Foodservice Equipment Reports

U.K. Foodservice Market Continues To Struggle

We heard last week that the United Kingdom fell into a second recession based on first quarter 2012 gross domestic product numbers. And we saw the weak fourth-quarter restaurant traffic (0.2%) and sales (0.6%) numbers for the U.K. from The NPD Group. So, we thought we’d check with Peter Backman, principal at Horizons FS Ltd., the U.K.-based foodservice research firm, on the outlook for the market there.

Horizon’s final numbers for ’11 had the U.K. operator market down 1.6% in nominal terms versus ’10. The number of units fell 0.2% to 258,579.

“We reckon this year will show some slight nominal growth; ditto next year,” Backman wrote FER Fortnightly. “But we are talking less than 1% uplift in both years. So the outturn in either year could easily turn negative. This year has got off to a poor start.” One marker on first-quarter operator trends: Horizons’ “Voucher Tracker” research on couponing activity shows that operators discounted more in the first quarter ’12 than in first quarter ’11.

Backman mentioned that growth sectors include managed pubs/pub restaurants, casual dining, and some subsectors (coffee shops, “unusual concepts” such as Mexican and Japanese) in the quick service/fast casual sector (especially in London).

But these segments’ growth is being offset by “decline in sectors that are dependent on government funding,” which has been slashed  by the government’s “austerity” policies. Among those negatively affected: primary and secondary education and health care.

One big factor affecting the market is the Olympics, set for London this summer. Backman said, “Our view is that the Olympics will be somewhat disruptive for normal trading patterns (especially in London) and the overall effect will be slightly negative compared with what we could expect without the Games. This is based primarily on an expected fall-off in the total number of foreign visitors to the U.K. over the summer.”

As for the equipment market, “It picked up a bit last year. Operators had to invest as equipment purchases that had been delayed ’08-’10 could no longer be put off. But overall the equipment market was only at ’06 levels (at current prices) last year.”

For those interested in the U.K. market, Backman will be in Chicago for the National Restaurant Association Show this coming weekend. His cell phone is +44 7795 242 809 and his e-mail peter.backman@hrzns.com. For more information on Horizons’ research products, visit hrzns.com.

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