U.K. May Suffer From Unit Saturation, Horizons Suggests

In its 2016 outlook for the foodservice market in the United Kingdom, Horizons FS Ltd., the London-based foodservice research firm, posits that rapid unit growth in the country during the past decade and a half has created overcapacity that will hold down same-store sales for the foreseeable future.

“Relentless growth amongst group operators has driven outlet numbers upwards,” according to Horizons. Most of this unit surge has been driven by chain operators, with a corresponding, but by no means equal, decline in independent units.  

And the transition of pub operations from majority “wet” sales to food-driven receipts has also been a factor. Horizons reports the number of pubs whose food sales exceed their beverage sales has increased from 2,600 in 2001 to 6,100 in 2014. Full-service chain operators have seen units increase from 7,700 in 2001 to 11,900 in’14, while quick-service concept numbers increased from 7,600 to 13,500 during the same timespan.

“It is difficult to see how this level of growth in food outlets can be sustained in the longer term,” says Horizons Managing Director Peter Backman. “Competition amongst operators means there will be a struggle to improve like-for-like sales across the sector, keeping menu prices fairly flat and margins low,” he added.

U.S. and Japanese restaurant operators, the two largest and most mature foodservice markets in the global arena, have seen similar patterns as unit saturation changes the drivers of growth from unit development to menu innovation, upgraded offerings and other strategies.

For information on Horizons research products, visit hrzns.com.”””