Wed 16th Nov 2016 - Branded foodservice outlets taking chunks of market share from independents Branded foodservice outlets taking chunks of market share from independents, particularly in pub sector: Branded foodservice outlets are taking chunks of market share from their independent competitors, particularly in the pub sector, according to new research by insights firm NPD Group. Figures show when consumers eat away from home, they are now more likely to spend their money at branded outlets. Eight years ago, the market share for brands versus independents in visit terms was 43% versus 57%. As of year ending September 2016, this has nearly reversed with the brands versus independents share now at 56% versus 44%. That means branded businesses in year ending September 2016 are enjoying 1.2 billion extra visits in Britain’s £50bn foodservice industry than eight years before (5.03 billion visits year ending 2008; up by 25% to 6.28 billion by year ending September 2016). On the same basis, independents saw visits drop from 6.73 billion in 2008 to 5.02 billion in 2016 (down 1.7 billion). The poor performance among independents is reflected in sales figures. Since 2008, brands have boosted annual sales from around £20.9bn to well over £30bn today, while independents have seen sales dive from £30bn to £23.2bn. Brands enjoy strong pricing power, having achieved an increase of 16% in the average bill per person over the past eight years versus 4% for independents. NPD Group said one factor is the success branded foodservice chains are having with young customers. In the pub sector, brands capture 20% of visits among the 25 to 34 age group, way ahead of the 11% figure for independents. In the full-service sector (FSR), brands win 25% of visits in the same age group, ten percentage points more than independents. Still in FSR, in the lower 18 to 24 age group, brands attract twice as many visits as independents (12% versus 6%). Brands also win in two other ways – breakfast and meal deals. Brands can attribute 14% of their visits to breakfast trade, a much higher proportion than the 8% seen for independents. Brands drive more than 36% of their visits through meal deals or promotions, while independents only succeed in driving around 13% of their traffic through this tactic. Brands get more of their business than independents from London (21% versus 13%), winning hands down in market share inside the capital (68% versus 32%). Drill down into London’s quick-service restaurant (QSR) and pub markets and the data shows that brands are even better against independents (80% versus 20%). The shift from independents to brands is even more drastic in the pub sector. Britain’s branded pubs have increased visits by a massive 65% over the past eight years. Independents have seen business tumble by -48%. It’s a similar story in FSR (excluding cafes and bistros) where brands have grown visits by 39% over the past eight years, while independents have slipped -28%. For the QSR sector, the changes are +22% (brands) and -14% (independents). The NPD Group said it is unlikely independent outlets such as ethnic restaurants and small takeaways would disappear from Britain’s high streets but they would find it more difficult to compete against the big brands over the next ten years. One bright spot is the extraordinary success of street food, although this is still a small part of Britain’s wider foodservice market, it said. NPD’s UK director of foodservice Cyril Lavenant said: “For the branded sector to have reversed its market share with independents over just eight years underlines how quickly Britain’s foodservice market is changing. Independents are struggling to be relevant and appealing to consumers on the British high street and clearly do not ‘speak’ well to young adults. Foodservice chains do a better job in this respect, especially with meal deals and promotions. Consumers are hungry for good value and they know where to go for it on the high street. Another factor is the ability of bigger brands to invest in their products and to expand into new locations. When the public choose where to eat out – whether it’s simple food-on-the-go, a sit-down snack or sandwich, or a more formal meal – people are clearly voting for brands. Thousands of independent pubs have closed down because they have not followed the market trends for a broad range of good quality food served in a child-friendly environment. Yes, we all know an excellent independent pub or restaurant that does a great job with food but they only make up a small part of the overall independent sector. But do remember that many of the big foodservice outlets we know today started as small independents. So there is clearly room for new players but they must offer something exciting and different or they will not succeed.”