The UK Foodservice industry is confident of
revenue growth in 2012
Respondents from companies operating in the profit sector channels are
confident with regards to the growth of the foodservice industry over the next
12 months. In total, 62% of respondents from the profit sector channels are
“very confident” or “confident” about revenue growth. The highest levels of
optimism are identified among foodservice operators in the catering channel,
with 82% of such respondents confident of growth. The ongoing recovery of the
UK’s economy, rising employment opportunities, the London 2012 Olympic Games and
expectations of an increase in disposable income are projected to drive revenue
growth within the foodservice industry in 2012.
Overall, 41% of respondents in the cost sector channels expect an increase in
foodservice budgets. While 30% of respondents expect no change and 19% expect
budgets to decrease.
On average, accommodation foodservice operators expect to see the greatest
increase in profitability of 3.4%, followed by operators in the catering channel
who expect an increase of 2.9% and operators of pubs, leisure and travel and
restaurants who expect respective increases of 1.3% and 0.3%. Operators in the
workplace channel project the lowest increase in profitability with a decrease
of -1.7%.
Food and beverage prices are expected to
increase slightly in 2012, but suppliers are projected to increase their prices
A total of 75% of respondents from the profit sector and 56% from the cost
sector expect an increase in food and beverage prices, however, 17% of
respondents from the profit sector and 28% of respondents from the cost sector
expect prices to “increase considerably.” Concerns such as increases in the cost
of raw materials and high inflation rates have severely impacted supplier
companies’ profit margins and as a result operators expect suppliers to pass on
the price burden to customers over the next 12 months.
Over 65% of respondents across profit sector channels expect supplier prices
to increase. Notably, 100% of respondents from the caterers channel and 97% of
respondents from the pubs, leisure and travel channel forecast an increase in
supplier prices over the next 12 months. With foodservice operators already
running with tight margins, any increase in raw material, fuel or commodity
prices will force foodservice supplier companies to increase their prices over
the next 12 months.
‘Seasonal updating of menu and drink menu options’ is expected to drive
demand in 2012
According to 28% and 27% of respective respondents, “improving sanitation and
hygiene” and the “seasonal updating of menu and drink menu options” are
considered important drivers of customer demand for foodservice operators in the
profit sector channels. “Targeting customers’ online” and “innovating menu and
drink menu options” are considered important drivers of customer demand as
identified by 22% of respondents each.
The “Seasonal updating of menu and drink menu options,” “providing balanced
diet options” and “innovating menu and drink menu options” are considered
important drivers by 41%, 33% and 31% of respective respondents in the cost
sector. Stringent government guidelines with regards to healthy eating habits
and a focus on the nutritional value of meals are encouraging foodservice
operators to provide a balance diet to educational institutions. The ability to
offer cost-effective, balanced diet options will significantly increase an
operator‘s chances of success in the market.
The seasonal updating of menus helps foodservice operators to procure food
from local farms based on availability. The taste, freshness and safety of such
food encourage customers to visit restaurants, pubs and other foodservice
outlets. Since local procurement decreases transportation costs products may be
offered to customers at reduced prices.
‘Increasing cost of raw materials’,
‘decreasing consumer or government expenditure’ and ‘increase in value added
tax’ are key concerns for the UK foodservice industry
According to the survey results, the “increasing cost of raw materials,”
“decreasing consumer or government expenditure” and “increase in value added
tax” (VAT) are the most pressing business concerns faced by the UK foodservice
industry. The “increasing cost of raw materials” is considered a critical
concern by 70% of respondents from the profit sector and 59% from the cost
sector, as the price of agricultural commodities increases. According to a press
release by the Office for National Statistics in December 2011, the highest
increase in prices were registered by food and non-alcoholic beverages, wherein
the prices of fruits increased by 6.4% and meat by 1.6% during October–November
2011. A rise in fuel prices has also increased the financial pressures on
foodservice operators.
With the exception of the restaurants and workplace channels, the majority of
respondents across all channels are either “very concerned” or “moderately
concerned” about the costs incurred when displaying nutritional or calorie
information on their products. With an increasing number of UK citizens‘ dining
out and health budgets growing to tackle obesity levels, a total of 37 food
companies in September 2011 agreed to voluntarily provide calorie information as
part of the government‘s public health responsibility deal. Displaying calorie
information on food and drink items is expected to help consumers identify
healthier foods and better manage their diets.
