After a tough couple of years that have seen major chains falling like dominos, the foodservice industry last year saw the faintest glimmer of recovery. But it is still growing at under 1% per year, and considering the population of the UK is growing at around 0.6% a year, that growth might as well be stagnation.
None of the challenges that restaurants faced in 2019 are going to change fundamentally in 2020, and that means “the year will see a market share battle between operators”, says Dominic Allport, food service insights director at global market research company, The NPD Group.
This means that operators will be doing whatever they can to scrape an advantage over the competition. One way they can do this is to try and be ahead of the curve when it comes to the latest food trends that are likely to hit the market in the upcoming year.
Allport and the NPD recently released their annual ‘eating out trend report’, which identified five trends shaping Britain’s £57bn out-of-home (OOH) foodservice industry for 2020, with the need for increased sustainability from foodservice operators a clear theme.
Allport and his fellow analysts found that consumers expect foodservice brands to do better in cutting waste, packaging and carbon emissions, innovation and better quality openings for children as just some of the expectations for the year ahead.
Sustainable food delivery
NPD data indicates that delivery is one of the fastest growing order channels in Britain’s OOH or eat-out foodservice market, increasing by over 10% last year. NPD also forecast that food and beverages purchased through the delivery channel will represent 10% of Britain’s entire foodservice market by 2022.
However, as the need for delivery increases so do customer expectations, and while it offers speed and convenience, consumers may find concerns around waste, packaging and carbon emissions. “We have seen on the BBC that it is going to focus heavily on climate change throughout the year, that coupled with what is happening in Australia with the bushfires, means packaging and carbon emissions are going to become bigger and bigger news, pushing it to the forefront of consumer’s minds,” says Allport.
“While consumers are going to see the ongoing convenience in delivery, there is an increasing reaction and increasing level of guilt in terms of the amount of packaging that is associated with all that.”
Winners in the foodservice delivery channel will be working hard to limit any adverse environmental impact. They will either use more renewable, compostable or recyclable packaging materials, or reduce packaging overall – or ideally manage both.
“I think that the packaging industry needs to come up with some sort of incentive in the way that people are turning their back on cling film at home and increasingly using tupperware and other plastic containers.
“Delivery companies are encouraged to deliver on these lines or offer a subscription in the same way you have reusable cups in coffee shops. Some type of loyalty scheme or business model that takes recyclability into account will be able to capitalise, in the same way reusable coffee cups give you 50p of a cup of coffee.”
Innovation is key
Allport explains how “sweating the assets” and delivering consistent footfall and sales throughout the day has been talked about for some time now, however operators have realised there are different occasions at different times of the day that a single outlet is looking to fulfill.
“It is similar advice to which we give operators about their product menu. In that while you should stick to your core, because if you don’t in terms of what you offer in your location consumers can become confused of what you stand for, you still need to find interesting ways to evolve your offering.”
He points towards “classics with a twist” such as Greggs’ vegan sausage roll and McDonald’s Big Mac with bacon, which, while “not revolutionary, created a sufficient amount of “media buzz” for it to be seen as a completely new product.
He says that it can be as simple as altering your core offering, be it lunch or your main day menu but work on delivering a credible breakfast menu, which he says is coincidentally “where all the growth in food service is at the moment”.
Allport adds that some examples like this can also be applied to physical location. Planet Organic offers a clever mix of foodservice, including food-to-go and click-and-collect, with conventional retail such as organic grocery and beauty products, all supplemented by leisure activities such as yoga, cookery classes and workshops.
“It’s down to finding what you can do without adding too much complexity in the kitchen which is credible to your brand and existing offer – and will still result in additional incremental visits and revenue,” he remarks.
Higher quality kids menus
Visits that include food or drink ordered from a kids’ menu, or which are part of a kids ‘meal deal’, represent a fast-growing part of the eating out market, according to NPD data. Such visits now represent 4% of total OOH visits and are currently growing almost 10 times faster than total market growth. However, quite often kids’ menus do not seem to have kept pace and there seems to be a lag between what is being offered on kids menus and their adult counterparts.
“Too often it is fish fingers and chips, or sausage, or chicken nuggets and chips,” says Allport. “While it might be exciting for the child, there are two key elements at place – one being that parents have that dual emotion of being happy that the kids are enjoying the food, they are also probably feeling a bit guilty about it not being the most nutritionally positive food choice.”
He describes how in this day and age, with smartphones and influencers increasingly impacting younger and younger audiences, and kids talking amongst themselves, they are becoming more and more adventurous and are not as satisfied with that type of food anymore.
He continues: “We have evidence that kids are at an increasingly younger age are transitioning out of a kids menu as they are ultimately uninspiring and you can only eat chicken nuggets and chips before they become bored of it.
“People are increasingly wanting more and with the ongoing focus on obesity and kids in particular it seems like sensible thing for it to be something they look at by spicing up its offering and also delivering a slightly reduced calorie amount.”
The growing popularity of food halls
NPD predicts that in the face of a variety of business pressures and rising costs, operators are seeking different ways to expand their businesses. It details how the food hall format is “growing rapidly” and tapping into the trend for informal and unstructured eating.
These large indoor spaces allow street-food vendors and established restaurants alike to serve adventurous customers from their own stalls. According to Allport, these are great in terms of innovation and often offer a “sensory overload”: a wide variety of foods and atmospheres all in one place. It also offers consumers a “great way to socialise” and could be coupled with popular competitive gaming sites to “form part and parcel of a wider offering for the younger market”.
“The only thing maybe holding this trend back is the expansion of virtual brands via dark/delivery kitchens with some of the innovation is being focused on that as much as food halls. This means they could cater to a similar customer – but they are for different occasions so they may not necessarily cannibalise each other.”
He also adds that food halls will increasingly allow people to come up with new ideas and new start-ups that could later develop into bigger brands. “They are a great way to test a food offering, test a brand without having to pay too much in the way of rent.”
The 2020 market
Allport says now that we have got over the uncertainty of the election and with the possibility of the economy “bouncing back”, he thinks something he calls ‘positive shrinkflation’ may occur in the food service space.
Shrinkflation – a portmanteau that describes the process of items shrinking in size or quantity, or even sometimes reformulating or reducing quality while their prices remain the same or increase – is usually seen as a bad thing as you get less for your money.
However ‘positive shrinkflation’ if adopted may see consumers receive higher quality ingredients, and is more of a focus on a health and wellness, while also reducing quantity.
Allport says: “Quite often value for money is a key consideration of going out to eat, but it’s not just about value for money. People are increasingly focusing on quality and if you package it the right way in terms of quality ingredients that are really really good for you and throw in some superfoods, people will feel they are still getting their value for money.”
He adds that the idea of value for money has changed somewhat. It used to be all about “actual” value for money, he says, as well as the “amount you got for your money”. But it has adapted to include the ‘value outside’, such as quality, environmental considerations, healthiness and the quality of the customer service they get. “This new version of value, value plus as I call it is growing five to 10 times faster than the market,” he adds.
While Allport thinks small scale independents will be closest to these trends originally and be quickest to try them he thinks they will always struggle to scale them, and for it to really hit the mainstream a chain of some description has to “test it, trial it, see if the public like it roll it out across their estate”.
He advises that the best thing for operators to do in 2020 to avoid pitfalls is to “not to try and do everything.”
“You may have a chain that is trying to appeal to the convenient side of things, quality, value for money trying to come up with focus on the key day times, trying to develop the latest hot food trend – but you can’t do everything and you won’t succeed in everything.
“It is about prioritisation and being clear in terms of quantifying what are the key opportunity areas and what are the areas that are going to lead to the most growth for the business.”