10%

6%

6%

6%

6%

5%

4%

4%

Having a treat

Get together

Too tired to cook

With my partner

To wind down

Special occasion

Specific cuisine

Other shopping

Work/study break

Regular routine

Under-index for social occasions; highest average spend when want a specific cuisine

∆TO AVERAGETOP 10 OCCASIONS FOR THE EXPLORERS

Strongly over-indexing for fast service

AVERAGE SPEND P/H

Channel visit share and average spend

21% (70)

Consideration set and non-consideration level

% who only considered 1 brand for last restaurant visit

51%

(76)

1%

-3%

1%

-1%

1%

0%

1%

-1%

2%

-1%

21%

16%

13%

11%

9%

9%

9%

7%

7%

7%

Food quality/ taste

Wide menu choice

Been there before

Good value

Close to home

Inexpensive prices

Fast service

Nice environment

Convenient - other*

Recommendation

TOP 10 NEEDS FOR THE EXPLORERS

£10 (86)

Strong day-part participation and visit frequency but low average spend

46% (127)

£6 (98)

15% (72)

£10 (78)

14% (137)

£13 (92)

5% (130)

£19 (74)


Population: 5.9 m

52% 57%

48% 43%

Average The Explorers

Fri-Sun

Mon-Thu


(355)

(302)

(302)

(297)

(296)

(295)

∆TO AVERAGE

No. of restaurant brands considered for a visit:

1.9

(118)

Convenient – other*: close to a place other than home or workplace, e.g. shops, leisure facility, etc.



The New Parents strongly over-index for participation and visit frequency. Fast food outlets are the main destinations. With the constriction with younger kids, getting together with friends is less important for the new parents, and family friendliness is a key need for choosing an appropriate venue. Critical to attract new parents is to provide family friendly services and facilities. Celebration offers (birthday party, etc.) for young kids will also encourage the New Parents to spend more per visit.

£ 10.87 (90)

£ 15.08 (94)

£ 9.87 (102)

£ 17.00 (97)

£ 13.65 (104)

£ 7.79 (93)

£ 19.27 (83)

£ 9.75 (94)

£ 11.67 (98)

£ 8.90 (123)

M – The New Parents (25-34s, with children at home)

124

Participation 76% (150) 96% (104) 93% (109) 82% (132)


Average spend p/h £5.31 (102) £8.84 (91) £17.44 (100) £5.42 (98)


expenditure)

£6.1bn

16%

11%

9%

7%

6%

5%

5%

5%

4%

4%

Having a treat

Get together

Too tired to cook

With my partner

To wind down

Other shopping

Special occasion

Regular routine

Specific cuisine

Work/study break

Over-index for treat occasions; highest average spend for special occasions

∆TO AVERAGETOP 10 OCCASIONS FOR THE NEW PARENTS

Over-index for the need of family friendliness

AVERAGE SPEND P/H


21% (71)


2%

-6%

0%

0%

1%

0%

0%

0%

0%

1%

15%

14%

10%

9%

8%

7%

7%

6%

5%

5%

Food quality/ taste

Wide menu choice

Been there before

Close to home

Good value

Fast service

Family friendly

Inexpensive prices

Convenient - other*

Friendly Service

TOP 10 NEEDS FOR THE NEW PARENTS

£11 (90)

Strong day-part participation and visit frequency

44% (124)

£7 (109)

18% (85)

£10 (78)

12% (124)

£12 (84)

5% (130)

£20 (79)


Population: 3.6 m

52% 56%

48% 44%

Average The New Parents

Fri-Sun

Mon-Thu


(402)

(377)

(361)

(343)

(331)

(331)

∆TO AVERAGE

-5%

0%

-6%

-3%

-3%

1%

3%

-1%

-3%

-1%


50%

(74)

No. of restaurant brands customers are aware of:

2.1

(130)




The Home Builders are the older millennials but have no children at home. This segment strongly over-indexes for visit frequency and contemporary chain restaurants (especially for contemporary brands). Having a treat is the joint No.1 mission and food quality is the most important need. This indicates strengthening food quality perception is the key to attract this segment to visit and build their loyalty.

M – The Home Builders (25-34s, with no children at home)

125

Participation 69% (136) 95% (104) 94% (110) 76% (122)


Average spend p/h £5.16 (99) £8.65 (89) £17.42 (100) £5.23 (96)


expenditure)

£6.2bn

14%

14%

10%

9%

6%

5%

5%

4%

4%

4%

Get together

Having a treat

Too tired to cook

With my partner

To wind down

Specific cuisine

Special occasion

Other shopping

At leisure activity

Work/study break

Under-index for getting together; highest average for special occasions

∆TO AVERAGETOP 10 OCCASIONS FOR THE HOME BUILDERS

Food quality, inexpensive, fast and recommendation over-indexing

AVERAGE SPEND P/H

Channel visit share and average spend Consideration set and non-consideration level

22%

14%

14%

11%

11%

9%

9%

9%

7%

7%

Food quality/ taste

Wide menu choice

Been there before

Good value

Close to home

Inexpensive prices

Convenient - other*

Fast service

Nice environment

Recommendation

∆TO AVERAGETOP 10 NEEDS FOR THE HOME BUILDERS

Strong day-part participation and visit frequency


Population: 5.1 m

52% 51%

48% 49%

Average The Home Builders

Fri-Sun

Mon-Thu


(374)

(362)

(359)

(356)

(303)

(280)

-3%

0%

1%

1%

1%

1%

-1%

-1%

0%

1%

2%

0%

-2%

0%

-1%

2%

0%

2%

0%

1%

£ 16.65 (104)

£ 11.70 (96)

£ 9.17 (95)

£ 18.40 (105)

£ 12.60 (96)

£ 11.11 (93)

£ 23.41 (101)

£ 9.69 (116)

£ 7.58 (104)

£ 11.45 (94)


62%

(92)


1.7

(106)24% (81)

£11 (95)

38% (107)

£6 (99)

21% (101)

£13 (100)

12% (124)

£15 (103)

4% (111)

£24 (97)




The Established Families are more affluent and mature customers. This segment strongly over-indexes for participation, frequency and average spend across all day-parts, especially in the later week (Fri-Sun). Customers in this segment have broad eating out repertoires but are relatively loyal, with 62% only considering one brand for each of their most recent visits. Targeting the Established Families with children’s menu, celebration offers and family friendly services/facilities are key business development opportunities.

X – The Established Families (35-54s, ABC1, children at home)

126

Participation 67% (132) 96% (104) 92% (107) 71% (115)


Average spend p/h £5.26 (101) £9.67 (99) £18.89(108) £5.75 (104)


expenditure)

£6.4bn

16%

14%

9%

7%

6%

6%

5%

4%

4%

4%

Having a treat

Get together

Too tired to cook

With my partner

Special occasion

To wind down

Other shopping

Specific cuisine

Regular routine

Work/study break

Highest average spend when want a specific cuisine and with my partner

∆TO AVERAGETOP 10 OCCASIONS FOR ESTABLISHED FAMILIES

Family friendliness is a key need

AVERAGE SPEND P/H


23% (77)


20%

14%

14%

12%

10%

9%

8%

7%

7%

7%

Food quality/ taste

Wide menu choice

Been there before

Close to home

Good value

Family friendly

Convenient - other*

Nice environment

Inexpensive prices

Fast service

∆TO AVERAGETOP 10 NEEDS FOR ESTABLISHED FAMILIES

£12 (106)

Over-index for participation, visit frequency and average spend for all day-parts

45% (125)

£7 (110)

18% (88)

£14 (107)

11% (106)

£14 (100)

3% (97)

£25 (101)


Population: 4.9 m

52% 49%

48% 51%

Average The Established Families

Fri-Sun

Mon-Thu


(347)

(254)

(225)

(209)

1%

-4%

0%

-1%

0%

1%

0%

0%

-1%

1%

0%

0%

-2%

1%

-1%

5%

0%

0%

0%

1%

£ 12.83 (106)

£ 17.11 (107)

£ 10.50 (109)

£ 19.67 (112)

£ 24.50 (105)

£ 15.00 (114)

£ 10.13 (121)

£ 12.40 (104)

£ 10.73 (103)

£ 6.92 (95)


62%

(92)


1.7

(108)


(204)

(202)



The Humble Householders are less affluent parents, who under-index for average spend for the main day-parts. With children being the No.1 priority in the household, family friendliness is of substantial importance for choosing a specific venue to visit, though over half of visits end up in fast food outlets. Customers in this segment are most willing to spend more for special occasions, especially when celebrating with their partners.

