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Capturing millennials key for operators because they are ‘the future of eating out market’

Capturing millennials is key for operators because they are the future of the eating out market, according to a new report.

The Looking for Tomorrow’s Growth report from CGA Peach and Barclaycard said targeting the 18 to 34 age group would help foodservice brands to thrive.

The report showed almost all 18 to 34-year-olds eat out. More than half of them do so at least weekly, and a third at least three times a week.

By comparison, fewer than one in four of those aged over 55 eat out at least weekly – and one in seven hasn’t eaten out at all in the past six months.

A third of millennials spend at least £100 a month on food out-of-home, compared with fewer than one in five “baby boomers”.

The net effect is that about half of the nation’s adult eating out occasions can be attributed to those aged 18 to 34.

And these people are even more dominant and influential in the dynamic home delivery market – about 85% of them have had food delivered to home, work or a friend’s house in the past six months, something that is true of only about 30% of those aged 55 and above.

One in four millennials considered themselves to be one of the first to visit new eating and drinking brands and to be constantly looking for new experiences, compared with only 5% of those aged 55 and above.

CGA Peach director Jamie Campbell said: “The big question throughout – so vital that we put it in our report’s title – is where growth will come from in the years to come. It is with millennials, who have grown up through the twin dynamics of branded culture and social media, that the future of eating out lies. Brands that cannot just meet but exceed the expectations of these and all their customers will thrive.”

The report showed eating out has become part of everyday life – but restaurant and pub operators seeking to expand face obstacles in their path. Nine in ten British adults now eat out – with two in five at least weekly. Barclaycard data indicated growth in monthly spending in pubs and restaurants has far outstripped that in supermarkets in the past two years. Average monthly spending growth has been about 10% for pubs and 14% for restaurants – but only 1% for supermarkets. But while the frequency of eating out remains high, organic growth has been harder to come by.

CGA Peach data showed total sales for leading managed pub and restaurant groups grew by 4.3% in the year to August – but by just 0.8% on a like-for-like basis.

It indicates casual dining brands in particular have been reliant on openings for growth – and that has led to a sharp upswing in the supply of restaurants across the country.

Separate CGA Peach data showed the number of managed restaurants has increased by 5.6% in the past year, with small to medium-sized groups especially active.

The report also identified more key dynamics in eating out, including a generally even distribution of new openings around the country and a particularly high concentration in cities beyond London including Manchester, Birmingham and Glasgow.

It identified important trends in loyalty – with only a third of adults considering themselves loyal to a particular brand, leaving two thirds who are ambivalent or fickle.

Recommendations are also down with just 27% defined as “brand advocates”.

The report also highlighted the problem of meeting diners’ rising expectations; only three in ten customers say they are very satisfied with their experience at eating-out brands, a figure that has remained static for several years.

Campbell added: “Eating out has become a near-universal habit for British consumers, and recent economic and social trends have helped fuel demand. Restaurant and pub operators have responded with incredible ingenuity, meeting soaring demand with dynamic new concepts and speedy brand roll-outs. It has created a rich eating out landscape in which consumers have never had access to so much choice nor so much quality. But success can breed challenges.”

“The incredible diversification of eating out has led consumers to raise their expectations and demand much more from their brands. The popularity of out-of-home eating has led multi-site restaurant and pub operators to dramatically ramp up their capacity with new openings, which after first squeezing the independent sector is now pitching brands into an intense battle for market share.”

“Add in steep property costs, the introduction of the National Living Wage and the Brexit vote, and we start to get a sense of the challenges facing operators today. As well as dealing with these macro issues, Looking for Tomorrow’s Growth highlights the need for all brands to keep their eyes firmly on the fundamentals. Good food, consistently delivered – it’s a simple enough formula but elusive to capture, and a huge asset for the brands that can do it.”

 

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