Foodservice Equipment Reports

Tough U.K Foodservice Market Shows Signs Of Life

The foodservice market in the United Kingdom is beginning to improve, according to Peter Backman, managing director at Horizons, the London-based foodservice research firm, which held its annual briefing on May 1.While the nadir of the foodservice recession in the U.S. was 2009, in the United Kingdom it was 2011-12, reports Backman. He estimates the market declined 2.1% in real terms last year, though nominal growth was 1.5%. But, in spite of several tough comparisons in 2013—no Olympics or Queen Jubilee to drive tourism—he does expect some real growth this year, as disposable incomes, consumer confidence, housing prices, and other macroeconomic drivers are improving.

The problem in Britain has been flat economic growth; for part of last year, it actually looked like the U.K was in a double-dip recession. The stagnation was caused in part by the general malaise in Europe and in part by the decline in incomes and rising unemployment as the coalition government’s austerity policies hit public sector spending hard. By the latest estimates, real gross domestic product was flat% in the U.K. in ’12. The spending cuts have also had an effect on foodservice, with publicly funded segments such as healthcare and education showing decline.

The decline in traffic counts experienced in 2011 and ’12 led to increase dealing and was made worse for foodservice operators by a strong run-up in food prices; margins were significantly squeezed. Food price increases have moderated somewhat, and the ratio of deals to overall meal occasions has slowed in the first quarter, according to Horizons data. Responding to the earlier price run-ups, operators are raising menu prices a bit more aggressively as well.

The downturn has sped up the transition that has been changing the U.K. restaurant market for more than a decade. Traditional independent restaurants and leased pub operators have been challenged by growth in managed pubs and chain restaurant concepts in both the quick-service and casual dining segments. Americans chains including Domino’s, Yum!, Starbucks and others have added units aggressively throughout the downturn, and homegrown chains have also expanded their store counts.

Backman sees a slowly improving foodservice market in ’13 and ’14, though he notes it will take until 2016 for the total foodservice market to reach its 2007 high.

Information on Horizons research products is available at

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