X – The Humble Householders (35-54s, C2DE, children at home)

127

Participation 56% (111) 92% (100) 86% (101) 67% (108)


Average spend p/h £5.07 (97) £8.29 (85) £15.03 (86) £6.03 (109)


expenditure)

£3.2bn

19%

13%

10%

7%

7%

5%

5%

5%

4%

4%

Having a treat

Get together

Too tired to cook

Other shopping

With my partner

To wind down

Special occasion

Regular routine

Specific cuisine

Shopping for groceries

Strongly over-index for having a treat; highest average spend for specific cuisines

∆TO AVERAGETOP 10 OCCASIONS FOR HUMBLE HOUSEHOLDERS

Strongly over-index for the need of family friendliness

AVERAGE SPEND P/H


26% (88)


18%

14%

13%

12%

11%

8%

8%

7%

7%

5%

Food quality/ taste

Been there before

Wide menu choice

Good value

Close to home

Family friendly

Convenient - other*

Inexpensive prices

Fast service

Nice environment

∆TO AVERAGETOP 10 NEEDS FOR HUMBLE HOUSEHOLDERS

£11 (97)

In line for visit frequency but under-index for average spend at lunch and dinner

48% (135)

£6 (99)

14% (70)

£12 (95)

9% (88)

£14 (99)

2% (60)

£23 (91)


Population: 4.2 m

52% 49%

48% 51%

Average Humble Householders

Fri-Sun

Mon-Thu


(207)

(172)

(170)

(162)

(160)

(154)

5%

-4%

1%

1%

-1%

0%

-1%

0%

0%

1%

-2%

-2%

-1%

0%

-1%

4%

-1%

0%

1%

-2%

£ 10.13 (83)

£ 14.38 (90)

£ 8.89 (92)

£ 6.73 (80)

£ 15.03 (85)

£ 11.67 (89)

£ 21.85 (94)

£ 8.37 (81)

£ 11.36 (95)

£ 6.06 (84)


63%

(93)


1.7

(106)




X – Aspiring Child Free (35-54s, ABC1, no children at home)

128

Participation 57% (114) 93% (101) 90% (105) 62% (99)


Average spend p/h £5.05 (97) £10.11 (104) £18.75 (108) £5.75 (104)


expenditure)

£4.4bn

17%

14%

10%

8%

6%

6%

5%

5%

4%

4%

Get together

Having a treat

Too tired to cook

With my partner

To wind down

Special occasion

Regular routine

Specific cuisine

Other shopping


Over-index for social occasions; highest average spend for special occasions

∆TO AVERAGETOP 10 OCCASIONS FOR ASPIRING CHILD FREE

Need strong food quality credentials

AVERAGE SPEND P/H


31% (103)


24%

19%

15%

13%

12%

11%

8%

8%

7%

7%

Food quality/ taste

Been there before

Close to home

Wide menu choice

Good value

Convenient - other*

Inexpensive prices

Nice environment

Recommendation

Fast service

∆TO AVERAGETOP 10 NEEDS FOR ASPIRING CHILD FREE

£12 (106)

Higher day-part participation and visit frequency but lower average spend p/h p/v

32% (89)

£6 (95)

24% (115)

£14 (107)

10% (102)

£16 (113)

3% (97)

£31 (125)


Population: 4.6 m

52% 46%

48% 54%

Average Aspiring Empty Nester

Fri-Sun

Mon-Thu


(212)

(205)

(187)

(184)

(180)

(172)

-1%

-1%

1%

1%

1%

0%

0%

0%

-2%

0%

4%

3%

3%

-1%

1%

3%

1%

1%

2%

1%

£ 18.05 (112)

£ 13.75 (113)

£ 10.06 (104)

£ 20.72 (118)

£ 13.20 (101)

£ 26.09 (112)

£ 10.91 (105)

£ 11.95 (100)

£ 9.37 (112)

£ 13.12 (114)


72%

(106)


1.6

(98)

Aspiring Child Free are the more affluent 35-54s and have no children at home. Customers in this segment are above average spends and like to visit restaurants where they have been there before and which have strong food quality credentials. The majority of their visits happen in the later week (Friday to Sunday) and have a strong skew towards independent restaurants and premium casual dining brands.




Functional Child Free under-index for participation, frequency and spend for lunch and dinner. Fast food and pubs are the main destinations. More functional missions over-index for Functional Child Free, including too tired to cook and out for shopping. However all these functional missions are associated with low relative spends. Promoting budget special occasion meal deal offers for functional Child Free is a key opportunity.

X – Functional Child Free (35-54s, C2DE, no children at home)

129

Participation 49% (98) 89% (96) 80% (93) 60% (97)


Average spend p/h £5.02 (96) £8.49 (87) £14.66 (84) £5.86 (106)


expenditure)

£2.5bn

16%

15%

12%

8%

6%

5%

5%

5%

4%

4%

Having a treat

Get together

Too tired to cook

With my partner

Other shopping

To wind down

Regular routine

Specific cuisine

Special occasion

Shopping for groceries

Getting together and special occasions under indexing

∆TO AVERAGETOP 10 OCCASIONS FOR FUNCTIONAL CHILD FREE

Good value is a key need

AVERAGE SPEND P/H


30% (101)


20%

17%

13%

13%

12%

9%

8%

7%

6%

5%

Food quality/ taste

Been there before

Wide menu choice

Good value

Close to home

Convenient - other*

Inexpensive prices

Fast service

Friendly Service

Nice environment

∆TO AVERAGETOP 10 NEEDS FOR FUNCTIONAL CHILD FREE

£11 (95)

Under index for participation, frequency and spend for lunch and dinner

42% (117)

£6 (92)

18% (87)

£13 (96)

7% (73)

£15 (104)

3% (73)

£20 (80)


Population: 3.9 m

52% 51%

48% 49%

Average Functional Empty Nester

Fri-Sun

Mon-Thu


(149)

(128)

(125)

(118)

(111)

(109)

2%

-3%

3%

1%

1%

0%

0%

0%

-2%

1%

0%

1%

-1%

1%

0%

0%

1%

1%

0%

-2%

£ 10.46 (86)

£ 14.24 (89)

£ 8.81 (91)

£ 16.74 (95)

£ 6.77 (81)

£ 11.05 (84)

£ 7.88 (76)

£ 9.86 (83)

£ 21.63 (93)

£ 5.93 (82)


71%

(105)


1.5

(93)




Greying Generation strongly over-indexes for social missions, including get-togethers, leisure activities and leisure journey. Customers in this segment over-index for the need of food quality/taste, but under-index for having a treat. This indicates a key opportunity especially for pubs, to promote treating occasions and strengthen food quality/taste.

G – Greying Generation (55-65s)

130

Participation 42% (83) 90% (98) 82% (96) 56% (90)


Average spend p/h £5.44 (104) £10.45 (107) £18.02 (103) £5.39 (97)


expenditure)

£4.5bn

20%

13%

9%

8%

6%

6%

5%

5%

4%

4%

Get together

Having a treat

Too tired to cook

With my partner

Other shopping

Special occasion


Regular routine

To wind down

At leisure activity

Over-index for social occasions; highest average spend for special occasions

∆TO AVERAGETOP 10 OCCASIONS FOR GREYING GENERATION

Want food quality and trust

AVERAGE SPEND P/H


38% (125)


21%

19%

13%

12%

12%

10%

8%

7%

6%

4%

Food quality/ taste

Been there before

Wide menu choice

Good value

Close to home

Convenient - other*

Nice environment

Inexpensive prices

Friendly Service

Recommendation

∆TO AVERAGETOP 10 NEEDS FOR THE GREYING GENERATION

£12 (103)

Under index for visit participation and visit frequency across all day-parts

29% (81)

£6 (95)

24% (114)

£14 (108)

7% (75)

£16 (111)

3% (75)

£30 (117)


Population: 7.4 m

52% 51%

48% 49%

Average Greying Generation

Fri-Sun

Mon-Thu


(193)

(135)

(122)

(121)

(120)

(116)

2%

-1%

0%

1%

1%

0%

1%

0%

-1%

1%

1%

3%

-1%

1%

1%

2%

1%

0%

0%

0%

£ 16.45 (102)

£ 13.44 (111)

£ 10.31 (107)

£ 17.77 (101)

£ 8.43 (100)

£ 25.85 (111)

£ 12.60 (110)

£ 11.20 (108)

£ 14.33 (109)

£ 12.49 (103)


72%

(108)


1.5

(9.3)




Golden Oldies under-index for participation and frequency across day-parts, but they are the most loyal customers. Pubs are the main destinations. Getting together with friends and families is the main mission to eat out, and they are risk adverse and choose a venue where they have been there before for reassurance. There is an opportunity for pubs to capture more spend, not least though developing multi-generational family offer and gathering special events.