‘Price’, ‘quality of product’, ‘existing
relationship with supplier’ and ‘speed of delivery’ are key elements of supplier
selection process
“Price,” “quality of products,” “existing relationship with supplier,” and
“speed of delivery” are considered key factors for supplier selection by
respondents in both the profit and cost sectors. Of respondents from the cost
sector, “level of after care service” and “healthiness of products” are also
considered important by 33% and 44% of respective respondents.
According to 86% and 79% of respective respondents from the profit and cost
sectors the “quality of products” is considered one of the primary factors when
considering supplier selection. Customers in UK are becoming increasingly aware
of buying superior quality, value for money products. The FSA has a set of
strict regulations on food usage. It mandates foodservice operators to know the
source of their products and food processing quality standards.
An increase in capital expenditure is expected in ‘new product development’,
‘IT infrastructure development’ and ‘equipment machinery or purchase’
“New product development,” “IT infrastructure development” and “equipment or
machinery purchase” are areas that will register a “significant increase” or
“increase” in investment, as identified by 44%, 43% and 41% of respective profit
sector respondents. Foodservice operators are concentrating on innovating new
product combinations to attract customers to their food outlets. For example,
SeeWoo, a supplier of oriental foods to restaurants, developed the first extra
virgin soy sauce in UK in January 2012.
Among cost sector respondents, 42%, 38% and 33% respectively report a
“significant increase” or an “increase” in areas such as “IT infrastructure
development,” “equipment or machinery purchase” and “expand premises.” During
the 2011 survey, “new product development,” investment in “IT infrastructure
development” and “equipment or machinery purchase” were identified as areas
likely to register an increase in investments.
Offering ‘locally grown produce’, ‘fresh
food’ and ‘vegetarian offerings’ are prominent trends in the UK foodservice
industry
“Locally grown produce,” “fresh food,” “vegetarian offerings” and “meals
prepared from scratch” are the prominent trends identified by respondents from
profit and cost sector channels. A growing awareness of healthy eating habits
among customers has led to an increase in a demand for fresh food. This has
supported the demand for “local produce,” which UK foodservice operators
consider one of the best ways to provide fresh food to their customers.
A total of 40% of respondents from the restaurant channel expect an increased
investment in “organic produce.” Significantly, many customers are changing
their eating habits from away from those foods grown with the aid of pesticides
towards organic foods, which contain more nutrients, minerals and vitamins than
foodstuffs that have been intensively farmed. Such a change in consumer trends
has induced many restaurants in the UK to increase their expenditure towards
organic produce.
An increase in capital expenditure is expected in ‘new product development’,
‘IT infrastructure development’ and ‘equipment machinery or purchase’
“New product development,” “IT infrastructure development” and “equipment or
machinery purchase” are areas that will register a “significant increase” or
“increase” in investment, as identified by 44%, 43% and 41% of respective profit
sector respondents. Foodservice operators are concentrating on innovating new
product combinations to attract customers to their food outlets. For example,
SeeWoo, a supplier of oriental foods to restaurants, developed the first extra
virgin soy sauce in UK in January 2012.
Among cost sector respondents, 42%, 38% and 33% respectively report a
“significant increase” or an “increase” in areas such as “IT infrastructure
development,” “equipment or machinery purchase” and “expand premises.” During
the 2011 survey, “new product development,” investment in “IT infrastructure
development” and “equipment or machinery purchase” were identified as areas
likely to register an increase in investments.
Offering ‘locally grown produce’, ‘fresh
food’ and ‘vegetarian offerings’ are prominent trends in the UK foodservice
industry
“Locally grown produce,” “fresh food,” “vegetarian offerings” and “meals
prepared from scratch” are the prominent trends identified by respondents from
profit and cost sector channels. A growing awareness of healthy eating habits
among customers has led to an increase in a demand for fresh food. This has
supported the demand for “local produce,” which UK foodservice operators
consider one of the best ways to provide fresh food to their customers.
A total of 40% of respondents from the restaurant channel expect an increased
investment in organic produce‘. Significantly, many customers are changing their
eating habits from away from those foods grown with the aid of pesticides
towards organic foods, which contain more nutrients, minerals and vitamins than
foodstuffs that have been intensively farmed. Such a change in consumer trends
has induced many restaurants in the UK to increase their expenditure towards
organic produce.
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