International
Markets
Bureau
MARKET ANALYSIS REPORT | MAY 2011
Source: Shutterstock
Source: Shutterstock
The United Kingdom
A Diverse Foodservice
Sector
The United Kingdom
A Diverse Foodservice Sector
EXECUTIVE SUMMARY
The British foodservice market is among the most modern and
concentrated in Europe. However, since 2008, the United Kingdom
(U.K.) has changed from a booming economy to an economy in
crisis, which has impacted the consumer foodservice market. In this
fast-changing environment, up-to-date market and consumer data is
more critical than ever.
A Shift in the British Foodservice Sector
The consumer foodservice sector continued to be affected by the
economy in 2010. Falls in disposable income and rising
unemployment resulted in a tough trading environment since 2009,
leading to limited growth in foodservice value sales and a decline in
outlet numbers, as operators struggled to keep up with the increasing
costs of ingredients and rent.
As a means to remain in business, foodservice operators sought
opportunities to attract cash-strapped consumers with promotional
vouchers and discounts. Pizza Express, Zizzi and Bella Italia were
among those that offered „buy one, get one free‟ meals, among other
offers, as operators competed with ready-meal deals offered by
supermarket chains, which would allow consumers to spend less by
staying in.
INSIDE THIS ISSUE
Executive Summary
2
The State of the Market
3-5
Major Trends in the
Foodservice Sector
6-7
Foodservice Sector
Performance by Channel
8-18
Market Entry Strategies
18-19
Conclusion
19
Bibliography
20
Annex: Company Profiles
20
Due to the number of outlets present in the market, cafés/bar
operators, better known as “pubs” in the U.K., have maintained a
strong presence, despite the economic downturn. Meanwhile, both
chained and independent operators struggled due to declines of over
2% in 2009 (Euromonitor). Losses stemmed from rising rent and
utility costs, alongside a decline in consumers dining out. Like most
markets, chained 100% home delivery/takeaway flourished in this
difficult economic environment, alongside smaller niche,
less-developed subsectors and affordable options such as chained
Middle Eastern fast food and chained specialist coffee shops.
Market Outlook
Private consumption has held up reasonably well since mid-2009,
but the outlook for foodservice operators and consumers appears
increasingly grim. With the struggling private sector and public sector
cuts, the unemployment rate is set to continue rising into 2011.
As a result, with the economy still uncertain, smaller/independent
operators are likely to be driven out of the market. Meanwhile, highend restaurants have also taken a hit, leaving mid-level restaurants
to benefit. Since the British are accustomed to eating out, often due
to a large number of single occupant households, they are likely to
consume more ready-meals instead, and are expected to continue
eating out less often.
Source: Shutterstock
PAGE 2
THE STATE OF THE MARKET
The U.K.‟s Hotel, Restaurant and Institutions Sector (HRI) is ranked the fourth largest consumer
market in the country, after food retail, motoring, and clothing and footwear. Nonetheless, recent
economic turmoil caused a decrease in consumer demand for foodservices as food prices increased in 2008. The
U.K.‟s economic health continues to be uncertain, leading foodservices to remain unsteady. Although
improvements in overall spending can be expected ahead, British consumers will still be watching how they spend
their money, and therefore the total number of HRI outlets is still likely to fall.
Effects of the Recession on Consumer Expenditures in Foodservices
The U.K.‟s fast food industry benefited from the recession, having grown
by over 2% in value terms in 2009 (Euromonitor). Consumers with less
disposable income have turned away from more conventional restaurants
and have moved towards fast food eateries or takeaway instead.
Source: Planet Retail
Quick-service restaurants are likely to continue to do well with consumers
spending less. With the British increasingly seeking convenience, fast food
outlets with drive-thrus saw an increase in trade over the recessionary
period. In addition, new enclosed shopping malls throughout the U.K. led
consumers to increasingly spend their time in malls, during which time they
likely spent money on food and drink. However, the success of fast food
operators will not last forever, as consumers slowly begin to return to
pre-recessionary habits. Some players plan to remain competitive by
broadening their consumer base through the health and wellness,
sustainability, and fair trade trends.
In addition, grocery retailers such as Marks & Spencer began offering meal deals to consumers, such as “Dine In
for £10”, which in turn affected the restaurant business. These meal deals combined with the numerous cookery
shows and food-related advertisements, continued to tempt consumers to stay home more often for a low-cost
dining experience.
The economy continues to struggle in the U.K., as the unemployment rate
continues to rise. In March 2010, the unemployment total was at its highest
level since December 2004 (Euromonitor). Consumer sentiment is unlikely to
improve following the October 2010 announcement of the coalition
government‟s comprehensive spending review, and as a result of concerns
over a renewed slump in the U.K. housing market. The fiscal tightening
program has set out projections showing an estimated 490,000 public-sector
job losses, resulting in increased fear over job security across many areas of
the economy, which are likely to weigh on spending plans for some time
(Viewswire – The Economist).
Following an estimated rise of 1% in 2010, the Economist Intelligence Unit
expects private consumption growth to slow to a mere 0.2% in 2011, as the
official measure of unemployment starts to trend higher. A fragile economic
recovery has forecasters seeing a 1.7% expansion of the country‟s real gross
domestic product (GDP) in 2010, slowing to 1.3% in 2011 (Viewswire – The
Economist).
PAGE 3
Facts and Figures
Since 2007, the foodservice sector has suffered a decrease in sales, with a slight increase in
2010 as the economic downturn eased in the U.K. The figures shown in Chart 2 on the following
page, illustrate the amount of total spending that was dedicated to food in the U.K. This was a
higher proportion in 2010 than in the previous years. This small increase is a result of consumers increasingly
opting for convenience when purchasing food and beverages. Foodservice operators did not all benefit from this
increase, with full-service restaurants still feeling the pressure of cash-strapped consumers.
Chart 1: Size of the Foodservice Market in the U.K.
$180
$160
$140
$120
$100
$80
$60
$40
$20
$2006
2007
2008
2009
2010
Foodservice total spend (Billion USD)
Source: Planet Retail, HoReCa Market – United Kingdom, July 2010
Chart 2: Proportion of Total Expenditures on Foodservice
2,500,000.00
165,999.96
2,000,000.00
158,982.68
Total expeditures
USD$Mn
144,231.95
129,917.95
137,766.84
1,500,000.00
Foodservice
total Spent
Total
Spending
1,000,000.00
500,000.00
0.00
2006
2007
2008
2009
2010
Year
Source: Planet Retail, HoReCa Market – United Kingdom, July 2010
PAGE 4
Table 1: Top 20 Foodservice Operators by Banner Sales in the U.K. (2010)
Banner sales
(USD$)
Foodservice
Market Share %
Rank
Company
1
Punch Taverns
6,978,913,976
5.90
2
McDonald's
4,050,457,700
3.53
3
Mitchells & Butlers
3,371,663,330
2.82
4
Whitbread
1,956,680,525
1.56
5
JD Wetherspoon
1,876,114,754
1.56
6
Yum! Brands
1,758,311,443
1.50
7
Greggs
1,207,363,084
1.03
8
Subway
1,143,753,869
0.97
9
Domino's Pizza
788,949,600
0.67
10
Starbucks
751,635,400
0.59
11
Gondola Group
741,076,348
0.63
12
Burger King
642,682,949
0.55
13
Restaurant Group
629,320,302
0.53
14
Carlson
172,347,097
0.15
15
Papa John's
86,159,447
0.07
16
Dunkin' Brands
36,422,379
0.03
17
HMV
18,660,198
0.01
18
Church's Chicken
11,730,000
0.01
19
Grupo Zena
8,454,658
0.01
20
Lincolnshire Co-operative
4,853,517
0.00
Source: Planet Retail, HoReCa Market – United Kingdom, July 2010
Table 2: Top 20 Foodservice Operators by Number
of Outlets in the U.K.