G – Golden Oldies (65+)

131

Participation 27% (53) 89% (97) 79% (92) 50% (81)


Average spend p/h £5.64 (108) £11.33 (116) £18.20 (104) £6.34 (114)


expenditure)

£5.0bn

28%

10%

7%

7%

7%

6%

6%

5%

4%

4%

Get together

Having a treat

With my partner

Regular routine

Other shopping

Too tired to cook

Special occasion


At leisure activity

Other (please specify)

Over-index for getting together; highest average spend for special occasions

∆TO AVERAGETOP 10 OCCASIONS FOR GOLDREN OLDIES

Choosing a venue within on existing repertoires

AVERAGE SPEND P/H


45% (148)


19%

18%

14%

12%

12%

9%

8%

6%

5%

5%

Been there before

Food quality/ taste

Wide menu choice

Close to home

Good value

Convenient - other*

Nice environment

Friendly Service

Recommendation

Inexpensive prices

∆TO AVERAGETOP 10 NEEDS FOR GOLDEN OLDIES

£12 (105)

Under index for visit participation and visit frequency across all day-parts

16% (44)

£6 (97)

27% (133)

£14 (106)

8% (84)

£14 (103)

4% (108)

£31 (124)


Population: 11.4 m

52% 56%

48% 44%

Average Golden Oldies

Fri-Sun

Mon-Thu


(153)

(135)

(134)

(131)

(129)

(129)

10%

-4%

0%

2%

1%

-3%

1%

1%

1%

2%

3%

-2%

0%

0%

0%

0%

1%

1%

0%

1%

£ 16.22 (101)

£ 14.46 (119)

£ 16.28 (93)

£ 11.98 (115)

£ 8.46 (101)

£ 10.59 (109)

£ 23.20 (100)

£ 12.24 (107)

£ 13.39 (110)

£ 12.89 (107)


78%

(115)


1.4

(86)




Contents


Executive summary

Market


Consumer insight



Section summary

Spending drivers

Cuisine preference

Promotional influences

Social media and email contact

Loyalty considerations

Future outlook

132


Section summaryCuisine collection and peer influence make Millennials the King of growth.

• 35% of 18-34s spending more on eating out than one year ago, 8pp higher than the average, reflecting the growing foodie culture among younger customers.

• Partner and friends becoming more interested in eating out is the joint most important reason for spending more on eating out these days, with Millennials and 35-54s strongly over-indexing.

• Keenness to try more cuisine types is the second most important reason for Millennials to spend more, reflecting more adventurous mindsets.

• The growing cuisine collection habit is also evident that 60% of 18-34s agree that they are trying out a broader range of cuisines than before, 15pp higher than the average.

Generation Y cutting down on alcoholic drinks to spend more on food .

• 26% of Generation Y (35-54s) are spending less on going out for a drink and increasing their spending on eating out in restaurants, compared to the average of 18% of all adults.

• Enhancing the food offers in pubs is key to retaining footfall and mitigating the expenditure lose.

Promotions remain a popular way to drive traffic.

• More restaurant offers and promotional discounts is the third most important reason for spending more now than 12 months ago. This message comes together with ‘more restaurants opened near where I live’ and ‘eating out is more affordable these days’.

• ‘Discounts and promotions’ is the third most important aspect of a branded restaurant that encourage customers to regularly visit it, with younger customers (under 55) strongly over-indexing.

133

The most favoured cuisines are becoming more multi-national.• Thai, Mexican, Mediterranean, Vegetarian, BBQ and Vietnamese

feature in the Top 10 fastest growing cuisines, with Millennials strongly over-indexing for the growth contributions

• British remains the most favourite cuisine, however it is losing its appeal to Millennials and its popularity is down slightly compared to 2-3 years ago.

• Italian cuisine is the second most favoured and is growing. The popularity has risen 3pp to 16%, driven by younger customers (under 55) and supported by promotional activity.

Emails, social media and discounts are key to target Millennials.• 46% of Millennials are on the email contact list of restaurants and pub

companies. The majority agree that being on an email contact list does encourage them to visit more often.

• 43% of Millennials confirm that they follow restaurants on Facebook and Twitter for information and deals.

• 33% of Millennials use discount vouchers most of the time when they eat out. Half of customers in this age group agree that they regularly choose a restaurant based on whether there is a voucher/promotional deal available.

Millennials want faster and more interactive service in chain restaurants.• Millennials vote friendlier and more engaging customer service (15%)

and faster service (14%) as the most important aspects that would encourage them to visit more often, 6pp respectively higher than the survey averages.

• Millennials also strongly over-index for more customisable products, more social media engagement and improved atmosphere.

• In light of heightened cost consciousness among 55+ customers, getting the value for money equation right and skilfully communicating this are important to succeeding among this segment.

BESPOKE CONSUMER SURVEY


Contents


Executive summary

Market


Consumer insight



Section summary

Spending drivers

Cuisine preference




Future outlook

134


Who are spending more these days compared to 12 months ago?Growth is driven by Millennials. Overall, 27% of customers spend more money on eating out compared to 12 months ago, 3pp higher than the proportion of people who spend less. 18-34s strongly over-index for spending more these days, reflecting fewer dependents in the household and generally reduced financial pressure.

Compared with 12 months ago, are you now spending more money on eating out?

Single choice, % of respondents

135

27%35%

21%28%

49% 36%53%

55%

24% 29% 27%17%

Average 18-34s 35-55s 55+

Spending less these days

Spending about the same

Spending more these days

Data source: MCA bespoke survey, 2016

N.B. Net increase/decrease is the absolute value of the difference between ‘spending more these days’ and ‘ spending less these days’.



Top ten reasons for spending more money on eating out Increases in food and drink prices and partner / friends eating out more often are the main reasons for spending more money on eating out. 30% vote the increase of prices is the main reason, strongly driven by 55+. The changing behaviour of partner / friends is the joint No.1 reason, with the under 55s strongly over-represented.

If spending more, what would you most attribute this to?

Multiple choice, % of respondents who spend more these days

136

Average, 30% Average, 30%Average, 28% Average, 25% Average, 24%

19

% 33

%

27

%

28

%

23

%30

%

32

%

22

%

19

%

20

%

43

%

24

% 34

%

27

%

26

%

Food & drink prices haveincreased in restaurants &

pubs

My partner/friends are moreinterested in eating out

More retaurant offers andpromotional discounts

More restaurants have openednear to where I live

Feel more comfortable aboutthe outlook for my finances

18-34 35-55 55+Average

Average, 23% Average, 23% Average, 23%Average, 20%

Average, 18%

22

%

25

% 31

%

16

%

16

%

20

% 24

%

22

%

20

% 26

%

26

%

18

%

14

% 24

%

14

%

I am buying from betterquality establishments than I

used to

My financial circumstanceshave improved

Keener to try more cuisinetypes

It is more affordable thesedays

Spending less on going out fora drink

1 1 3 4 5

6 6 6 9 10




Top ten reasons for Millennials spending more money on eating out Peer influence is the most important reason for Millennials spending more. 33% of Millennials who spend more on eating out compared to one year ago vote ‘my partner/friends are more interested in eating out’ as one of the most important reason, 3pp higher than the average. This indicates Millennials are more likely to be influenced by the changing attitudes and behaviours of others. Keener to try more cuisine types is the second most important reason, reflecting millennials’ adventurous characters and lower risk aversion.


Multiple choice, % of 18-34s who spend more these days

137

30%

23%25%

28%23%

33% 31%28% 27% 25%

My partner / friends are moreinterested in eating out





18-34Average


1 2 3 4 5

24% 23%30%

20% 18%23% 22%

19% 16% 16%



used to


pubs



6 7 8 9 10



Top ten reasons for 35-54s spending more money on eating out The changing behaviour of partner/friends is the most important reason for 35-54s to spend more. 32% of 35-54s who spend more these days vote ‘my partner/friends are more interested in eating out’ as the one of the most important reasons, 2pp higher than the average. Spending less on going out for a drink is the third most important reason for 35-54s, 8pp higher than the average. This reflects the middle-aged customers switching their spending from alcoholic beverages to food.


