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The Top Three Quarterly Trends Shaping the Great Britain Foodservice Industry

In Q2 2016, the talk focused on the upcoming European membership vote. Despite the uncertainty, the economy remained strong in Q2, with GDP growing by 0.6 percent compared to Q1 and 2.2 percent compared to Q2 2015.

The foodservice market performed very strongly in the second quarter. Indeed, consumer spend grew by 3.2 percent. This means we saw an additional £385 million in consumer spend compared to the same quarter last year.

Once again, growth was driven by both traffic gain (+1.5 percent) and average spend per eater increase (+1.7 percent).

In this edition of Topline Top 3, we witness the Brexit vote’s effect on consumer confidence, observe the strong performance of full service in Q2, and look at the acceleration of delivery this year.

As always, if you would like to discuss this information in greater detail, just contact your NPD account representative.

Consumer confidence experienced the biggest drop seen in a month in the U.K. for decades

On 23 June 2016, the British population went to the polls to make what was described by some as “one of the biggest decisions in a lifetime.”

The run-up to the vote already started to raise the level of uncertainty, which was then borne out in May and June with negative consumer confidence levels. However the decision of the British population to quit the European Union was extremely unexpected, and this had a great impact on consumer confidence.

 Consumer Confidence U.K.

Source: European Commission

Indeed, consumer confidence dropped by more than 8 points in July, which is the most drastic drop in a single-month period that we have seen in the U.K. in over 20 years.

Consumer confidence is one of the factors that tend to relate the most to foodservice market performance. It remains to be seen if those results will drop further and what impact it will have on the performance of the out-of-home market in the coming years.

Full service experienced particularly strong performance in Q2 16

In the second quarter of the year, full service saw an acceleration of its performance. Following good performances this year, with 1.5 percent traffic increases in Q3 15 and Q1 16, as well as a high of +1.8 percent rise in Q4 15, full service showed its highest raise in Q2 16, with a 4.0 percent gain in visits compared to the same quarter last year.

Full Service
Traffic Year-on-Year Percent Change

Source: The NPD Group/CREST®

Small chains were the key growth drivers of the full service channel’s incredible performance in Q2 2016.

Delivery growth has accelerated greatly this year

It already has been a few years since the British foodservice landscape started to witness the rise of delivery. It was helped by mobile technology, the success of some of the main pizza delivery chains, as well as the rise of aggregators such as Just Eat and Hungry House.

This year the growth almost doubled. It came from a very strong 5.7 percent traffic increase in year ending June 2015 to a stupendous 12.1 percent in year in year ending June 2016.

Total Out-of-Home – Delivery Only
Traffic Year-on-Year Percent Change

Source: The NPD Group/CREST®

The continued rise of pizza brands associated with the multiplication of aggregator platforms delivering more and more types and brands of restaurants helped push this phenomenon along this year.

Overall, it is still uncertain whether the positive performance in Q2 16 will continue over the next quarters, as consumer confidence is likely to hurt the market.

Will the success of the full service channel continue next quarter? Will the delivery boom be enough to help the foodservice industry growth going forward?

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