Rank
Company
Number of
Outlets, 2010
1
Punch Taverns
6,770
2
Subway
2,010
3
Mitchells & Butlers
1,567
4
Greggs
1,448
5
Yum! Brands
1,420
6
Whitbread
1,418
7
McDonald's
1,210
8
JD Wetherspoon
771
9
Gondola Group
682
10
Domino's Pizza
634
11
Starbucks
630
12
Burger King
505
13
Restaurant Group
318
14
Nando's
284
15
Dunkin' Brands
167
16
Papa John's
122
17
Carlson
50
18
Quiznos
13
19
Church's Chicken
11
20
Grupo Zena
8
Source: Shutterstock
Source: Planet Retail, HoReCa Market – United Kingdom, July 2010
PAGE 5
MAJOR TRENDS IN THE FOODSERVICE SECTOR
The Rise of Discount Vouchers
As a result of heightened competition in the consumer foodservice sector, promotional vouchers and discounts
flooded the market in 2009. Operators opted to compete with meal deals that supermarket chains were offering,
which were encouraging consumers to spend less by staying in. A price comparison website,
www.moneysupermarket.com, indicated that more than a quarter of British consumers will only go to restaurants if
they have a discount voucher. The site states the most popular vouchers are Pizza Express, Zizzi, Strada, Haha
Bar & Grill and Bella Italia. According to research conducted by HitWise Intelligence, the „Pizza Express voucher‟
was the most popular branded voucher search, with the only other company to have a branded voucher in the top
10 apart from restaurants being Tesco. This tool proved necessary in 2009 as consumers chose to forgo eating out
as frequently as a result of the recession. The slow recovery of the economy will bring a new change to foodservice
operators, as they will have to be more innovative in their value offerings and wean consumers off discount
vouchers. Restaurants that used promotions to attract consumers in 2009 might be faced with the same challenge.
Niche Subsectors Gain Popularity
Consumer foodservice outlets are expected to continue struggling over the next two years. However smaller niche,
less-developed subsectors and affordable options such as chained Middle Eastern fast food and chained 100%
home delivery/takeaway, as well as chained specialist coffee shops will continue to thrive in value terms
(Euromonitor 2010)
The British have developed a strong appreciation for ethnic foods, which is largely driven by the high numbers of
non-British citizens making the U.K. their home, as well as international travel. In the last couple of years,
Japanese food has seen a big increase in popularity, due somewhat to its healthy image. Many British consumers
are also known to cook non-British food at home on a regular basis.
Health and Wellness Is Still On the Radar
The health and wellness trend has grown strong in the U.K., leading Brits to spend more money on food and
beverages in health centers. The British government has put increased efforts into encouraging consumers to eat
“healthy” through governmental campaigns and other means; one of the reasons is that the U.K.‟s obesity rates are
now the highest in Western Europe. As a result, consumers are increasingly demanding healthier products, to
which the industry as a whole has had to respond.
Sector operators such as Pizza Express introduced a range of “Leggera pizzas”, a lighter pizza in which the dough
in the centre is removed, leaving a hole that is filled with fresh salad. Each pizza is designed to be approximately
500 calories and is low in saturated fat. Meanwhile, in November 2009, other fast food players such as Burger
King, KFC, McDonald’s, Subway and Wimpy, committed to offering healthier choices to consumers by complying
with the Food Standards Agency (FSA) guidelines to reduce salt, saturated fat and energy intakes, as well as
informing consumers further of healthier options. Other chains, such as Pizza Express, Pizza Hut, Café Rouge and
Domino’s Pizza, along with Tragus Group restaurants, have signed up to „hide‟ vegetables in children‟s dishes, in
an attempt to encourage healthier eating.
Despite efforts to promote health in the U.K., figures suggest that the recession-hit British have put their health on
the back-burner, turning to fast food. The Health Food Manufacturers‟ Association (HFMA) recently conducted a
survey suggesting that approximately 36 million people, two thirds of the British population, opted for TV dinners
and fast food take-aways in 2009. Similarly, a study conducted by the FSA found that, on average, only 14% of the
British population ate the recommended five portions of fruit and vegetables every day. These research results are
further supported by sales figures achieved by fast food brands McDonald’s and KFC, whose value sales increased
in 2009.
Still, efforts towards the moderation of salt and fat intake on behalf of the FSA, the government, as well as
manufacturers and foodservice operators will lead consumers to become increasingly aware of high-fat and highsalt foods over the medium term. Euromonitor predicts that consumers may return to pre-recessionary spending
habits as healthier foods are deemed more affordable in a less economically panicked society.
PAGE 6
Consumer Consciousness Hits the Foodservice Sector
Ethics continue to make their mark in the U.K., with foodservices increasingly adopting the trend.
According to Euromonitor, the U.K.‟s Sustainable Restaurant Association (SRA), launched in
March 2010, plans to accredit its member restaurants with gold, silver and bronze awards based
upon their ethical practices. These ratings are then displayed on online booking services, such as
www.toptable.com, to inform consumers of the restaurant‟s status. The SRA also exists as a means to help
restaurants become more sustainable in the way they source their ingredients, engage with the community and
affect the environment. The SRA is expected to play a large part in shaping the future of consumer foodservice
over the medium term.
Other foodservice operators, such as the U.K.‟s first fully
vegetarian restaurant chain, Otarian, have engaged in
sustainable eating with the carbon footprints of each dish
communicated on the menu. The chain owner posits that
vegetarians have a lighter ecological footprint, in terms of
reduced water impacts and lower carbon emissions than meat
eaters. Otarian also believes that consumers will save up to 3 kg
of carbon when purchasing a „Carbon Saving Combo Meal‟,
which includes dishes such as Tandoori Mushrooms or a Paneer
Wrap.
Consumerism has gained speed in the U.K. and may continue at
this speed as ethical eating becomes more accessible through
consumer foodservices. Still, if ethical and fair-trade foods are
unable to keep costs down, consumers may not be as keen to
pay a premium to be kinder to the environment.
Source: Shutterstock
Globalization is Out - Localization is In
The trend for buying seasonal, local produce is increasingly popular with British consumers, many of whom chose
fruits and vegetables grown conventionally in the U.K. over imported organic produce. In response, Compass
Group Plc, a major U.K. foodservice player that services around 7,000 sites, announced in October 2009 that it
would source its apples and pears exclusively from the U.K. in the months of October and November. In addition,
the company has created a Truly Local sourcing initiative to emphasize their support for the local movement - one
of the criteria for fruit and vegetables to qualify is that they must be grown within a 50-mile radius of the client site.
Concept Foodservices and Entertainment
Consumer standards have risen in the U.K. in the past decade, especially in regards to the customer experience.
