Déjà vu – as eating out of home declines, are British consumers behaving as they did in the 2007/2008 recession?

Dinner has been in decline for years, but now lunch and breakfast are falling too

London, June 14th 2018 – Global information company The NPD Group says total visits in the eat-out or out-of-home (OOH) foodservice market dropped 1% in Q1 2018 versus the same quarter a year earlier. That 1% decrease is equivalent to 28 million visits, or 112 million on an annualized basis. In Q1 2018, breakfast was down in visit terms by 1.6% against the same quarter a year earlier and has now registered its second quarter of declining visits following more than seven quarters of growth. The 5.1% drop in lunch visits seen in Q1 2018 against the equivalent quarter in 2017 marks the third quarter of decline for this daypart in the past year after six quarters of growth. The NPD Group says this pattern of decreasing foodservice visits was last seen at the start of Britain’s 2007/2008 recession.

Dinner visits within the OOH foodservice market have been in decline for a long period. For YE December 2017 OOH dinner visits were down 2.3% versus the same period two years earlier (YE December 2015). Dinner frequency is also down with consumers averaging 61.2 dinners in the past 12 months (YE March 2018), down -3.5% against the previous year. Lunch frequency decreased by -4.8% year-on-year (from 83.1 to 79.1).

In the 2007/2008 recession, consumers very quickly changed their consumption behaviour and this resulted in a dramatic decline of 510 million OOH visits annually by 2010.  The last recession was an opportunity for the industry to reshape its offering to consumers in terms of quality, choice and the overall customer experience. Despite that effort, the British foodservice market has not fully recovered from the 2007/2008 recession as the industry is still 370 million visits smaller each year than 2008. So the latest figures are enough to suggest operators should be on the alert.

Cyril Lavenant, Head of Foodservice UK in the NPD Group, said: “Although it is too soon to say whether we are currently in recession or not, there are clear warning signs. This time around, any sustained downturn would be more difficult to overcome because the foodservice industry is seeing fresh threats on top of existing operating and cost challenges. The casual dining sector, for example, is facing pressure from quick-service brands that are offering new food choices and newly refurbished modern outlets. Consumers also have a bigger choice than ever of operators offering healthier and lighter eating. It is likely that any new recession in foodservice will be harder to fight because the landscape is already intensely competitive.”

The NPD Group is advising foodservice operators in the UK to respond to the changing business environment by gaining the best possible understanding of core customers, by engaging loyal customers through promotions or events that make them feel ‘special’, and by encouraging new customers to make return visits. NPD is emphasising the need for operators to offer value for money, the highest quality food and beverages, and a strong customer experience. It is also suggesting ways that operators can better understand the strengths of their competitors.

Cyril Lavenant added: “Eat-out visits began to slow down after the Brexit referendum in June 2016 and the consequences of this became clear from the second half of 2017 onwards, when the market started to lose visits after four years of growth. This trend has accelerated since the start of 2018 and now is the right time to sound a warning. The foodservice industry has so far demonstrated remarkable resilience in the face of tougher operating conditions, cost pressures and the uncertainty caused by Brexit. But since the end of last year we have seen some evidence of decline and operators will need to monitor carefully whether this downward trend continues. If it does, they will have to act fast to protect their business.”

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