From discount dining through to ‘diffusion brands’, the Horizons Breakfast Briefing, held in London’s Glaziers Hall, revealed some of the critical issues affecting restaurants and pubs across the UK.
“The light of dawn may not now be as far off as it was,” said Horizons' managing director Peter Backman. "And in the meantime, there are successes and opportunities for success in this market."
Led by presentations from Horisons’ analysts and attended by a number of key industry personel, the morning followed the theme of 'Success in Challenging Times', concluding with a panel discussion which included Maurice Abboudi, director of the expanding K10 Restaurants business.
So, here’s what they all had to say: -
1) Discounting evolves
Discount vouchers have traditionally proved an effective tactic by some operators in encouraging consumers to eat in their outlets and have risen in popularity since the recession. But as last year’s Horizons Breakfast Brieifng concluded, the popularity of these schemes has raised concerns that some operators are now becoming too reliant on them.
This time around, however, Backman said ‘discounting has been a little bit different’ as restaurants and pubs are beginning to become more specifically targeted in their voucher marketing approach.
“Discounting has been a real issue for restaurants over the past three or four years now,” said Backman. “We monitor it through our voucher tracker service.
“This year, the trends are indicating to us that the supply of vouchers is qualitatively different in that operators are now using vouchers in a much more targeted and creative way.
“In the past it would have just been a more simple, money-off approach - it is now much more targeted to day parts and to particular customer categories.
“Nevertheless, the use of vouchers has squeezed operators margins and continues to do so.”
2) Breakfast time...
Backman indicated through the above infographic that ‘breakfast will be showing substantial growth over the next few years.’
“One response from operators in these tough market conditions has been to modify the day-part opportunities such as breakfast,” he said.
As last month’s edition of Restaurant magazinehighlighted, restaurateurs’ breakfast offers have moved beyond bacon and eggs as less traditional players enter the fray. Examples include Dishoom, Bill’s and Naamyaa.
3) Brand extensions
Nicola Knight, Horizons’ director of services, spoke of the emergence of ‘diffusion brands’ – when an established brand changes its format slightly to target a specific niche. This could be a change of menu, change of décor or style, or the launch of a new format such as an on-the-go or delivery service.
“This can leverage existing brand loyalty and allow a business to get up and running quicker by gaining investment and attracting more consumers,” said Knight.
“The key to success for these companies is to transfer the essentials of their core brand into this new format without any damage to the parent brand. Companies like Wildwood Kitchen, Ed’s Easy Diner and Girraffe have successfully moved into new territory using new formats.”
4) Menu prices increase
Horizons’ director of marketing and business development Emma Read was keen to point out signs of optimism and growth within the UK foodservice sector, noting that menu prices have seen a sharp increase of late.
“We’re in a position where the market has done its worst, is now flattening and will move forward from here on,” said Read.
“There’s been quite a pronounced increase in prices on menus. Operators finally have some confidence to move their prices up – particularly over the past six months. The number of meal deals has also increased significantly.
“So, prices are going up, but operators are being very clever about it - they are doing it where they know that the market can sustain it.”
5) The end of the tunnel is near
The Horizons annual Breakfast Briefing concluded with more signs of optimism. – this graph shows that the foodservice sector is continuing to grow, albeit at a fairly slow and steady pace.
“Recovery is going to be slow but the light of dawn may not now be as far off as it was,” added Backman. “And in the meantime, there are successes and opportunities for success in this market.
“If I was giving advice I would say: look to the future. You’ve got to deliver value and secure the bottom line.”
The full Horizons presentation can be viewed here.