Consumers are increasingly enjoying added benefits and functions from their purchases. As a result, new
foodservice concepts have emerged, with restaurants offering added value in the form of entertainment or a
different dining experience. Some examples are Dans le Noir?, French for „in the dark‟, which serves multi-course
meals in a dark room with diners unable to see a thing. Dans le Noir? opened in Paris in 2004, followed by
franchise openings in London, Barcelona and New York (Euromonitor). Another themed restaurant in the U.K. is
Circus, launched in 2010, which provides diners with an in-house interactive show after their meal, comprised of
burlesque, drag and aerialist performances. YO! Sushi is another 2010 outlet aiming to create more of an
ambience in its new London site. Inspired by trends from Tokyo, YO! Sushi features interiors with a red and black
colour scheme and a heaven and hell theme. Meanwhile, other players, such as Starbucks, Burger King, and
McDonald’s, are also looking to create more of an atmosphere to keep customers coming back and to encourage
new visitors, as consumers continue to expect more from the money they spend.
Chained and Independent Operators Struggle Together
Both chained and independent operators struggled in terms of outlet numbers in 2009, both experiencing declines
of over 2% during the year. Rising rent and utility costs, alongside a decline in consumers dining out, affected both
chained and independent operators, with chained 100% home delivery/takeaway being one of the few subsectors
to flourish in a difficult economic environment.
PAGE 7
FOODSERVICE SECTOR PERFORMANCE BY CHANNEL
The British foodservice market is complex and can be considered more intricate than the grocery
retail market. According to the United States Department of Agriculture (USDA), the U.K.‟s
foodservice sector is divided into two distinct sectors: profit outlets and cost outlets. When profit acts as the main
motivator, pricing becomes flexible; these are typically outlets working within the hospitality industry such as
restaurants, fast food, pubs, hotels, and leisure venues. Alternatively, the cost sector includes caterers that provide
food out of necessity, with pricing being controlled, if not fixed. Examples of this sector include schools, hospitals,
prisons, and specialist care homes.
The following section describes the performance of foodservice outlets in the U.K. by channel.
Full Service Restaurants
Major Trends
Full-service restaurants are the most common type of foodservice – independent players continue to dominate the
sector, with approximately 90% of restaurants being accounted for by independent operators in terms of outlet
numbers, down from 91% in 2004 (Euromonitor). A shift towards chained restaurants has been reported in the
U.K., as these outlets are larger, more centrally located and able to generate higher revenues. This shift is likely to
accelerate over the medium term, as economic instability may continue to affect independent operators.
The full-service restaurant sector has battled strongly against the recession with continual marketing and
promotional deals. Research by Hitwise Intelligence suggests that U.K. Internet searches for restaurant vouchers,
specially pizza, have increased by more than 226% over the past 12 months. Restaurant vouchers dominate the
list of top 10 voucher-related searches (Euromonitor). Specialist discount voucher sites such as
www.myvouchercodes.co.uk and www.voucherseeker.co.uk have contributed to the trend. Although the price of a
three-course meal increased in 2009, the flurry of discounts and meal deals kept main course prices fairly stable or
even lower than in previous years. In an attempt to offset such discounting, some operators increased their prices
of starters and desserts.
London has seen the development of numerous upscale restaurants, some of which evolved around famous chefs
such as Jamie Oliver and Gordon Ramsay. Apart from the U.K.‟s classics, recent newcomers include The Ivy, Chez
Bruce and Hakasan. In addition to the U.K.‟s numerous independent luxury restaurants are some notable fast
casual chains, such as Nando's, La Tasca and Pizza Express, as well as some American influenced concepts such
as Tootsies, TGI Fridays and Hard Rock Cafe. More recently there has been an increase in the presence of ethnic
chains, especially Asian inspired ones, as they gain popularity with consumers.
Typically, full-service outlets in the U.K. offer traditional British, Indian and Chinese cuisine with the latter two
having become a strong part of British culture. The U.K. reported having almost 17,000 Indian and Chinese
restaurants, a sector that has attracted government funding in an attempt to improve staff training and upgrade the
quality of food offered (Planet Retail). The popularity of Indian and Chinese food is now being followed by tastes
from Mexico, Thailand, the Caribbean, Indonesia and Malaysia. Some notable chains are Masala World (Indian),
Oriental Restaurant Group (Thai), Wagamama (Japan), and Yo! Sushi (Japan). Also, Latin American full-service
restaurants are experiencing growth with Giraffe, Las Iguanas and Chiquito being among those that increased in
outlet numbers in 2009, as British taste palates continue to expand. Other popular segments are the fish and chips
section or burger section. While fish and chip operators are decreasing in outlet numbers, a number of upmarket
niche operators offering "gourmet burgers" have been emerging, including Tootsies, Hamburger Union, Fine Burger
Company and Real Burger World.
Changes in foodservice trends have forced operators to modify their operations. For example, to respond to health
and nutrition trends, Pizza Express, Pizza Hut, The Restaurant Group and Tragus, among others, have agreed to
commit to providing a range of healthier options to their customers. These foodservice operators have partnered
with the FSA to help with measuring salt reduction projects, reviewing children‟s menus and increasing the range of
healthier options. Another example is the increase of full service restaurants that are eat-in outlets. Additionally, the
number of takeaway outlets has increased as many restaurants introduce „take-away‟ sections to cater to all
customers.
PAGE 8
Popular Players in the British Marketplace
 The Restaurant Group plc (one of the largest independent restaurant and pub restaurant
groups in the country, encompassing Chiquito, Frankie & Bennies, Garfunkel’s, Home
Country, TRG Concessions, and Brunning & Price)
 Gondola Holdings plc (the leading U.K. casual dining group operating Pizza Express, ASK, Zizzi, BYRON
and Kettners, together with a number of smaller brands.)
 Clapham House Group (The Real Greek, Gourmet Burger Kitchen)
 The Giraffe Restaurant Group
 Boparan Ventures (Harry Ramsdens fish and chips chain as well as the Fishworks seafood restaurants)
 Tragus (Café Couge, Bella Italia, Strada, and Brasseries)
 Wagamama
 Busaba Eathai
 Mitchells and Butler
 Whitbread Restaurants
Future Prospects
British market operators are mostly concerned with what will be the next big trend in the U.K. Organic and
localization trends are increasingly important, but the media may overstate their impact. With the E.U. population
expanding, examining the next wave of immigration may be useful. Perhaps food from Eastern Europe or Asia may
begin to influence the U.K., particularly where operators can promote a healthy or functional aspect to the menu.
Finally, operators should be worried about the ongoing economic concerns that are expected to limit growth in the
U.K., as promotions and discounting continue to entice consumers to eat out, yet not increase spending.
Another growing trend is that of restaurant chain brands being sold not only in restaurants, but also at grocery
chains. For example, Wagamama has developed four sauces which are sold in Wagamama restaurants as well as
approximately 400 Sainsbury's stores. In a highly fragile environment, growth through expansion can be risky and
expensive, and expanding into new sales channels represents an attractive alternative to the traditional growth
model of opening new restaurants. The growth of new sales channels also represents an opportunity for
manufacturers as restaurant chains seek companies to produce the food ranges in their name.
Furthermore, the British tourism agency VisitBritain predicts tourist spending is set to double by 2020, while Deloitte
and Oxford Economics have forecasted a 4.4% increase in tourism expenditure in the next 10 years. With London
hosting the Olympic and Paralympic Games in 2012, full-service restaurants, and the foodservice industry as a
whole, is set to be revitalised.