Multiple choice, % of 35-54s who spend more these days

138

30% 30%

18%23%

17%

32% 30%26% 24% 24%



pubs



I am buying more expensivedishes on menus these days

35-55Average


1 2 3 4 4

23%28%

24% 23%20%22% 22% 20% 20% 20%





used to


6 6 8 8 8



Top ten reasons for 55+ spending more money on eating out Rising food and drink prices are the main reason why 55+ say they are spending more. 43% think ‘food and drink prices have increased in restaurants and pubs’ is the key reason for them spending more money on eating out, 13pp higher than the average. In addition, promotional discounts are an important factor that encourages 55+ customers to visit and spend more.


Multiple choice, % of 55+ who spend more these days

139

30% 28% 25% 24% 23%

43%34%

27% 26% 26%


pubs





used to

55+Average


1 2 3 4 4

30%

20% 23%17%

12%

24% 24%18% 17% 15%




I am buying more expensivedishes on menus these days

Belong to more loyaltyschemes

6 6 8 9 10



12% 13% 10% 13%21% 21%

53% 50% 52%56%

57% 56%

28% 29% 30%25%

17% 17%

5% 5% 6% 5% 4% 4%2% 3% 2% 2% 1% 2%

Average 18-34s 35-55s 55+ Eat out more often these daysSpend more these days

DisagreeeStrongly

Disagree

Neither

Agree

Agree Strongly

Better choice of good quality restaurants and pubsThe majority of customers agree there is a much better choice of good quality restaurants and pubs these days. 55+ customers and those who eat out more often and spend more all strongly over-index.

To what extent do you agree with following statement?

% of respondents

140

There is a much better choice of good quality restaurants and pubs these days



Eat out more often these days

Spend more these days


8% 11% 7% 8% 9% 9%

39%44%

39% 35%45% 42%

34%31%

36%33%

29% 29%

14%13%

13%16%

15% 16%

5% 2% 6% 8% 3% 4%

Average 18-34s 35-55s 55+

DisagreeeStrongly

Disagree

Neither

Agree

Agree Strongly

The rise of the lower-ticket restaurantsMillennials visit more lower-ticket restaurants. 47% of customers agree that they visit more restaurants that offer lower prices or value deals, with 18-34s and customers who eat out more often and spend more strongly over-indexing.


% of respondents

141


I visit more restaurants that offer lower prices or value deals





Contents


Executive summary

Market


Consumer insight



Section summary

Spending drivers

Cuisine preference




Future outlook

142


The globalising popularity of the Top 20 favourite cuisine types British cuisine is the most favoured. 18% of respondents vote British as their favourite cuisine, down 0.3 pp compared to 2-3 years ago. Italian is the second most favoured, up 3pp in the same amount of time. Ten out of the Top 20 favourite cuisine types have grown popularity, led by Italian, Thai, Mexican and Mediterranean, but also with signs of interesting enjoyment of Japanese, Indian and Spanish cuisines. Healthier influences are also coming through with rising popularity of vegetarian and seafood dishes.

Top 20 favourite cuisine types 2016 v 2-3 years ago, % of respondents

143


18.2%

16.3%

9.5%8.2%

4.9% 4.5% 4.0% 3.9%3.1% 2.8% 2.6% 2.4% 2.4% 2.4% 2.1% 1.9% 1.5% 1.5% 1.3% 0.8%

PP compared to 2-3 years ago

-0.32.6

-2.9-4.6

-0.9-1.0 1.8

-1.3 1.31.5 1.0 -2.5 1.3 1.5 -0.3 1.0 0.20.6-0.5 0.1



Top 10 most popular cuisines, 2016 British is the most favoured cuisine, particularly for 55+ customers. 18% vote British as the their favourite type of cuisine, strongly supported by 55+ customers. Italian is the second favourite cuisine, with broad appeal to all age groups. Indian and Chinese rank in the third and fourth places, with 35-54 strongly over-indexing. Millennials are over-represented for Italian, chicken, Thai, burger and Mexican food.

When you are eating out these days, what is your favourite type of cuisine? Single choice, % of respondents

144

Average, 18.2%Average, 16.3%

Average, 9.5%

Average, 8.2%Average, 4.9%

10

.3%

18

.7%

6.5

%

6.8

%

7.1

%

17

.6%

15

.6%

12

.3%

10

.6%

2.5

%

25

.8%

14

.9%

9.3

%

7.0

%

5.3

%

British Italian Indian Chinese Chicken

18-34 35-55 55+Average

Average, 4.5% Average, 4.0% Average, 3.9% Average, 3.1% Average, 2.8%

3.2

%

4.2

% 6.1

%

2.9

%

4.2

%

5.0

%

3.6

%

4.7

%

2.2

%

2.8

%5.1

%

4.2

%

1.1

%

4.2

%

1.7

%

Pub Food Thai Burger Vegetarian Mexican

12

3

45

6 6 6 9 9




↑ 2.6%

↑ 1.8%

↑ 1.5%

↑ 1.5%

↑ 1.3%

↑2.9%

↑1.9%

↑3.2%

↑1.9%

↑1.3%

↑ 3.4%

↑ 2.0% ↑

0.3%↑

0.8%

-0.6%

↑ 1.7%

↑ 1.4%

↑ 1.1%

↑ 1.7%

↑ 3.1%

Italian Thai Mexican Mediterranean Vegetarian

The fast growing cuisines by age groupMillennials are the key drivers for the majority of the fast growing minority cuisines. Millennials over-index for the growth of Thai, Mediterranean, Mexican, BBQ and Vietnamese cuisines. 35-55s over-index for Italian, Thai, regional Indian cuisines. 55+ are over-represented for the growth for Mediterranean, seafood and vegetarian cuisines.

Fast growing cuisines, by age groups, 2016 v 2-3 years ago

Single choice, % represents the increased respondents who choose this type of cuisine as their favourite, % of respondents

145

18-34 35-55 55+Average

↑ 1.3%

↑ 1.0%

↑ 1.0%

↑ 0.6%

↑ 0.5%0.0%

↑0.3%

↑2.6%

↑0.3%

↑1.0%

↑ 0.8%

↑ 2.2%

0.0%↑

0.6%↑

0.3%

↑ 2.8%

↑ 0.3%

↑ 0.6%

↑ 0.6%

↑ 0.3%

Seafood/Shellfish Regional Indian BBQ Japanese Vietnamese

1 2 3 3 5

5 7 7 9 10




The declining cuisines by age groupChinese and India cuisines losing their appeal to the older customers. A large promotion of customers have switched their favourite cuisine from Chinese and India to others, with 55+ strongly over-indexing for both. Millennials account for the biggest decreases for American, burger and pub food.

146

Fast growing cuisines, by age groups, 2016 v 2-3 years ago

Single choice, % represents the decreased respondents who choose this type of cuisine as their favourite, % of respondents

18-34 35-55 55+Average

↓ -4.6%

↓ -2.9%

↓ -2.5%

↓ -1.3%

↓ -1.0%

↓ -4.5%

0.3%

↓ -4.2%

↓ -2.9%

↓ -2.3%

↓ -3.6%

↓ -3.9%

↓ -2.5%

↓ -0.3%

0.6%

↓ -5.6%

↓ -4.8%

↓ -1.1%

↓ -0.8%

↓ -1.4%

Chinese Indian American (Excl. burgers) Burger Pub Food1 2 3 4 5




Top ten favourite cuisines for 18-34s, now v 2-3 years agoItalian, BBQ and Thai are growing popularity among Millennials (18-34s). Italian is the most favoured and fastest growing cuisine for Millennials and the popularity has grown 2.9pp in the past 2-3 years. The popularity of BBQ has grown 2.6pp to 6.1%, 3pp higher than the average. This indicates Millennials are the main driver for the rise of BBQ. 4.2% of Millennials also vote Mexican as a favourite cuisine type, again higher than the average.

Top 20 favourite cuisine types 2016 v 2-3 years ago


147

16.3%18.2%

4.9%

8.2%9.5%

18.7%

10.3%

7.1% 6.8% 6.5%

Italian British Chicken Chinese Indian

18-34Average


1 2 3 4 5

3.9%2.6% 2.4% 2.8%

4.0%

6.1% 6.1%

4.5% 4.2% 4.2%

Burger BBQ American (Excl. burgers) Mexican Thai

6 6 8 9 9

2.9↑

2.9↓

1.3↓ 4.5↓

4.2↓ 1.9↑

2.6↑

0.9↓

4.6↓

1.3↓

1.0↑ 2.5↓ 1.5↑

↑↔↓: PP compared to 2-3 years ago

0.3↓

2.9↓

1.8↑

0.3↑

2.9↓ 2.6↑

3.2↑



Top ten favourite cuisines for 35-54s, now v 2-3 years agoBritish, Italian, pub food, Thai and regional Indian are growing in popularity among 35-54s. British is the most favoured cuisine for 35-54s, up 1pp from 2-3 years ago. Italian cuisine is the second favoured, up 3pp for customers aged 35-54. Pub food, Thai and regional Indian have also grown in popularity among this age group.



