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Bakeries competing with sandwich chains as sales outperform market

Bakery outlets have seen the strongest growth in on-premise business among major British quick service restaurant (QSR) channels, with sales and visits up more than 19% and nearly 18% respectively in the past year, data from global information company The NPD Group has shown.

Based on its new Bakery Trends Tracker report, the company has predicted Britain’s bakery chains and independents are now in a strong position to increase their off-premise business and challenge the well known sandwich retailers, supermarkets and QSRs for a larger share of the food-to-go, click and collect and delivery channels.

Recent figures for the British out-of-home or eat-out foodservice industry showed that bakery outlets are already a popular option for food-to-go customers with eight out of 10 bakery purchases consumed on the move. But with bakeries only accounting for just £1.2bn or 5% of Britain’s £22.5bn food-to-go business annually – up from £1bn five years ago – there is potential for growth.

Bakeries also only service 3% of total click and collect but sales are showing an increase. While delivery business for bakeries is also still at a very low level, delivery volume is up nearly 63% in the past year and the value of delivery sales has increased by over 47%.

Bakery outlets boosted sales by 6% in the year ending April 2019 and increased visits by 2.2%, outperforming pizza and chicken outlets, which saw visits drop. Furthermore, outlets recorded a 9% jump to 1.17 billion servings – the strongest servings growth in the past year of any other QSR channel.

Bakeries also satisfy part of the British demand for snacking with a 10% increase in snack sales in the past year, the strongest total sales growth in any QSR segment. Outlets have enjoyed the strongest growth in coffee servings of any QSR channel year ending April 2019, with servings of coffee up nearly 19%. Around 1.46 billion visits involved a deal or promotion, up 16% over the past year.

The attraction of bakeries proved to be broad, as in the past year, among the 16-to-24 age group, a 15% growth in visits was achieved and a 5% growth in the 50+ age group. Bakeries were the fastest growing segment among the 50+ age group and the second fastest for 16-to-24s.

Peter Linden, insight manager foodservice UK, The NPD Group, said: “Bakeries and patisseries are an important part of Britain’s £57bn ‘out of home’ or eat-out foodservice industry. Many businesses – small and large – are moving away from their traditional bakery offering to a sharper food-to-go focus.

“This involves putting on good coffee, offering new food choices such as pizza, salads, pasta, hot sandwiches, croissants, pasties and much more, and meeting the demand for click and collect and delivery. Bakeries by their very nature focus on food-to-go and this is where the growth is, with sales in this part of Britain’s total OOH market having grown by 8% in the year to April 2019.”

He added: “Bakeries can secure more growth by increasing their share of the food-to-go market from their current level of just 5%, and by bringing their food-to-go appeal to dayparts they don’t normally service, such as dinner. They also have scope to provide delivery, especially at breakfast time and at weekends.

“Say the word ‘bakery’ and some might think of a traditional ‘old school’ family-run business that sets to work each day well before dawn turning out bread, savoury bakes, pastries and cakes for sale across the counter. Those outlets still exist throughout Britain. But there are many other ambitious outlets already competing head-on with the big high street names. We believe competition will heat up. Bakery chains are ideally suited to riding some of the big trends in British foodservice and have responded imaginatively to consumer demand for convenience.”

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