Fast Food Restaurants
Major Trends
Similar to the full-service restaurant industry, the U.K.‟s fast food industry is dominated by independent players
operating sandwich shops, fish and chips or fried chicken outlets and various take away formats; however, recent
years have seen the share of chained outlets increase steadily. The modern fast food sector is among the most
developed in Europe and is dominated by a small number of larger corporations such as McDonald’s. Competition
among major players remains fierce, with each attempting to respond to the trend towards healthier eating options.
Competition is also no longer restricted to a battle between the traditional fast food chains as coffee shops,
doughnut chains, casual dining, pub-restaurants, supermarkets, convenience stores and petrol forecourt stores all
try to feed the demand.
Fast food restaurants have been on the rise since 2007 and have been facilitated by a number of factors, including:
the rapid expansion of certain players; the introduction of healthier menu options and healthier food preparation in
response to criticisms about the unhealthy nature of products; and the revamping of fast food restaurants such as
McDonald’s. Across chains, menu changes and new product launches focusing both on healthier and more
upscale dishes have been observed. Meanwhile, companies are also increasingly investing in advertising and
marketing campaigns, as well as providing nutritional information about the food served at their respective chains.
The recession was the key driver in a return to strong sales growth as consumers migrated back to fast food at the
expense of full-service restaurants and pubs. Fast food operators were quick to capitalize on the value proposition
by promoting family meals and meal deals, as well as straight price cuts on some of their products. Take away was
another area worth noting as British families increasingly chose to dine at home.
PAGE 9
Some of the larger fast food operators have continued to strongly support other menu items
outside their traditional businesses of burgers, sandwiches, chips and chicken. McDonald’s, for
example, has established its coffee offering in the U.K., despite strong competition from
specialist coffee shops Starbucks and Costa Coffee. Meanwhile, breakfast trade continues to be
viewed as an untapped revenue source.
Source: Planet Retail
Recent regulations banning fast food operators from advertising to children on
British television have encouraged players to adapt their marketing strategies to
fit the more limited environment. Healthier menus have been the major trend in
recent years and fast food operators have been competing with each other to
advertise this shift to foods with lower fat and salt content. Prêt a Manger, EAT
and Greggs have linked up with the FSA‟s voluntary healthy eating campaign.
Prêt a Manger pledged to apply new calorie labelling on its sandwiches and
reduce the level of salt. Greggs pledged to remove all hydrogenated fats and
artificial colours and flavours from its pies by summer 2010. These recent
initiatives follow earlier moves by KFC, Burger King, McDonald’s and Subway to
conform to the FSA‟s voluntary standards.
Similar to cafés, quick service restaurants, also known as fast casual dining, offer a quick meal on the go, but lack
the social element of a café. Fast casual dining represents a growing segment of the fast food sector, showing the
fastest growth in recent years. This growth has been driven by the segment‟s healthy perception among British
consumers, as well as the expansion of players such as Nando’s, Prêt a Manger and EAT, which all saw doubledigit store growth in 2009.
Bakery retailers and sandwich specialists are both quite popular in the U.K. Mixed bakery retailers offering a range
of sandwiches and baked goods dominated the sector, aided by Greggs, which significantly increased its offering
as part of recession-busting meal deals. Sweet bakery goods specialists, although still a fraction of bakery products
fast food, have seen solid growth underpinned by the expansion of Krispy Kreme, which is now sufficiently
established in the U.K. Meanwhile, sandwich specialists, led by Prêt a Manger, Subway and EAT, lost share in
2009 with sweet bakery goods specialists increasing their share of the market.
Since the 1990‟s, sandwiches had been a major growth sector, with the working population opting for shop-bought
sandwiches as opposed to homemade ones. Although the total number of sandwiches sold has decreased in
recent years, value sales have remained sustainable due to a variety of price-points. Major players in the sandwich
shop sector are Gregg’s network of sandwich shops, Subway, Upper Crust, O’Brien’s, Benugo, and Benjy’s.
Another important channel to consider in the sandwich market is that of petrol forecourt operators.
Chicken fast food operators maintained their presence in the U.K. with players such as Nando’s, KFC, Dixie’s, and
Chicken Cottage, continuing to prove themselves attractive to many middle-income families forced to trade down
from full-service restaurants. Some players demonstrated a healthier offering (Nando’s) or halal-natured menu
(Chicken Cottage), while others offered an attractive value deal (KFC). KFC remains the market leader within the
fried chicken segment; other players include Favourite Fried Chicken, Chick King and Southern Fried Chicken.
Fish and chips shops are another known segment in the British market and remain a great British tradition as well
as an important area of the fast food industry. This segment has, however, decreased in size since the 1970s due
to the availability of other fast foods, the perception that fish and chips are unhealthy, and the expanding range and
quality of frozen fish and chip products available in supermarkets.
Ice cream outlets are another form of fast food. Today, ice cream chains are more
likely to be international chains located in shopping centres and cinemas. Some of
the U.K.‟s biggest players are Baskin-Robbins (Dunkin’ Brands), Häagen-Dazs,
Ben & Jerry’s, and the specialist chocolate retailer Thornton’s.
In terms of the food versus drink distinction, the latter has gained share. The
growth of drinks in this sector can be explained by the rising quality of hot drinks in
fast food outlets such as McDonald’s, Greggs and Prêt a Manger. Many fast food
brands are experiencing greater coffee sales, benefiting as consumers shift away
from more expensive coffee shops such as Starbucks..
Source: Planet Retail
PAGE 10
Popular Players in the Market
 McDonald‟s
 Greggs Plc
 Baker‟s Oven
 Doctor‟s Associates Inc. (Subway)
 YUM Brands (KFC)
 Burger King
 Prêt a Manger
 Nando‟s Group Holdings Ltd.
 EAT
 Fast Food Systems (Southern Fried Chicken)
 Wimpy‟s
 Urban Dining (Tootsies)
 Compass Group (Upper Crust)
Source: Shutterstock
Future Prospects
With fast food increasing in popularity, expansion is set to be a key trend in the medium term. Players such as
KFC, Greggs, Nando’s, Prêt a Manger, EAT and smaller brands such as Leon, Paul and Wasabi all have ambitious
plans to expand over the coming years. Furthermore, many of these brands already have the funding in place to do
so.
The U.K.‟s fragile economy is less of a threat to chained fast food operators than it is to independent players, who
may continue to struggle in the medium term. The fast food sector‟s biggest threat is the take-away outlets which
continue to grow at a rapid rate and which have established a solid business competing on value and increased
convenience through such innovations as text ordering. Other competitors are cafés/bars, which offer a range of
food and drink as well as longer kitchen hours as they attempt to compensate for lost alcohol sales with increased
food sales.
Forecasts for the fast food sector are expected to be flat in value terms up to 2014. The better sales performance
of bigger chained brands will counterbalance the long-term sales and outlet decline of independent fast food
operators, which will be squeezed out further by economic uncertainty. Moreover, according to Euromonitor, fast
casual dining is predicted to be the fastest-growing fast food category.
The upcoming 2012 Olympic Games as well as the predicted increase in tourism will have a positive impact on the
British foodservice sector with some focus on fast food. With McDonald’s as a principal sponsor of the Olympics,
they are expected to reap much of the benefits, however, there will be spin-off benefits for other fast food operators
and the challenge ahead will be how best to capitalize on the worldwide event.
Further price competition from the likes of take-away and cafés/bars operators, as well as the rising cost of raw
materials and static rent prices, will continue to affect independent operators in the medium term. These increased
costs will be extremely difficult to pass on to consumers, as competition on price becomes the norm.