148

18.2%16.3%

9.5%8.2%

4.5%

17.6%15.6%

12.3%10.6%

5.0%

British Italian Indian Chinese Pub Food

35-54Average


1 2 3 4 5

3.9% 4.0%

2.8%

1.5%

4.9%4.7%3.6%

2.8% 2.8% 2.5%

Burger Thai Mexican Regional Indian Chicken

6 7 8 9 10

0.8↑

3.9↓3.6↓

3PP↑2.0↑

2.9↓4.6↓

1.0↓

1.5↑

1.8↑1.3↓

1.0↑

0.9↓

3.4↑

0.6↑

2.2↑ 1.1↓

0.3↓2.6↑

0.3↓

0.3↑




4.5%

2.4%

4.0%3.1%

2.4%

5.1% 5.1%4.2% 4.2%

3.4%

Pub Food Seafood/Shellfish Thai Vegetarian Mediterranean

18.2%16.3%

9.5% 8.2%4.9%

25.8%

14.9%

9.3%7.0%

5.3%

British Italian Indian Chinese Chicken

Top ten favourite cuisines for 55+, now v 2-3 years agoAll cuisines except Indian, Chinese, chicken and pub food, are growing in popularity among the 55+. More than one in four 55+ customers vote British cuisine as their favourite, up 1pp from 2-3 years ago. This highlights heightened cost conscious among this more mature customer segment.



149

55+Average


1 2 3 4 5

6 6 8 8 10

1.1↑

4.8↓5.6↓

3.1↑2.8↑

↔

1.8↑

1.3↑

1.0↓

1.3↑

1PP↓

1.7↑

1.7↑

1.4↓

1.5↑

1.4↑


0.3↓2.6↑

2.9↓ 4.6↓0.9↓ 0.3↓



The changing attitudes towards cuisines Millennials have the biggest changes towards wider variety, healthier and more vegetarian cuisines. 60% of 18-34 customers agree that they are trying out a broader range of cuisines than before, 15pp higher than the average. This reflects Millennial customers being more adventurous and lower risk averse than other age groups. Millennials also strongly over-index for ordering more healthier dishes now and eating more vegetarian food in restaurants and pubs these days, indicating that vegetarianism is becoming more established among younger customers.

To what extent do you agree with following statements?

% of agreement*

150

% of agreement*: strongly agree % + agree slightly%, % of total respondents


I am trying out A BROADER RANGE OF CUISINES than before

I order more 'HEALTHIER' DISHES now

I am eating MORE VEGETARIAN food in restaurants and pubs

these days

Overall , 45%

Overall , 38%

Overall , 22%

60%

49%

33%

43%

35%

18%

35% 33%

17%

18-34s 35-55s 55+ 18-34s 35-55s 55+ 18-34s 35-55s 55+



Contents


Executive summary

Market


Consumer insight



Section summary

Spending drivers

Cuisine preference




Future outlook

151


The frequency of using discount vouchers Millennials and customers who eat out more often or spend more these day are frequent discount voucher users. One in five customers use discount vouchers most or all of the time, with 18-34s and customers who eat out more often or spend more strongly over-indexing.

How regularly do you use discount vouchers when eating out?

% of respondents

152

3% 6% 3% 1%8% 6%

17%26%

15%12%

22% 20%

34%

35%

36%31%

32%32%

28%

25%

27%

30%

27%28%

18%8%

20% 25%12% 15%


Never

Occasionally

Sometimes

Most of the time

Every time






The impact of vouchers/ promotional dealVouchers and promotional deals have a strong impact Millennials’ decision-making. 50% of 18-34s regularly choose a restaurant based on whether there is a promotional deal available, 10pp higher than the average. This indicates sending promotional codes / deals by email contact list and social media are important and effective ways to boost Millennial customers’ visits.


I regularly choose a restaurant based on whether there is a voucher/promotion or deal available

% of respondents

153

55+

18-34s

Total

35-55s

8%

12%

8%

5%

32%

38%

33%

27%

28%

29%

29%

26%

20%

15%

20%

24%

12%

6%

11%

17%

Agree strongly Agree Neither Disagree Disagree strongly




Contents


Executive summary

Market


Consumer insight



Section summary

Spending drivers

Cuisine preference




Future outlook

154


The impact of social media Social media has a strong impact on the Millennials but also customers who eat out more often or spend more. On average, 22% of customers agree they follow restaurants on Facebook and Twitter for information and deals, with Millennials and customers who have increased visit frequency and spending on eating out strongly over-indexing.


% of respondents

155

I follow restaurants on Facebook and Twitter for information and deals

4% 9% 5% 0%11% 9%

18%

34%

17%

6%

30%24%

14%

20%

15%

7%

13%

14%

21%

16%

24%

24%

19%19%

42%

21%

39%

63%

26%34%


Disagree strongly

Disagree

Neither

Agree

Agree strongly






The impact of on email contact list Millennials and customers who have increased eating out frequency and spending strongly over-index among those who have joined an email contact list. The majority of those who sign up for email contact list agree that being on a email contact list does encourage them to visit more often.


% of agreement*

156



I am on the email contact list of 3-5 restaurant/pub companies

I am on the email contact list of more than 5 restaurant/pub

companies

Being on a restaurant/pub brand email contact list does encourage me to visit more

often

Overall , 29% Overall , 19% Overall , 30%

38%

30%

39%

27%

19%

29%

24%

10%

23%

44%

32%

45%

39%

29%

41%

18-34s 35-55s 55+ More frequently

Spending more


Spending more


Spending more



Contents


Executive summary

Market


Consumer insight



Section summary

Spending drivers

Cuisine preference




Future outlook

157


Branded restaurants are higher quality than five years agoThe majority of customers have recognised that branded restaurants are of a higher quality than five years ago.


Branded restaurants are now of much higher quality than 5 years ago

% of respondents

158

7% 10% 6% 5%12% 9%

38%40%

37% 38%

46%44%

43%41%

42% 46%

32%35%

10% 9%13% 9% 9% 10%

2% 1% 3% 2% 1% 2%


DisagreeeStronglyDisagree

Neither

Agree

Agree Strongly


Net agreement*33%

Net agreement40%

Net agreement27%

Net agreement32%

Net agreement48%

Net agreement41%

Net agreement* = (% of ‘agree strongly’ + % of ‘agree’) – (% of ‘disagree strongly + % of disagree)





Rank Aspects of branded restaurants would encourage customers to regular visit it % of respondents (multiple choice)

1 Convenient location 49.6%

2 Consistent and reliable 44.6%

3 Discounts and promotions 39.0%

4 Great quality / tasty food 31.6%

5 Friendly and engaging Service 18.2%

6 Value for money 15.8%

7 Low prices 14.4%

8 Familiarity 13.6%

9 Favourite cuisine 13.5%

10 Customisable products 13.2%

11 Fast service 10.8%

12 Family friendliness 9.1%

13 Good atmosphere 7.9%

14 Good restaurant environment 6.9%

15 Events e.g. exclusive tastings, new opening parties 2.8%

16 Long opening hours 2.8%

17 Reward card 2.6%

18 Strong customer reviews 1.9%

19 Staff recognise me 1.2%

20 Social media engagement 0.5%

Reasons for regular visits to chain restaurants Convenient location is the most important aspect why a branded restaurant retains customer loyalty. However, this is closely followed by a consistent and reliable food offer.

What are the aspects of a branded restaurant that encourage you to regularly visit it?

Multiple choice, % of respondents

159




Top 10 branded restaurant aspects to retain the loyalty of 18-34sConsistency and discounts are the joint most important aspects that retain Millennials’ loyalty. 47% of Millennials vote consistent and reliable dining experiences and discounts & promotions as the most important aspects, with both strongly over-indexing against the total customers. Millennials also strongly over-index for customisable products and fast service.


