Watchwords for 2019 include delivery, veganism, transparency, the environment and virtual restaurants
London, December 3rd, 2018 – Global information company The NPD Group has identified five new trends that will shape Britain’s £56 billion out-of-home (OOH) foodservice industry in 2019.
1 – Delivery aggregators will thrive as consumers cocoon themselves indoors
Driven by technology, the rise in in-home entertainment subscription services like Netflix and Amazon Prime and a desire to save money, consumers are likely to ‘cocoon’ more and eat more meals at home. Consumer spend on restaurant food delivery could grow by 10% in 2019 to reach £5bn. Delivery already plays to consumer needs for convenience and enjoying a ‘treat’. In the future, consumers wanting to order and eat at home will have more complex requirements, ordering from OOH operators as well as grocery outlets. Aggregators such as Deliveroo, Just Eat and Uber Eats will reap greater rewards through subscription and loyalty programmes. Look out for foodservice brands partnering with in-home entertainment providers.
Winners will be the OOH delivery aggregators that provide consumers with value for money and a good experience, while offering meaningful partnerships and innovative loyalty schemes.
2 – Transparency and trust will make their way onto the menu
Consumers want to know more about the contents and source of the food they consume and the impact on their health and the environment. There is increased concern over the environmental impact of raw materials such as palm oil. Operators have started to offer more information about ingredients in terms of allergies and nutrition.
Winners will set the transparency agenda. Consumers will ask questions about the food they are buying. The best operators will provide the answers and address consumer concerns about single-use items, especially those made of plastic.
3 – Veganism and vegetarianism will grow
There is wide debate about consumption of meat and dairy products, and whether a different approach to what we eat can help protect the world’s climate and environment. The number of vegans and vegetarians has increased rapidly in recent years. Many more people say they are flexitarian – meaning they are occasional vegetarians. NPD’s CREST panel data shows that OOH flexitarian visits (See Notes) have increased at twice the rate of overall market growth over the last three years. Among 16-34 year olds, overall visits have declined by -3% since 2015, but flexitarian visits within this age group have increased +4%. However, some operators have failed to adapt because they see veganism and vegetarianism as a short-term fad, but others have evolved their menus already.
Winners will need to respond carefully, ensuring they provide a balanced menu with the right choices for vegans and vegetarians while not alienating meat-eaters.
NPD Group: % increase in visits involving non-meat items: three years to YE Sept 2018
|Vegetarian burgers, vegetable wraps & sandwiches||Visits up 42%|
|Non-protein salads and pasta||Visits up 17%|
|Vegetable sides||Visits up 9%|
4. Virtual restaurants will take off
The delivery boom is driving another trend: virtual restaurants. Usually run from ‘dark kitchens’ owned by the aggregators such as Deliveroo, Just Eat and Uber Eats, a virtual restaurant brand is a delivery-only brand. While they often trade from an industrial estate rather than a traditional retail location, virtual restaurants can also be run from under-used conventional restaurant premises. A core appeal is that virtual restaurants can begin trading quickly, are relatively cheap to run and are flexible, aided by a lack of overheads such as dedicated retail premises and waiting staff. Deliveroo has around 400 virtual restaurants and Uber Eats aims for a similar number by the end of 2018. Just Eat is entering this space with ‘digital pop ups’.
Winners will be delivery aggregators and restaurant operators who are best able to grow virtual brands into meaningful propositions in the eyes of consumers. The wealth of customer data available to delivery aggregators will provide opportunities to marry virtual restaurants with local preferences.
5 - Menus will become slimmer and easier to digest
In the face of today’s fierce competition, operators try to innovate but this often results in crowded menus, with some operators trying to be everything to everybody. But consumers do not want to waste time searching for food and drinks; many simply search for their favourite dish anyway. Crowded menus don’t work.
Winners will focus on what they do best. They’ll establish a great reputation for a specific cuisine, style or experience. Their slimmer menus will mean less complexity in the kitchen, a leaner supply chain, lower food costs and less food waste too.
Dominic Allport, Insights Director with The NPD Group, said: “While Britain’s foodservice industry is grappling with all sorts of cost pressures, it is showing that it can recognize and address a host of new trends. Britain’s delivery market will see a new phase in 2019. As consumers eat more meals at home, they’ll have more complex requirements, and this will strengthen the role of delivery aggregators. Consumers are also more aware than ever of key sustainability issues and are asking where products come from and how a foodservice outlet is helping the wider environment. Veganism and vegetarianism are not just passing fads and are working their way onto menus. We’ll see the growth of delivery-only virtual restaurants. Finally, a slimmed-down menu will also bring rewards.”