Cafés and Bars
Major Trends
The cafés/bars sector in the U.K. is one of the largest consumer foodservice
sectors and the most highly concentrated. Chained outlets continue to
dominate the cafés/bars sector, accounting for 74% of value sales and a
59% share of outlet numbers in 2009 (Euromonitor).The majority of cafés/
bars are eat-in venues achieving almost 93% of sales, however, this has
been slowly declining and is expected to continue to do so over the medium
term (Euromonitor). The British population enjoys eating in pubs and cafés/
bars, and very rarely will they visit a pub for an on-the-go reason.
Meanwhile, the food/drink sales split in the U.K.‟s cafés/bars sector was
54% to 46% in favour of food in 2009, a result of growing food sales in pubs
and chained specialist coffee shops. Juice bars have increased the share of
take-away for this segment to over 7% in 2009.
PAGE 11
Pubs and Bars
As part of the cafés/bars sector, pubs had always been a popular outlet in the U.K. However, as
a result of an unsteady economy, pubs continue to close at a steady rate, as reported by the
British Beer & Pub Association (BBPA). The BBPA also indicated that pubs with a shared focus
between food and drink faired better than those classified as “drink led”. According to Planet
Retail, there are currently 60,000 pub enterprises trading in the U.K., with more than three-quarters of them serving
food. The majority of these rely on snack food, while some larger players have considerably expanded their food
offering. Many pubs have gone from pre-cooked and frozen foods to more cosmopolitan and even ethnic food,
thereby appealing to a larger market segment. Meanwhile, beverage consumption has also changed with a shift
from beer to wine. Some of the larger operators, such as Mitchells and Butlers Plc, Greene King Plc, and JD
Wetherspoon, have continued to generate profit as a result; pubs have become a cheap and informal foodservice
destination for family dining. Low prices and price promotions are some of the main differences between
restaurants and pubs. Other prominent pub operators in terms of the number of leased and tenanted properties are
Punch Taverns, Enterprise Inn, Admiral King, Wolverhampton & Dudley Breweries and Greene King.
One of the sector‟s main concerns over the short term is the government‟s goal to reduce binge drinking in the U.K.
Some direct outcomes that may affect pubs are a potential increase in the cost of alcohol and stricter rules, which
will affect the segment‟s growth in the long term.
Specialist Coffee Shops
As a general observation, the specialist coffee shop channel has grown exponentially. Specialists continue to
launch company-owned and franchised chains, as well as many established retail and non retail businesses.
Coffee shops in the U.K currently total 8,000, and are led by three major players: Starbucks, Costa Coffee
(Whitbread) and Caffè Nero. Other companies to bear in mind are Coffee Nation, AMT Espresso, and Puccino’s.
Competition is further heated by concession-based operations such as Caffè Ritazza and food-led operators such
as Prêt A Manger and McCafé or EAT. Other indirect competitors include in-store restaurants and cafés, such as
Marks & Spencer's Café Revive, and pub operator JD Wetherspoon, which attempted to enter the coffee segment
by offering affordable cappuccinos and early morning openings. In addition, juice/smoothie bars such as Boost and
Revive juice bars, are increasing in presence nationwide, presenting themselves as a healthier alternative to
coffee. However, unfavourable weather in the U.K. and cash-strapped consumers continue to constrain the
potential of this segment.
In a nation of avid tea drinkers, specialist coffee shops have grown in popularity and continue to experience growth.
The coffee shop sector consists of outlets that serve hot and cold beverages, but no alcohol. They also serve
snack foods such as cakes, sandwiches, soups and salads, although serving food is not their primary business
domain. These players have expanded their range of food offerings in an attempt to compete with other
foodservice operators, as well as to diversify their offering, allowing them to appeal to a larger consumer segment.
Euromonitor has observed a great emphasis on increasing the selection of fresh pastries and baked goods, as well
as coffee accessories and related products, on behalf of operators in this sector. Another key trend is the attention
specialist coffee shops allocate to offering consumers a healthier proposition. According to Euromonitor, seven
British foodservice operators have made public commitments to improve their food offering, including chained
specialist coffee shop operators Starbucks, Costa Coffee, Caffé Nero and BB’s Coffee & Muffins.
Popular Players in the Market
 Scottish & Newcastle
 JD Wetherspoon Plc
 Punch Tavern Group Ltd.
 Enterprise Inns Plc
 Greene King
 Admiral Taverns
 Whitbread Plc (Costa Coffee)
 Starbucks
 Town & City Pub Company
 Yates‟s
 Hogshead
 Litten Tree
 Regent Inns (Walkabout, Jongleurs, etc.)
 Coffee Republic
 Arab Investments Ltd.
 BB‟s Coffee & Muffins
 Puccino‟s
 Ca‟ppucino
 Café Nero
 Millies
PAGE 12
Future Prospects
The combination of the U.K.‟s economic instability and the government‟s goal to reduce binge
drinking will continue to play a role in the cafés/bars sector, however, growth in the specialist
coffee shop sector is expected in the medium term. Trading is forecasted to remain difficult for
pubs and bars; budget announcements of increased alcohol tax will continue to affect trading at more “drink led”
operators.
In addition, according to Euromonitor, the national chain Cadbury has entered the specialist cafés and bars sector,
with Kraft Foods throwing its support behind it. The cafés were launched in the fall of 2010, offer afternoon teas
along with a chocolate service, and could open as many as 60 locations nationwide over the next three to five
years.
Home Delivery and Takeaway Services
Major Trends
In contrast to other sectors within the foodservice industry, home delivery and takeaway services (HDTS)
performed well both during and post recession, and saw outlets expand. The sector benefited from consumers
trading down during the recession, and meanwhile, continued to grow due to the channel‟s convenience factor and
level of expansion throughout the U.K.
Despite extensive expansion by large pizza chains such as Domino’s Pizza, the HDTS sector is predominantly a
sector run by independents. The vast majority of independents in the U.K. are family run businesses, often by
immigrants and ethnic minorities. They are less interested in attaching their operations to corporations and
franchises that would limit and set guidelines to their buisnesses. According to Euromonitor, the unorthodox hours
and paucity of good locations are proving to be obstacles to penetration by chained operators, thereby allowing
smaller, more flexible and often family-run outlets to dominate. Players in the independent field include Indian
restaurants and fish and chip shops with a high proportion of Chinese and Middle Eastern operators also doing
significant trade. Although the tendency exists for independent HDTS operators to offer multiple cuisines,
particularly in smaller towns and in rural areas, it is not uncommon to find fish and chips offered in Chinese and
Indian takeaways or vice versa. Most new developments were independent and Asian, most commonly Thai or
Vietnamese. Other new offers, such as Korean and Indonesian food, are limited to larger cities within the U.K.
The shift towards these new alternatives has led some Chinese takeaway outlets to resort to rebranding
themselves as Thai takeaways. In the case of Thai outlets, profits are also higher than at other takeaways simply
because consumers are prepared to pay higher prices for products they perceive to be healthier.
Popular Chained Players in the Market
 Domino‟s Pizza
 Pizza Hut
 Pizza Go Go
 Hot Stuff Pizza
 Pizza Express
Source: Planet Retail
Source: Planet Retail
Source: Planet Retail
PAGE 13
Future Prospects
British consumers have acted as homebodies in the last two years, hosting various home
entertainment events such as the Six Nations rugby, the Ashes cricket and most importantly, the
football World Cup in South Africa, all of which have contributed positively to the HDTS sector. In
the medium term, HDTS operators will continue to see growth, though at a slower pace. The slowdown in both
outlet and value growth owes more to the growing maturity of the market rather than any fundamental decline. Both
chained and independent HDTS operators are forecast to show positive growth over the next five years with chains
growing significantly faster due to players such as Domino’s Pizza and their expansion plans.