Multiple choice, % of 18-34 respondents

160

18-34Average


Top 10 aspects for 18-34s

Where 18-34s over-index

47% 47% 45%

23% 23% 18% 15% 13% 13% 11%

Consistent andreliable

Discounts andpromotions

Convenientlocation

Customisableproducts

Great quality /tasty food

Friendly andengagingService

Familiarity Fast service Low prices Favouritecuisine

13%

39% 45%

11% 14%3% 3% 1% 0%

23%

47% 47%

13% 15%4% 4% 2% 1%




Fast service Familiarity Reward card Events e.g.exclusive

tastings, newopening parties

Staff recogniseme

Social mediaengagement

+10pp +8pp +2pp +2pp +1pp +1pp +1pp +1pp+1pp



52%42% 42%

34%18% 15% 14% 13% 13% 12%

Convenientlocation





Low prices Favouritecuisine

Familiarity Value formoney


Top 10 branded restaurant aspects to retain the loyalty of 35-54sConvenient location is the most important aspect that encourages 35-54s to regularly visit a branded restaurant. Convenient location is voted by 52% of 35-54s, 2pp higher than the average. Discounts and promotions is the third most important aspect, with 35-54s over-indexing. 35-54s are also over-represented for great quality / tasty food and family friendliness.



161

35-54Average




32% 39%50%

9% 8% 13% 14%0%

34% 42% 52%

11% 9% 14% 15%1%



Convenientlocation

Family friendliness Good atmosphere Favourite cuisine Low prices Social mediaengagement

+3pp +3pp +2pp +1pp +1pp +1pp +1pp+2pp



51% 45%37%

29% 23% 19% 15% 15% 12% 10%

Convenientlocation




Value formoney


Favouritecuisine

Low prices Familiarity Fast service

Top 10 branded restaurant aspects to retain the loyalty of 55+55+ strongly over-index for value for money, great quality / tasty food and environment. 23% of 55+ vote value for money as one of the most important aspects that encourage them to regularly visit brand restaurant, 7pp higher than the total customers. 37% also vote great quality / tasty food as one of the most, 5pp higher than the average. Getting the value for money equation right and skilfully communicating this are important to succeeding among this segment.


Multiple choice, % of 55+ respondents

162

55+Average


Top 10 aspects for 55+

Where 55+ over-index

16%32%

7% 13%

50%

3%14% 18%23%

37%

10% 15%

51%

4%15% 19%

Value for money Great quality /tasty food

Good restaurantenvironment

Favourite cuisine Convenientlocation

Long openinghours

Low prices Friendly andengaging Service

+7pp +5pp +3pp +2pp +1pp +1pp+1pp +1pp



48% 46% 42%27% 22% 18% 17% 14% 12% 12%

Convenientlocation






Familyfriendliness

Familiarity Value formoney

Low prices

Top 10 branded restaurant aspects to retain the loyalty of parentsFamily friendliness is key for retaining the loyalty of parents. 22% of parents who have under 18 children at home vote family friendliness as one of the most important aspect of a brand restaurant that encourages them to regularly visit it, 7pp higher than the average. Discounts and promotions is the second most important aspect for parents, and 7pp higher than the average, highlighting some appreciation of the enhanced affordability of eating out that is facilitated by promotional offers.


Multiple choice, % of 25-54 respondents who have under 18 children at home

163

ParentsAverage


Top 10 aspects for parents

Where parents over-index

9%

39%

13% 18%3% 0%

17%

46%

18% 22%4% 1%

Family friendliness Discounts andpromotions

Customisable products Friendly and engagingService

Events e.g. exclusivetastings, new opening

parties

Social mediaengagement

+7pp +7pp +5pp +1pp+4pp +1pp



The aspects that would encourage more often visitsBetter quality / tastier food is the most important aspect of branded restaurant that would encourage customers to visit more.

164

Rank Aspects of branded restaurants would encourage more visits % of respondents (multiple choice)

1 Better quality / tastier food 39%

2 Lower prices 34%

3 Improved value for money 31%

4 More discounts and promotions 26%

5 Wider menu choice 23%

6 Reward card/loyalty scheme 17%

7 Favourite cuisine 15%

8 More convenient location 15%

9 Good restaurant environment 14%

10 More frequent updating of menu assortments 14%

11 More consistent and reliable menu offer 13%

12 More family friendliness 9%

13 Friendlier and more engaging Service 9%

14 Nicer environments 8%

15 Faster service 8%

16 Improved atmosphere 7%

17 More customisable products 6%

18 Staff recognise me 5%

19 More frequent 'club-type' events, e.g. exclusive tastings, new opening/menu parties 4%

20 More social media engagement 3%


What are the aspects of branded restaurants that would encourage you to visit them more often?

Multiple choice, % of respondents



Top 10 improvements for branded restaurants to target 18-34s18-34s are keener to see fast, friendlier and more engaging service in branded restaurants. For the Top 10 improvement aspects, 18-34s strongly over-index for fast service, friendlier and more engaging service and more customisable products. These attributes are consistent with a high regard for more informal and personalised dining experiences.



165

18-34Average




32% 31%27% 25%

20%15% 15% 14% 14% 13%

Better quality /tastier food

Lower prices More discountsand

promotions

Improved valuefor money

Wider menuchoice

Reward card/loyalty scheme

Friendlier andmore engaging

Service

Favouritecuisine

Faster service More frequentupdating of

menuassortments

8% 9% 6% 7% 3% 4%

26%

5% 9%14% 15%10% 10% 5% 6%

27%

6% 10%

Faster service Friendlier andmore engaging

Service

Morecustomisable

products

Improvedatmosphere

More socialmedia

engagement

More frequent'club-type'

events

More discountsand promotions

Staff recogniseme

More familyfriendliness

+6pp +6pp +4pp +3pp +3pp +2pp +1pp +1pp +1pp



42% 40%31% 27% 22% 16% 16% 15% 14% 11%


Lower prices Improved valuefor money

More discountsand

promotions

Wider menuchoice

Rewardcard/loyalty

scheme

Favouritecuisine

Moreconvenient

location

Goodrestaurant

environment

More frequentupdating of

menuassortments

Top 10 improvements for branded restaurants to target 35-54sBetter quality / tastier food and lower prices are the most important aspects that would encourage 35-54s to visit more often. 42% of 35-54s vote better quality / tastier food as the most important aspect, 4 pp higher than the average. Lower prices is the second most important aspect, but is 6pp higher than the average. 35-54s also over-index for more family friendliness, reflecting the greater number of households with children in this age group.



166

35-54Average




34% 39%

9%26%

5% 4%15%

40% 42%

11%27%

6% 5%16%

Lower prices Better quality /tastier food

More familyfriendliness

More discounts andpromotions

Staff recognise me More frequent 'club-type' events

Favourite cuisine

+6pp +4pp +2pp +1pp +1pp +1pp +1pp



41%35% 30% 25% 24% 19% 18% 17% 17% 16%


Improved valuefor money

Lower prices Wider menuchoice

More discountsand

promotions

Rewardcard/loyalty

scheme

Moreconvenient

location

Moreconsistent andreliable menu

offer

Goodrestaurant

environment

Favouritecuisine

Top 10 improvements for branded restaurants to target 55+Improved value for money and more consistent and reliable menu offer have a stronger impact on the 55+. Better quality / tastier food is the most important for 55+, but slightly under-indexes compared to the total customers. Improved value for money and lower prices are the second and third most important aspects, with both over-indexing against the average.


Multiple choice, % of 55+ respondents

167

55+Average


Top 10 aspects for 55+

Where 55+ over-index

31%13% 15% 23%

39%

14% 14% 17%8% 15%

35%17% 18% 25%

41%

16% 17% 19%9% 16%

Improvedvalue formoney

Moreconsistent andreliable menu

offer

Moreconvenient

location

Wider menuchoice


More frequentupdating of

menuassortments

Goodrestaurant

environment

Rewardcard/loyalty

scheme

Nicerenvironments

Favouritecuisine

+4pp +4pp +3pp +2pp +2pp +1pp +1pp+2pp +2pp +2pp




Executive summary

Market


Consumer insight



Future outlook

Contents

168


2,901 2,730 2,4808,688 9,318 10,250

17,345 17,900 18,800

22,370 17,510 13,000

5,8327,483 8,960

350 560 841

25,475 25,834 26,120

1,475 1,776 2,0572,770 3,031 3,308

29,987 28,273 26,600

296350 391

4,249 4,725 5,033

2013 2016E 2019F


Fine dining



Branded delivery-focused fast food

Independent fast food/takeaway

Branded contemporary fast food




Managed, branded & franchisedpubs

Social clubs

Forecast UK Restaurant market growth by outletsNet closures to continue in Restaurant market. The net decline in outlets will be driven primarily by tenanted & leased pubs and independent restaurants. A slowdown is also expected for the Branded service-led restaurant and Branded delivery-focused fast food segments.

