Research firm The NPD Group has predicted visits in the British out-of-home (OOH) market will slide in the next two years while digital orders will exceed one billion per year for the first time by end of 2020.
The use of apps in particular is expected to continue to see a rapid increase, forecast to leap by 88% between now and the end of 2020. If app-based orders perform as predicted, they will have grown 2.5 times in visit terms since the end of 2017.
The OOH market peaked at 11.35 billion visits in 2017 but dropped 0.5% to 11.29 billion in 2018. Despite population growth of 0.6% per annum, the analysts predict there will be a further drop of 0.5% in 2019 and another 0.1% in 2020 to reach 11.23 billion visits.
However, NPD is predicting a 5.0% increase in spend to £59.47bn by end of 2020, against the £56.62bn for 2018. This will be mainly driven by operators increasing menu prices as they respond to cost pressures, including inflation. The average individual cheque reached £5 in 2018 and will rise an additional 5.6% by 2020 to £5.30.
The on-premise sector has seen a decline as less shoppers visit the high street; it peaked at 4.58 billion visits in 2016 but dropped in the two years following. NPD predicts it will lose a further 8% by end 2020 (vs. 2018) to reach 4.02 billion visits.
NPD has predicted a better performance in the off-premise sector, with visits to reach 7.21 billion visits by end 2020 (4% higher than 2018), while spend is forecast to jump 10% to £27.87bn. Because takeaway and grab ‘n’ go currently contributes 83% to off-premise visits even low growth is expected to make a difference. NPD’s forecast is for takeaway and grab ‘n’ go visits to increase by 1.6% and spend to go up 6% by end 2020.
The information firm predicted more investment in drive-thru in response to the decline of the high street. NPD’s forecast is for consumers to spend 22% more on delivery by end 2020 to create a delivery market worth £5.8bn annually. The number of delivery visits are expected to jump 17% by end 2020 to reach 882 million. The delivery market currently accounts for 13% of all off-premise foodservice visits but by end of 2020 delivery’s share is predicted to increase to 15%. By 2020, delivery could comprise almost 10% of spend in the total British OOH market.
Casual dining is expected to do well with a predicted 43 million additional visits by the end of 2020, accounting for 5.5% of all OOH visits. Spend is also expected to increase by 15.5% or some £960m. By contrast, full-service restaurants are predicted to decline with a loss of 63 million visits – a 9.3% drop.
The quick service restaurant (QSR) sector is expected to attract 41 million more visits each year by the end of 2020 to reach nearly six billion visits annually, representing more than 53% of the entire British foodservice industry in visit terms. NPD’s forecast is for QSR to attract £1.53bn more spend by end 2020 to reach £24.6bn.
Dominic Allport, insights director with The NPD Group, said: “The pressures affecting on-premise eating and drinking is a big theme in British foodservice. The old habit of going shopping and finding a place to sit down and eat is on the wane as more people shop online. We are predicting that all the meaningful growth in foodservice will be ‘off-premise’ and this is where the industry will address the decline on the high street.
“We forecast that the modest growth in the large takeaway and grab ‘n’ go channel, supported by the continuing delivery revolution, is enough to provide 85% of the growth in spend over the next two years for the entire British foodservice industry.”
He added: “The growth of drive-thru is part of a trend towards more convenience and a result of consumers spending less time on the high street. But operators must address the big price gap between on-premise versus off-premise. The average on-premise cheque of £7.17 is nearly twice the £3.66 seen for off-premise purchases. Is that good for the industry?”