One of the main threats to the sector is a lack of internal investment by smaller operators, which have become
complacent, and the ongoing improvement in terms of quality and choice of ready meals and even hot food from
supermarkets/hypermarkets. According to Euromonitor, consumer trust of supermarkets/hypermarkets is high, and
their offers are typically cheaper, healthier and clearly labelled. The one core difference is in the delivery of the
goods, which will always help preserve a degree of growth in the sector. Another potential threat could also arise if
HDTS operators fail to keep pace with technological advances, such as mobile and Internet ordering, as the U.K.
becomes increasingly web-focused.
Street Stalls and Kiosks
Major Trends
The street stalls and kiosks sector is dominated by independent players in the U.K. These have been increasingly
challenged in the last decade by the growth of other consumer foodservice formats, such as specialist coffee
shops, which can often offer similar products, such as coffee, sandwiches, paninis and cookies. In addition, these
players are often present in the same retail space where street stalls/kiosks can be found, such as train
stations.
An improved product offering has been a dominant trend in the sector in recent years, with some categories being
characterized as premium. Prior to the recession there was an increase in consumer demand for premium-priced
coffees and teas, as well as other drinks, such as fresh juice, all of which contributed to price increases.
Post-recession, the shift to premium products saw a sharp correction and a new trend towards value for money
emerged. Although street stalls and kiosks have been able to adapt to the shifting trends due to their smaller
operating footprint, the trend towards value had a significant and negative impact on sales in the sector.
Popular Players in the Market
 Compass Group Plc (over 50% market share)
 West Cornwall Pasty Co.
 Upper Crust
 SSP Group Ltd.‟s (Camden Food Co.)
 Millie‟s Cookies
 AMT Espresso Ltd.
Future Prospects
The economic volatility in the U.K. continues to affect the sector in both
outlet and value terms, especially for independent, non-established
brands. This slowdown is also a result of saturation in the market, with
most prime sites being occupied, while new ones are being reserved by
chained operators before plans of future locations are even announced.
These trends will help drive an ongoing shift towards chained operators
within this sector, to the detriment of independent players. Other threats
to the sector in the coming months are rises in rental spaces. Moreover,
there is also expected to be a lack of suitable sites. Although spaces will
free up due to smaller independent operators exiting the sector, sites that
offer meaningful traffic will become more expensive, as operators will
seek to avoid the low turnover of many independent street stall/kiosk
sites.
Source: Planet Retail
PAGE 14
Retail, Entertainment, and Hotel/Accommodations and Resort Catering
Retail
Cafés and restaurants operating in chain stores were a secondary feature of U.K. shops until the
1990s. Retail catering has grown in popularity in the last decade as grocers seek to increase
their one-stop-shopping appeal. Operators such as M&S, Tesco and Asda all offer either chained foodservice
concepts, or develop their own in store catering concepts. Moreover, retail giants IKEA and Borders are both
non-food retailers which have also opted to offer a similar service.
Entertainment
The entertainment sector includes various venues such as theatres, cinemas, sports venues and bingo halls. Other
visitor attractions or consumer destinations are museums, zoos, theme parks, as well as health clubs and fitness
centers, sports and social clubs. Health clubs are one area where consumers are spending more money on food
and drink as the importance of health is increasingly significant. Key players include Living Well Fitness and David
Lloyd. Although foodservice is not considered the core business of entertainment venues, the latter have
increasingly developed their food and drink offerings as a means to increase revenue.
Bingo halls have become an important channel for foodservices, typically running one or more bars and a fast food
concept, while some even have full-service restaurants. There are nearly 700 licensed bingo clubs operating in the
U.K., according to the Bingo Association. Some of the leading bingo operators in the U.K. are Gala Bingo, Mecca
Bingo and Carton Bingo.
Theatres have also generated significant foodservice sales alongside their main activities. The vast majority of
cinemas are already active in selling products such as popcorn, hot dogs, nachos, soft drinks, sweets, crisps and
branded ice creams, with an increasing number introducing features such as licensed bars. Still, although the
British are increasingly vacationing within the U.K., visits to these establishments have not contributed to additional
spending on food. British consumers prefer to take their own snacks to cinemas rather than buying food there. A
key player in this sector is Odeon cinemas.
Another popular venue in the U.K. is the bowling centre. According to the Tenpin Bowling Proprietors Association
(TPBA), there are around 320 bowling centres in the U.K. Most of them feature a licensed bar, a snack bar and/or
café/restaurant, and are popular locations for children‟s parties and family weekend trips. While some centres
feature third-party concepts such as McDonald’s, most are owned concepts that offer „American diner‟ style
restaurants.
Hotels/Accommodation and Resorts
The majority of hotels trading in the U.K. are small independent businesses, mostly
run by families; however, this is slowly changing as a number of larger chained
operators have entered the market. Hotels generally have several foodservice
components within their hotel locations, for example, a restaurant, a bar, room
service, and associated leisure locations such as museums, cinemas, theatres,
theme parks and sports auditoriums. Each of these foodservice components can be
counted as one outlet.
Source: Planet Retail
A decline in public spending and the general public‟s price consciousness owing to the credit crunch, has seen
demand increase for budget accommodations. Many budget hotels feature narrow foodservice offerings, often
limited to vending machines if anything at all. Many travel budget hotels are located adjacent to pubs or
restaurants. The significant rise in the budget sector is due to the popularity among business travellers and the
competitiveness of prices in comparison to more upmarket hotels.
Since the recession hit, people increasingly choose to vacation in the U.K. as a result of the weaker pound, thus
allowing leisure outlets and hotels/accomodation and resorts to see increasing success. In addition, the weakness
of the pound has led the U.K. to experience an increase in foreign visitors. As previously mentioned, tourist
spending is set to double by 2020, and is expected to increase by 4.4% in the next 10 years. With London hosting
the Olympic and Paralympic Games in 2012, the hotels/accomodation and resorts industry as a whole, is set to
experience noticeable growth. Key players include: Hilton Hotels Corporation, Holiday Inn, Marriott, Intercontinental
Hotels Group, Whitebread, The Savoy Group and Accor.
PAGE 15
Contract Catering
Growth has been slow in the contract catering sector, making it difficult to predict its future. One
of the major trends has been the move towards healthier dishes and light “grab „n' go” meals.
Commercial formats such as kiosks, are also on the rise due to shorter lunch breaks in the U.K.
Meanwhile, reductions in catering subsidies to clients and an under-investment in catering in both educational and
healthcare facilities, are other issues currently being addressed by catering companies. These challenges have led
to a trend towards fixed-price or guaranteed-cost contracts.
