Marketplace International 2015
World Leaders. World Class. Worldwide.
UK Foodservice Market
Terry Cook
November 2014
Growing the success of Irish food & horticulture
AIDAN COTTER
Growing
the success
CHIEF
EXECUTIVE
BORD BIA
of Irish
food & horticulture
28 JANUARY
2009
UK Market opportunity
Population
of
6 million
UK Population of
60 million
Inside M25
12million
• M25 provides 25% of all Catering Outlets in UK
• West Midlands population is 5+ million!!
Growing the success of Irish food & horticulture
2013 Irish food and drink exports to the UK reached €4.1 billion
Seafood €52m
Hort. & Cereals.
€210m
Meat & Livestock
€1,5bn
Beverages €361m
Prepared Foods
€635m
Dairy
€1.1bn
Meat & Dairy Products account for over 64% of total
exports to the UK
Growing the success of Irish food & horticulture
Some of our well known brands
Growing the success of Irish food & horticulture
What is Foodservice?
“ the provision of
food and drink
away from the home”
Growing the success of Irish food & horticulture
Out of Home is GROWING!
Today, over 35% of food spend is outside the home in the UK, 15
years ago, it was 20% and yet in the United States currently it is over
50%.
It is STILL predicted that by 2025, 50% of food consumption in
the UK will be Out of Home.
Snacking and eating ‘on the go’ is reducing the number of formal
meal occasions.
Out of Home
35%
Growing
In Home
65%
Declining
Growing the success of Irish food & horticulture
Recession ……? What Recession ….?
Sector experiences 18 months of consecutive like for like growth
Pubs in London and restaurants outside the M25 were September’s strongest performers as the sector
enjoyed its 18th consecutive month of growth, the latest Coffer Peach Business Tracker shows.
Source: M&C Report, 16th October ‘14
Two thirds of foodservice operators see 2014 food sales rise
Confidence continues to improve in the UK foodservice market, as more than two thirds of operators reported an
increase in food sales year-on-year. That's according to the latest figures from foodservice analyst Horizons' Eating
Out-Look with JRA.
Source: The Caterer, 23rd October ‘14
Whitbread celebrates revenue growth of 13%
Whitbread has announced its interim results for the six months ending 18 August showing a total revenue
growth of 13% to £1,293.2m (2013/14: £1,144.7m). Premier Inn delivered total sales growth of 14.7% with
like-for-like sales growth of 9.6% and record UK occupancy at 84.0%. Costa delivered total sales growth of
16.9% with like-for-like sales growth of 6.1% in the UK stores, driven by a 5.0% increase in customer
transactions. Whitbread's restaurants business grew its total sales by 4.3%, performing ahead of its
industry benchmark.
Source: Caterlyst, 21st October ‘14
IHG posts double digit RevPar results for UK division
InterContinental Hotels Group (IHG) has reported strong results for the third quarter with
RevPAR growth of 7.0%, with a 6.3% rise in the first nine months. The UK delivered double
digit RevPAR growth reflecting strong performance in both London and the regions.
Source: Caterlyst, 21st October ‘14
Growing the success of Irish food & horticulture
Fast Facts on UK Foodservice
• c260,000 outlets
• No player with more
than 5%.
• 90% of businesses t/o
less than £250k.
• Groups = 45% of meals.
• 67% via Wholesalers.
• 8% via Cash & Carry.
• Vending & Direct 25%.
*Note: Food Purchases & Sales above EXCLUDE
Alcoholic Beverages
Source: Allegra / Horizons 2013
Growing the success of Irish food & horticulture
UK Foodservice - Caterers
Profit Sector:
• ‘Food & Drink sold for profit’!!
• High Street – Coffee Shops – Pubs – Restaurants
• Travel Catering – Road – Rail – Ferries …..
• 2,500 Groups only account for 45% of the market.
• 240,000 Independents make up the balance.
Cost Sector:
• ‘Where the Caterer is simply recovering the cost of
Food & Drink provision – it is not their core activity’.
• NHS – Education – Prisons – Social Services.
Growing the success of Irish food & horticulture
Is it worth targeting …..?