FUTURE OUTLOOK

169

Forecast growth in the UK Restaurant market by outlet numbers by segment, 2013, 2016E & 2019F

121,738 119,491117,670

CAGR 2013-2016E CAGR 2016E-2019F

-0.6% -0.5%

3.6% 2.1%

5.6% 3.7%

-1.9% -2.0%

3.1% 3.0%

6.4% 5.0%

0.5% 0.4%

17.0% 13.7%

8.7% 6.2%

-7.8% -9.5%

1.1% 1.3%

2.4% 3.2%

-2.6% -2.2%



£174 £164 £151

£8,992 £9,932 £11,121

£7,059 £7,196£7,545

£5,145 £4,177 £3,159£723 £1,094 £1,611£335 £702

£1,102£4,857 £4,942£4,973£936 £1,275£1,594£3,652

£4,035£4,548

£15,292£14,410

£13,397

£649 £777£880£4,308

£5,150£5,865

2013 2016E 2019F


Fine dining



Branded delivery-focused fastfoodIndependent fastfood/takeawayBranded contemporary fastfoodStreet food & Mobile vans



Managed, branded & franchisedpubsSocial clubs

Forecast UK Restaurant market growth by turnoverValue growth to accelerate slightly over next three years. The total Restaurant market is forecast to reach a turnover CAGR of 1.2% between 2016E-2019F, up from 1.0% between 2013-2016E. Turnover growth is expected to accelerate at Managed, branded & franchised pubs, Independent & Free of tie pubs and Branded traditional fast food. In contrast, a marked slowdown is expected in Branded service-led restaurants.

FUTURE OUTLOOK

170

Forecast growth in the UK Restaurant market by outlet numbers by segment, 2013, 2016E & 2019F

£52,182£53,853

£55,946

CAGR 2013-2016E CAGR 2016E-2019F

1.1% 1.3%

6.1% 4.4%

6.2% 4.2%

-2.0% -2.4%

3.4% 4.1%

10.8% 7.7%

0.6% 0.2%

21.3% 16.0%

14.8% 13.8%

-6.7% -8.9%

0.6% 1.6%

3.4% 3.8%

-2.0% -2.6%



Share of Restaurant market turnover ad outletsManaged, branded & franchised pubs making biggest gains in share of turnover. The pub segment is set to increase its share by 2.6pp between 2013-2019F. Branded service-led restaurants and street food are also on track to claim a significantly higher share of the market.

FUTURE OUTLOOK

171

2.4% 2.3% 2.1%7.1% 7.8% 8.7%

14.2% 15.0% 15.8%

18.4% 14.7% 11.0%

4.8% 6.3% 7.6%

0.3% 0.5% 0.7%

20.9% 21.6% 22.2%

1.2% 1.5% 1.7%2.3% 2.5% 2.8%

24.6% 23.7% 22.6%

0.2% 0.3% 0.3%3.5% 4.0% 4.3%

2013 2016E 2019F

Branded service-ledrestaurantsFine dining



Branded delivery-focusedfast foodIndependent fastfood/takeawayBranded contemporary fastfoodStreet food & Mobile vans


Independent & Free of tiepubsManaged, branded &franchised pubsSocial clubs 0.3% 0.3% 0.3%

17.3% 18.5% 19.9%

13.5% 13.4% 13.5%

9.9% 7.8% 5.7%1.4% 2.0% 2.9%0.6% 1.1% 1.7%9.3% 9.2% 8.9%1.8% 2.4% 2.9%7.0% 7.5% 8.2%

29.3% 26.8% 24.0%

1.2% 1.4% 1.6%

8.3% 9.6% 10.5%

2013 2016E 2019F

Outlets Turnover


Restaurant market value growth drivers, 2016E-2019FManaged, branded & franchised pubs the largest contributor to Restaurant market growth over next three years. This is followed by branded service-led restaurants, street food & mobile vans and branded traditional fast food. In contrast, social clubs, independent restaurants and tenanted & leased pubs are the main channels constraining growth in the market.

FUTURE OUTLOOK

172

£1,189

£715

£517 £513

£349 £341 £319

£103£31

-£13

-£1,013 -£1,018

Contribution to Restaurant market growth, 2016E-2019F, by segment, ranked from high to low, £mn


Forecast sales and outlet growth – service-led restaurantsBranded restaurants to continue outperforming independents, but segment not expected to reach previous highs in growth. The forecast sales CAGR for Branded restaurants for 2016E-2019F is 4.4%, down from 6.1%. Expansion rates are not expected to reach the levels seen in 2013-2015 even with macroeconomic factors improving, as the property market and tightening competition will continue to be barriers to high aggregate growth in the segment. Younger brands with lower outlet counts are expected to see the strongest growth. Driving like-for-like sales improvements will be key for more established brands.

FUTURE OUTLOOK

173

Market segmentSales Growth Outlet Growth

% CAGR13-16E

% CAGR16E-19F

% CAGR13-16E

% CAGR16E-19F

Independent restaurants -2.0% -2.4% -1.9% -2.0%

Fine dining 6.2% 4.2% 5.7% 3.7%

Branded service-led restaurants 6.1% 4.4% 3.6% 2.1%

Total Service-led restaurants 0.1% -0.3% -1.2% -1.3%

Forecast sales and outlet growth, Service-led restaurant segments, 2013-2019F


Forecast sales and outlet growth – fast foodBranded contemporary fast food to continue enjoying strong growth. MCA forecasts a turnover CAGR of 16.0% for Branded contemporary fast food between 2016E-2019F. While this is down from the previous growth rate of 21.9%, that rate was affected by a low base and average annual growth of 16% is still the fastest in the whole Eating Out market. Rapidly expanding brands, including Five Guys and Leon, are successfully tapping into key consumer trends around convenient yet high quality food.

FUTURE OUTLOOK

174


% CAGR13-16E

% CAGR16E-19F

% CAGR13-16E

% CAGR16E-19F

Independent fast food/take-away 0.6% 0.2% 0.5% 0.4%

Street food & Mobile vans 14.8% 13.8% 8.7% 6.2%

Branded traditional fast food 3.4% 4.1% 3.1% 3.0%

Branded delivery-focused fast food 10.8% 7.7% 6.4% 5.0%

Branded contemporary fast food 21.3% 16.0% 18.1% 13.7%

Total Fast food 4.4% 4.6% 2.5% 2.2%

Forecast sales and outlet growth, Fast food segments, 2013-2019F

Note: Branded delivery-focused fast food defined as branded fast food operators with no or very limited seating in outlets, e.g. Domino’s, Papa John’s and Pizza Hut Delivery.


Forecast sales and outlet growth – pubsManaged and independent pubs in a strong position to grow. This growth comes on the back of accelerating conversions of tenanted pubs. Yet like-for-likes for several leading, national pub brands are under pressure, and this is expected to continue to be the case over the next few years.

FUTURE OUTLOOK

175


% CAGR13-16E

% CAGR16E-19F

% CAGR13-16E

% CAGR16E-19F

Managed, branded & franchised 3.4% 3.8% 2.4% 3.2%

Tenanted & leased -6.7% -8.9% -7.8% -9.5%

Independent & Free of tie 0.6% 1.6% 1.1% 1.3%

Social clubs -2.0% -2.6% -2.0% -3.2%

Total Pubs 0.2% 0.8% -2.6% -2.2%

Forecast sales and outlet growth, Pub segments, 2013-2019F


Market growth matrix, 2016E-2019F

FUTURE OUTLOOK

176

INTERNAL EXTERNAL

HIGH IMPORTANCE

LOW IMPORTANCE

MCA believes the key sources of growth will move in the following directions in terms of importance over the next three years. New trading formats, the pace of NPD, premiumisation and hybridisation will all become more important to drive sales as the importance of physical expansion wanes.