The sector‟s leading companies are Compass, Sodexho and Aramark. Compass U.K. & Ireland serves clients in
business and industry, education, healthcare, defence, remote sites and offshore sectors, and is also active in
vending. Meanwhile, Sodexho provides food and support services to clients in the business and industry,
education, healthcare, remote sites, corrections and defence sectors. The company further offers service vouchers
and cards, as well as river and harbour cruises. The American company Aramark, the third-largest operator,
operates in the business and industry, healthcare and seniors, defence, education, offshore and remote sites, and
corrections sectors. However, Aramark also provides foodservice solutions to commercial clients including hotels,
commercial restaurants, sport stadiums and arenas, theatres and entertainment venues through its Parallel
division. Another notable player is Elior, which strengthened its position within the business and industry segment
with new contracts and contract renewals. Other smaller players include Initial Catering Services, the catering
division of the Rentokil Initial Group; Castle View, Halliday Catering, Charlton House, Baxter Storey, Catering
Alliance, Harrison Catering Services (mainly active in education catering) and Redcliffe Catering.
Business and Industry/Workplace Foodservices
The U.K.‟s business and industry/workplace foodservice sector includes trolley services as well as areas where full
meals are sold such as self-run or contracted canteens, National Government canteens, and off-shore catering.
The sector has decreased in size in recent years due to shrinking demand and tighter subsidies for employee
meals. Catering operators are facing increased challenges in expanding their returning clients; major companies
are working towards identifying innovative ways to retain clientele such as operating a variety of branded outlets.
Compass, one of the U.K.‟s larger players, operates branded outlets such as Café Ritazza and Upper Crust, in
most sectors in which they do business. Another trend in workplace catering is the preparation of single serving
meals for employees to collect on their way home to be heated up or cooked later, catering to the increasingly busy
lifestyles of British residents.
Education
Schools in the U.K. receive grants from the government to partly cover catering services. This includes all food and
drinks served in schools at all levels from nurseries to universities. In the last couple of years, guidelines have been
changed so that the meals served are healthy and nutritional. The leading contract school caterers are Compass's
Scolarest Division, Initial Catering Services and Sodexho.
Healthcare
Healthcare centres in the U.K. are, by law, obliged to hire the catering company that submits the lowest bid. Meals
in the health care sector include those served to patients, staff and visitors of hospitals, nursing homes and care
homes. As with the educational sector, nutritional needs are under scrutiny in this area.
Commercial caterers have come a long way in hospital catering due to larger, more viable contract deals, though
less so in private healthcare. Similar to other sectors within contract catering, branded outlets are becoming more
present, particularly for staff and visitor catering facilities, which are starting to resemble mini shopping malls, with a
selection of food and other retail services available. Vending is also used, mainly to cater to night staff when
kitchens are closed.
Another interesting dimension of the healthcare sector is “Meals on Wheels” – this concept entails delivering and
serving lukewarm food in the middle of the afternoon to pensioners. With the boom in seniors‟ residences this has
proved to be an interesting growth area, though prospects are now less certain as a result of the U.K.‟s volatile
financial sector, as the elderly may have less disposable income to afford nursing homes. Meals served to the
elderly living in their own homes have, consequently, proven to be popular alternatives. The service has been
revitalised with the introduction of regeneration vans. Under this system, the food can be cooked or reheated while
the van is on the road, so the food is delivered piping hot, which is said to also improve nutritional value. The over
65 age group enjoy the less cosmopolitan food offered, such as sliced roasted meat, and steak and kidney pie.
PAGE 16
The Defence Segment
The vast majority of the defence catering market is still managed by the Ministry of Defence
catering group, which is part of its defence logistics organization. Like much of contract catering,
defence contracts no longer solely focus on food and commonly encompass areas such as
waste management, bakery productions, cleaning and laundry management. Despite being a
relatively mature market, interest in this sector is high, as the Ministry of Defence decided to overhaul its internal
defence infrastructure. The idea is to end up with a smaller number of larger contracts. Defence caterers include
mainly large players, such as Sodexho (Defence Services), Compass Group (ESS Defence), and Aramark
(combined Services Division).
Prisons
Catering for prisoners has a number of attractive features. Demand is predictable and regular, and the quality does
not have to be higher than adequate. However, the sector is not one in which governments wish to spend large
amounts of money. Prison farms and gardens supply varying amounts of food, especially vegetables, pork, bacon,
eggs, and milk. The main purchases are dried or tinned foods.
Airline Catering
The U.K.‟s in-flight catering has benefited from the importance of London‟s Heathrow airport; nonetheless, the
trend towards no-frills airlines has encouraged airlines to cut down on free hot meals in the last decade, offering
instead, discretionary snacks or sandwiches available for an extra charge. The market leader for in-flight catering in
the U.K. is Alpha Flight Services, part of the Alpha Retail Group, and has locations in airports across the country.
Gate Gourmet is another strong catering company, currently supplying in-flight meals for British Airways.
Meanwhile, LSD Sky Chefs, part of Lufthansa, is another internationally-known caterer, currently supplying British
airlines.
Concession Catering
Roadside
In the last decade, roadside catering has grown through petrol stations in the form of store foodservice solutions
such as cafés, coffee machines, hot food facilities and co-branded outlets with fast food operators. This particular
market is split by three main companies: Moto, Welcome Break and RoadChef. Brands operated at Moto’s include
some of Compass' own brands such as Harry Ramsden’s, Upper Crust, Caffé Ritazza, as well as Fresh Express,
Marks & Spencer‟s Simply Food, (a convenience store concept offering hot and cold 'to go' sandwiches and
snacks), as well as franchised brand Burger King. Welcome Break operates main street brands such as Starbucks,
KFC and Burger King as well as the company‟s own brands, Red Hen, and Coffee Primo, and a convenience store
format. The company also has hotels at motorway service stations including Days Inn and its own chain Welcome
Break; these locations have a self-service restaurant and a retail shop, most featuring a Costa Coffee and a Wimpy
hamburger restaurant.
Airport Outlets
Airports have seen numerous multi-brand food courts open up in the last decade. This
channel has helped big contract caterers, with their portfolio of brands, to gain a foothold.
Also part of the Airport foodservice sector are full-service restaurants, with the likes of
Chez Gerard, TGI Friday's, Garfunkel’s, Giraffe, Est Est Est and Pizza Express, which are
all either available or opening in airport sites. Other players are coffee shops, with
representation from leading players such as Caffè Nero, Starbucks and Costa Coffee in
most major airports.
Select Service Partner (SSP), is the major supplier of airport catering in the U.K., and is
present at most major airports in the country, operating a selection of franchised units and
proprietary foodservice concepts. The Restaurant Group is another foodservice player at
U.K. airports, operating franchised and owned outlets at some airports across the U.K.
It is noteworthy to mention that airport dining experienced high growth since security levels increased in the U.K.
Travelers have a meal at the airport and buy drink products and snacks after crossing security in order to take the
items on the plane with them.
PAGE 17
Rail
SSP U.K. Rail is the country‟s major provider of railway catering. Burger King, Upper Crust, Caffe
Ritazza, Threshers, Millies Cookies and Whistlestop are some of the familiar names that make
up the company's portfolio of over 20 brands. As part of SSP's exclusive franchise arrangement
with Marks & Spencer, it operates Simply Food stores in stations across the U.K.
Ferries
Eurotunnel and Eurostar have negatively affected ferry foodservice operations between the U.K. and mainland
Europe, due to their higher convenience and efficiency in terms of links and length of trips. Major ferry operators
provide a wide variety of catering facilities such as bars, coffee shops, restaurants, fast food, self service cafeterias
and kids‟ food/leisure services. The leading providers of ferry services between the U.K. and France are P&O
Ferries, SeaFrance, Brittany Ferries, Hoverspeed Limited, Stena Line, Norfolkline, Fjord Line, DFDS Seaways and
Condor Ferries.
