U.K. Foodservice Market Remains Quite Soft, Says Horizon

The foodservice market in the United Kingdom will show little if any real growth this year, according to Peter Backman, principal of Horizons, the London-based hospitality research firm. Current-dollar growth is forecast at a mere 0.8% while real growth is expected to be flat, Backman told FER Fortnightly during the NRA Show in May. The numbers are slightly better than 2009 and ’10, both of which saw real foodservice market declines. Real sales were down 1.5% last year, Backman said, with nominal sales flat. Horizons says the total U.K. foodservice market was slightly larger than £31 billion (US$50 billion) in’10.

But Backman noted nearly all the nominal gain forecast for ’11 can be attributed to an increase in the U.K.’s broad-based value-added tax, enacted as part of the new coalition government’s deficit-reduction program. That program will also lead to the lay-offs of hundreds of thousands of public-sector employees and reductions in foodservice subsidies for public-sector segments such as schools, healthcare and corrections. All these cuts will be a drag on the foodservice market.

Still, parts of the U.K. market are showing growth. The hotel segment, which is larger as a percent of the total market in Britain than in the U.S., is rebounding, thanks to increased foreign visitors (the royal wedding helped) and increased business travel. Pub restaurants, those with more than 50% of revenues from food, are growing sales, as are other full-service concepts such as Tex-Mex, Mediterranean and “healthy.” Quick-service as a whole is expected to decline, as smaller, independent take-away shops’ sales suffer as unemployment grows. But U.S.-based QSR concepts across the menu spectrum continue to grow aggressively, in part by emphasizing “value” offerings. Leisure and what in the U.K. is called “staff catering” (business & industry) are also forecast to grow.

Backman expects an uptick in the U.K. market growth rate in ’12, especially in and around London, thanks to the influx of foreign visitors for the Summer Olympics. He also anticipates a return to slower growth in ’13 and growth gradually ramping higher as the next scheduled election approaches in ’15.

Information on Horizons’ forecasts and other research products can be found at www.horizonsforsuccess.com. Backman can be reached at peter@horizonsforsuccess.com.  “””

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