High Street (sites)
Costa Coffee
1,550
Hotels (sites)
Pubs & Restaurants (sites)
Hilton
68
JD Wetherspoons
950
Workplace (sites)
Compass Group
8,000
Starbucks
800
Premier Inn
700
Whitbread
2,000
Sodexo
4,000
Caffè Nero
550
Travelodge
520
Greene King
1,900
Baxter Storey
1,200
Greggs
1,700
IHG
281
Spirit Group
1,200
Elior
650
McDonalds
1,200
Accor
200
Mitchells & Butlers
1,600
CH&Co
200
Burger King
500
Marriott
63
TRG
400
ISS
229
Best Western
286
Wagamama
109
Bespoke
85
Carluccio’s
70
Subway
1,500
Pret a Manger
300
Eat
120
Source: Allegra / Caterlyst 2013
Growing the success of Irish food & horticulture
Market Structure - FUNDAMENTALS
SUPPLIERS
WHOLESALERS
Growing the success of Irish food & horticulture
Very little
Direct Delivery in
UK
CATERERS
UK Foodservice –
Understanding Supply Chain
Growing the success of Irish food & horticulture
Supply Chain- Traditional Wholesale
4 ‘Routes’
Cash &
Carry
Some
Deliveries
Traditional
Delivered
Contract
Distribution
Ambient
Grocery
Wholesaler
Frozen &
Chilled
Specialist
‘Consolidators’
Multi-Temp
Growing the success of Irish food & horticulture
In-House
Distribution
Keystone
Distribution
Wholesale: Cash & Carry
Few Groups to target.
Simple to service:
• Head Office Listings.
• Pallets to CD or Branch.
Simple Pricing Structures.
Costs of Doing Business:
• Listing Fee – Promotion Support.
• ORD.
Performed well in Recession.
Growing the success of Irish food & horticulture
Wholesale: Multi-Temp Delivery
Core Ambient service
• ‘Larder’ provisions.
All adding Frozen & Chilled.
• Gives ‘One-Stop Shop’ capability.
National service dominated by 3663 &
Brakes (also own Woodward).
Country Range ‘federation’ now No. 3.
Chef Direct – owned by Booker.
200+ Regionals & Specialists
available.
Growing the success of Irish food & horticulture
Pricing - Delivered Wholesaler
Negotiates the best price for the product.
Controls ordering and stock levels.
Takes stock risk.
Sells to Caterer at the best price attainable.
Any cost price improvements (product or
operational) are retained by the Wholesaler.
Growing the success of Irish food & horticulture
Wholesaler Pricing
Via Wholesaler
Manufacturer trade price
£
10.00
Product rebate
Nett cost to Wholesaler
£
£
1.00
9.00
Wholesaler margin £
Wholesaler margin %
Selling cost to caterer
£
£
6.00
40%
15.00
Nett cost to Caterer
£
15.00
Growing the success of Irish food & horticulture
Wholesale Margins & Discounts
Discounts:
• Cash & Carry Promotions – margin cut to 15%?
• Trading with a Catering Group:
• Discount for Number of Sites & Product Range.
• Discount for Committed Volume.
• Discount for Fewer Deliveries.
• Discount for APL – Approved Product List.
Wholesaler will aim for margin of:
• 20% Minimum Margin Target.
• Cannot operate below 12% Margin.
Growing the success of Irish food & horticulture
Supply Chain – Contract Distribution
• Growing importance.
• Driven by Catering
Wholesale
Sector
Cash &
Carry
Some
Deliveries
Traditional
Delivered
Groups.
Contract
Distribution
Ambient
Grocery
Wholesaler
Frozen &
Chilled
Specialist
‘Consolidators’
Multi-Temp
Growing the success of Irish food & horticulture
• All Delivered Wholesalers
doing some ‘contract’
work.
• 3663 & Brakes have
separate ‘logistics’
divisions.
• Specialists include:
•
•
•
•
Wincanton
DHL
Exel
Kuehne & Nagel
Contract Distribution
Bidvest Logistics.
Sister company to 3663.
Contracted by the Caterer as his
logistics partner.
Not a Wholesale supplier.
Growing the success of Irish food & horticulture
Contract Distributor
Acts simply as storage and wheels.
Price negotiated by the customer – THE CATERER.
Stock risk taken by the customer.
Customer determines the selling price.
Distributor orders and maintains agreed stock level.
Fee is per case or fixed on cost percentage:
say £1 per case; or 10% on-cost.
Fee covers ‘logistics’ charges to:
• Hold stock
• Break bulk
• Deliver to individual sites.