Vending
One of the leading vending companies in the U.K. is Compass’ Selecta, with an important presence in the subway
system with both beverage and snack machines. Another important player is Coffee Point Group – the company
provides clients an extensive range of vending machines including snack and food machines as well as beverage
and coffee machines.
MARKET ENTRY STRATEGIES
The following diagram, provided by the USDA, shows the most common routes to market in the British foodservice
sector. Although there are a variety of routes, the most common way for Canadian products is through an importer,
due to their knowledge of the market, well-developed contacts and distribution systems.
Chart 3: Most Common Routes to Market in the U.K. Foodservice Market
Exporter
Imported/Contracted
Distributor (16%)
Delivered Wholesaler
(53%)
Cash and Carry (13%)
Retail (18%)
Foodservice Operator
Source: USDA, HRI Food Service Annual Report – United Kingdom, August 2010
According to the data provided in Chart 3, over half of all food and drink sold to foodservice operators is through
delivered wholesale. While larger operators will purchase from wholesalers, smaller outlets generally buy from
either cash and carries or retail stores. Due to the large number of companies operating within the foodservice
sector, intermediaries skilled in fulfilling small orders efficiently, play a pivotal role in the distribution of products.
PAGE 18
The foodservice sector cannot be looked at as a single market. The role of each channel varies
from sector to sector. Wholesalers, for example, distribute a lot more frozen foods than ambient
products and the retail sector has the most chilled short-life products. Meanwhile, cash and
carries mostly supply chilled long-life products.

 Advantages and Challenges to Canadian Products in the British Hotel, Restaurants and
Institutions Sector
Advantages
Challenges
According to the USDA, there are a relatively small
number of specialist foodservice importers, capable
and interested in importing from the U.S. – this also
applies to Canada.
With the exchange rate still being comparatively low
against the dollar of two years ago – price
competitiveness will be fierce.
Canada has a good brand image in the U.K.
There are trict E.U. import regulations and labelling/
ingredient requirements.
The country is English-speaking and is therefore a
natural gateway into the rest of Europe for Canadian
exporters.
U.K. importers don‟t pay duty on E.U. origin goods.
The importers of Canadian origin products generally
pay 0-25 percent import duty, depending on the
product.
CONCLUSION
Food consumption in the U.K. is being shaped by a number of factors. Changing demographics have influenced
tastes, with a whole new ethnic food sector emerging around the large numbers of immigrants from Central and
Eastern Europe. More significantly, the uncertain prognosis for the U.K.‟s economy is causing value for money to
remain at the forefront of consumers‟ minds.
Foodservice will continue to face tough competition from retailers, which have strongly promoted a number of deals
that are clearly presented as an alternative to eating out. Ready meals are set to grow as a result of these meal
deals offered by retailers.
The U.K.‟s fast food sector continues to be the most challenged within the foodservice industry as a result of
growing concerns over obesity rates in the U.K., especially among children. Across chains, but most visibly in the
burger segment, companies are diversifying their menus to offer healthier and more upscale products. Pubs are
expected to suffer as new regulations to avoid binge drinking come into effect. Meanwhile, in the catering sector,
companies are diversifying their offering and providing customers with healthier and more convenient, “grab „n' go”
meals. Trends toward standardization through branding and the development of chains have emerged in the U.K.‟s
catering sector. Growth prospects are mostly expected to be seen in the lower- to middle-market sectors, as well as
in niche outlets such as coffee and juice bars. The home delivery and take-away service sector is also expected to
remain the industry‟s best performing sector in growth terms.
The U.K. is one of the most sophisticated markets in the world. Canadian products face fierce competition in the
British market, with European companies incurring relatively low transportation costs, fast delivery times, and
duty-free access. Despite the disadvantages faced by Canadian suppliers and manufacturers with regards to
market access, there are several opportunities to pursue in this competitive and challenging environment.
Working through importers or contracted distributors is the most common approach, and may be the best option for
Canadian exporters to get acquainted with the British marketplace. It is, however, essential that Canadian suppliers
and manufacturers do a great deal of research and prepare themselves prior to entering the British market.
Overall, the British foodservice sector is very large and diversified. The most successful strategy will be to keep up
with ongoing trends in the industry, and for manufacturers and suppliers to match their network strategies with the
evolving future requirements of the foodservice sector in the U.K.
PAGE 19
BIBLIOGRAPHY
Datamonitor, Country Overview – United Kingdom, July 2010
Economist, The. United Kingdom, October 2010, (ViewsWire Euromonitor, 100% Home Delivery – United Kingdom,
August 2010
Euromonitor, Cafes and Bars – United Kingdom, August 2010
Euromonitor, Consumer Foodservices, August 2010
Euromonitor, Consumer Foodservice by Location, August 2010
Euromonitor, Consumer Foodservice – United Kingdom, August 2010
Euromonitor, Fast Food – United Kingdom, August 2010
Euromonitor, Full Service Restaurants – United Kingdom, August 2010
Euromonitor, Self-Service Cafeterias – United Kingdom, August 2010
Euromonitor, Street Stalls and Kiosks – United Kingdom, August 2010
Planet Retail, HoReCa Market – United Kingdom, July 2010
United States Department of Agriculture (USDA), HRI Food Service Annual Report – United Kingdom, August 2010
ANNEX: COMPANY PROFILES
According to the USDA, the following companies are some of the biggest players in the U.K. foodservice industry:
1. Aramark Ltd.
Millbank Tower, 21-24
Millbank London, SW1P 4QP
Tel: +44 (0) 20 7963 0000
Fax: +44 (0) 20 7963 0500
Website: www.aramark.co.uk
2. Brakes
Enterprise House, Eureka
Business Park
Ashford, Kent, TN25 4AG
Tel: +44 (0) 1233 206 000
Website: www.brake.co.uk
3. Compass Group plc
Rivermead, Oxford Road, Denham
Uxbridge, Middlesex, UB9 4BF
Tel: +44 (0) 189 555 4554
Website: www.compass-group.co.uk
4. 3663 First for Foodservice
Buckingham Court,
Kingsmead Business Park
London Road, High Wycombe,
Bucks, HP11 1JU
Tel: +44 (0) 870 3663 000
Website: www.3663.co.uk
5. Mitchells & Butlers plc
27 Fleet Street Birmingham, B3 1JP
Tel: +44 (0)870 609 3000
Fax: +44 (0)121 233 2246
Website: www.mbplc.com
6. Sodexho UK Ltd
Capital House, 2nd Floor 25 Chapel
Street London, NW1 5DH
Tel:+ 44 (0) 20 7535 7400
Fax:+ 44 (0) 20 7535 7401
Website: www.sodexho.co.uk
7. Whitbread Group plc
Whitbread Court Houghton Hall
Business Park
Porz Avenue, Dunstable, LU5 5XE
Tel: +44 (0) 1582 424200
Website: www.whitbread.co.uk
PAGE 20
The Government of Canada has prepared this report based on primary and
secondary sources of information. Although every effort has been made to
ensure that the information is accurate, Agriculture and Agri-Food Canada
assumes no liability for any actions taken based on the information
contained herein.
The United Kingdom: A Diverse Foodservice Sector
© Her Majesty the Queen in Right of Canada, 2011
ISSN 1920-6593 Market Analysis Report
AAFC No. 11459E
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Aussi disponible en français sous le titre :
Le Royaume-Uni : Un secteur diversifié des services alimentaires