PHYSICALEXPANSION

DISCOUNTS & PROMOTIONS

MARKETING INITIATIVES

LONGER TRADING HOURS

PREMIUMISATION HYBRIDISATIONNEW TRADING FORMATS

PACE OF NPD SOCIAL MEDIA

INFLATION

TOURISM & STAYCATIONS

EXPERIENTIAL SHARE OF SPEND

FOODIE CULTURE

DELIVERY

TRADING-UP

POPULATION GROWTH

ALTERNATIVE FUNDING SOURCES

EARLY CAPTURE OF DIGITAL NATIVES


Market growth drivers summary table

FUTURE OUTLOOK

177

Importance ranking

Growth driver2013-2016 vs 2016-2019 movement in importance

Description

1 Physical expansion Physical expansion rates are believed to have reached a high water market in 2015

2 Longer trading hours The past three years have seen an explosion of breakfast offers

2 Marketing initiatives Marketing will remain a crucial component of driving sales growth

2 Discounts & promotions Discounts & promotions will be less prominent as business confidence improves

3 New trading formats Large groups are eyeing new markets, i.e. Whitbread’s investment in Pure

3 Premiumisation Will grow in importance as operators need to justify higher prices to offset rising costs

3 Hybridisation Pubs doing coffee and coffee/sandwich shops doing alcohol, e.g. Pret ‘Evening’

4 Pace of NPD Faster fashion in food will push operators to speed up NPD

4 Social media Social media can be key to capturing the hearts and minds of millennials

1 Inflation Price inflation will continue to have a major impact on growth in the market

2 Experiential share of spend The trend towards a higher experiential share of spends is only increasing

2 Foodie culture The growing foodie culture in the UK is going from strength to strength

3 Delivery Delivery will only grow in popularity but care must be taken with margin management

3 Trading-up Average spend per visit is expected to keep increasing after 2017

3 Tourism & Staycations The UK will continue to be an attractive tourist destination on the back of a weaker sterling

4 Alternative funding sources Modest growth will come from increased usage of alternative investment sources

4 Population growth Net immigration rates are likely to begin stabilising after early 2017

5Early capture of digital natives

Today’s teenagers will be a key customer segment in 2019 with their own missions & needs

INTE

RN

AL

EXTE

RN

AL


Growth in Total & Branded Restaurant market, 2013-2019FBranded restaurant market growth rates expected to continue to slow down slightly. MCA expects the Branded restaurant market to see fairly strong growth over the next years, but at a slowing rate. The challenges facing the industry in 2016 – the property market, tightening competition and arguable saturation in certain segments – are unlikely to disappear over the next few years. The total Restaurant market will benefit from the improving performance of independent & free of tie pubs, pushing it to retain a stable 1.3% growth rate in 2018 and 2019.

FUTURE OUTLOOK

Comparative analysis of growth in the Total & Branded Restaurant market, 2013-2019F

178

3.9%

4.5%

5.5%

4.7%4.3%

4.7% 4.6%

2.6%

3.2%

3.8%

3.3%3.1%

3.4% 3.3%

0.2%0.6%

1.4%1.1% 1.0%

1.3% 1.3%

-0.8% -0.7%-0.4%

-0.8% -0.7% -0.6%-0.2%

2013 2014 2015 2016E 2017F 2018F 2019F

Branded Restaurant marketturnover growth

Branded Restaurant market outletgrowth

Total Restaurnat market turnovergrowth

Total Restaurant market outletgrowth


Customer segmentation – future outlook

179

2016(Total: 50.9m)

2026(Total: 55.0m)

12%(5.9m)

7%(3.6m)

10% (5.1m)

10%(4.9m)

8%(4.2m)

9%(4.6m)

8%(3.9m)

14% (7.4m)

22% (11.4m)

IMPLIED ANNUAL RESTAURANT MARKET SPEND**

£7.0b(16%)

£6.1b(13%)

£6.2b(14%)

£6.4b(14%)

£3.2b(7%)

£4.4b (10%)

£2.5b(6%)

£4.5b (10%)

£5.0b (11%)

10%↓(5.6m)

7%↔(3.7m)

9% ↓(5.2m)

9% ↓(4.8m)

7% ↓(4.1m)

8% ↓(4.5m)

7% ↓(3.8m)

18%↑ (9.8m)

25% ↑ (13.5m)

£7.4b (14% ↓)

£6.8b(13% ↔)

£7.0b(13% ↔)

£7.0b(13% ↓)

£3.5b(7% ↔)

£4.8b(9% ↓)

£2.7b (5% ↓)

£6.6b(13% ↑)

£6.5b(12% ↑)

% OF UK ADULT POPULATION*

2016(Total: 45.3b)

2026(Total: 52.2b)

Notes: *UK adult population: 2016 population is based on ONS most recently released data - population and age group (2014), social grade (2011) and children dependent in household(2011). 2026 population is based on ONS 2014-based national population projections.**Implied annual restaurant market spend: 2016 spend is an estimated UK adult spend (inc. tax) at fast food, branded restaurants, independent restaurants and fine dining across all day-parts; 2026 spend is based on consumer visit frequency remaining the same but the average spend rising by an inflation 1% per annum.

The rise of the Greying Generation and Golden Oldies. The latest projections are 4.5 million more 55+ in ten years’ time. Assuming no change in visit frequency and average spend only rising by 1% per annual, the implied restaurant expenditure for the G segments will rise by £3.5b or 4pp to a 25% share. In reality and importantly, this rise is likely to be greater with more youthful and more frequent eating out behaviours being maintained for longer as consumers age.

FUTURE OUTLOOK


Future outlook – visit frequency and spendHigher spend and wider repertoires but lower eating out frequencies. Over the next 12 months, 12% of customers will increase eating out frequency in contrast to 18% who will reduce frequency. 30% will increase the total spending on eating out, 12pp higher than proportion who will reduce the spending. 31% will increase the number / variety of restaurants, 18pp higher than those who will reduce.

Over the next 12 months…

% of respondents

180


My eating out frequency will be My total spending on eating out

will be The number / variety of

restaurants I visit will

12%

65%

18%

5%

Don't know

Less often

The same

More often

4%

26%

46%

11%

7%

7%

Don't know

Fallen significantly

Fallen slightly

Remained unchanged

Increased slightly

Increased significantly

4%

27%

50%

10%

3%6%

Don't know

Fallen significantly

Fallen slightly

Remained unchanged

Increased slightly

Increased significantly

FUTURE OUTLOOK


Future outlook – customer confidence indicators 55+ customers are more confident in the economy. 55+ strongly over-index for not having any concerns about job security and are broadly optimistic about the outlook for the UK economy over the next 12-18 months. By contrast, Millennials are over-represented for thinking their household finances are going to stretch further over the next 12 months.

To what extend do you agree or disagree with the following statements?

% of respondents

181


I do not have any concerns about my job security

I am broadly optimistic about the outlook for the UK economy over the

next 12-18 months

I think my household finances are going to stretch further over the next 12

months


Overall, 46% Overall, 42%

Overall, 32%

43%40% 42%40%

36%33%

55%51%

22%

18-34s 35-55s 55+ 18-34s 35-55s 55+ 18-34s 35-55s 55+

FUTURE OUTLOOK


Future outlook – potential business development ideasThe top customer wish list include reducing prices for larger groups and more sharing platters on the menu. 56% of customers agree that it would be a good idea if prices were reduced for large groups. 51% agree that if more sharing platters were on menus, against only 16% of disagreement.

It would be a good idea if … how much do you agree or disagree with the following statements?

% of respondents

182

14% 9% 13% 11% 9% 11%

42%42% 33% 38%

31% 28%

29% 33%37% 28% 40% 34%

11% 11% 14%14%

15%16%

4% 5% 4% 9% 5% 10%

Prices were reducedfor larger groups

More sharingplatters were on

menus

Bills includedshowing how muchthe meal costs on a

per person basis

More seafood andfish is included on

menus

More restaurantsoffer breakfast

More vegetarianlines are offered on

menus

Disagree Strongly

Disagree

Neither

Agree

Agree Strongly


Net agreement*41%

Net agreement* = (% of ‘agree strongly’ + % of ‘agree’) – (% of ‘disagree strongly + % of disagree)

Net agreement36%

Net agreement28%

Net agreement25%

Net agreement20%

Net agreement14%

FUTURE OUTLOOK


Catching up with friends more than before Eating out to catch up with friends is a key driver. Overall, 38% of respondents agree that they are going out to eat as a way to catch up with friends more than before, with 18-34s and customers who eat out more often these day or spend more these days strongly over-indexing.


% of respondents

183

7% 11% 6% 4%15% 11%

31%

42%

30%23%

47%42%

33%

29%

34%

35%

17%26%

18%

12%

17%23%

14% 15%

12% 6%13% 15%

7% 7%


DisagreeeStronglyDisagree

Neither

Agree

Agree Strongly


I'm going out to eat as a way to catch up with friends more than before



MCA – Key contacts:

Sophie Barber, Sales & Marketing Manager

[email protected]

Peter Linden, Market Analysis Manger

[email protected]

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