Growing the success of Irish food & horticulture
Contract Distributor pricing
Via Distributor
Manufacturer trade price
£
10.00
Product rebate
£
-
Nett cost to Distributor
£
10.00
Distributor margin £
Distributor margin %
Selling cost to Caterer
£
£
1.00
10%
11.00
Nett cost to Caterer
£
11.00
Growing the success of Irish food & horticulture
Caterer Terminology & Structures
Caterers
Groups
Independents
Head Office
Purchasing
Food Development
Operations
Controlled Units
Lower Discipline
Growing the success of Irish food & horticulture
Wholesaler’s range
will determine their
choice
Mitchells and Butlers
The Good
Less Good
• 2012 Food Spend of £280mill +
• Low margin
• Opportunities for ALL in this room.
• Will take time:
• Contract Distribution:
• Fixed with Brakes
• Product Development:
• Brand Managers
• Development Chefs
• Purchasing Managers
• Tailor to each Brand
• Me-too is no good!!
• Summer/Winter Menus
• Service Level Penalties
• ‘Blackboard’ specials
• Paperwork!!
Growing the success of Irish food & horticulture
Menu Costing
• Caterer ‘works back’ from his
Price Point.
• VAT is ‘lost’.
• Food Costs:
• Protein
• Carbohydrate
• Vegetables
• Sauce
• Target GP of 66%+
• Fish Pie ….
£9.25
Growing the success of Irish food & horticulture
Caterer Menu Costing
Selling Price
£9.25 Main Course
Net Selling Price (ex VAT @ 20%)
£7.71 SP/1.20 (or Multiply by 0.8333)
Assume Gross margin of 66%
£5.09 Multiply NSP by 0.66
Cost price allowance of
£2.62 Difference above = Food Cost
available to the Caterer.
Jacket Potato/Chips/Rice/Pasta
0.30 Portion
Vegetables
0.25
Sauce
0.20
Roll & Butter
0.20
Total
0.95 Cost of ‘support’ products
Allowance for Main Item - Protein
£1.67 BUT, YOU WILL REALISE LESS
ONLY ….. £1.25 IF WSALE MARGIN IS 25%
Growing the success of Irish food & horticulture
What is your point of
difference?
Give me a compelling reason
to buy from you ……USP’s
OR
Are you just another me-too
selling on price?
Growing the success of Irish food & horticulture
Must re-assure the Buyer
Independent audit of Food Standards:
• Food Safety.
• Processes – Product Recall etc.
Allergens declarations.
Demonstrate CSR is important to your
business ………
Growing the success of Irish food & horticulture
You must be ‘on trend’
……
Long-term trends
Caterer Operator
• Value for money
• ‘Grab & Go’
• Healthier eating
• Blurring of ‘day-parts’
• No ‘nasties’
• All Day Dining
• Allergens labelling
• Tapas & Sharing
• Catering for dietary needs
• Simple Food – well executed
• Food provenance
• Bolder Flavours!!
• Red Tractor
• Labour-saving ideas
• Environmental initiatives
• De-skilling ideas
• Social Media!!
Growing the success of Irish food & horticulture
Buyer targets
Over 500 buyers will be canvassed in UK:
Key retailer decision makers in your categories
Key foodservice players
Manufacturers & Distributors
Specialist food retailers & foodhalls
104 UK buyers will be present on the 26th of March
Growing the success of Irish food & horticulture
Bord Bia Office Services
PR
Buyer
Contact
Workshops
Study
Tours
4 Fellows
Strategy &
Planning
Mentoring
Information
&
Research
Supplier
Capability &
Profile
Development
Growing the success of Irish food & horticulture
Route to
Market
Irish market vs. UK Foodservice market
UK
IRISH
•
60+ million
•
6 million
•
Formal Sales Process
•
Approachable
•
Group Purchasing
•
More ‘Independents’
•
Controlled Menus
•
More flexibility
•
Food Safety ‘phobias’
•
More relaxed
•
6-7oz Portion size
•
More generous!!
•
Higher taste profiles
•
Milder
•
Direct delivery ‘gone’
•
More Caterer contact
•
Sterling
•
Euro
Growing the success of Irish food & horticulture
For more information
Please contact our team in London:
Michelle Butler, Manager
michelle.butler@bordbia.ie
Adrian Rivers, Retail
adrian.rivers@bordbia.ie
Micheal Gately, Foodservice
micheal.gately@bordbia.ie
Henry Horkan, Meat
henry.horkan@bordbia.ie
Tel: 00 44 20 7307 3555
Growing the success of Irish food & horticulture
Questions please……?
Growing the success of Irish food & horticulture