BrandTrack, CGA Peach’s regular survey of out-of-home eating and drinking consumer behaviour, has a key focus on brands, but also gives a vital reading on the key dynamics in the market—and asks some big questions about market evolution. David Martin does the analysis.
1 Where’s growth coming from?
It’s a familiar theme, and we make no apology for returning to it, especially in an era of restaurant chains’ aggressive expansion. The question is just how robust is consumer demand?
Market growth can only come from a limited number of drivers: more people eating out, people eating out more often, people trading up, or a growing population. So let’s examine each of those potential market-growth drivers.
Eating-out consumer participation, as we’ve seen before, has probably reached its effective ceiling. With close to 95% of the population eating out in the six months before interview in successive rounds of our BrandTrack research, negligible numbers of people could realistically be converted to eating out. Anyone who could be expected to eat out already does so to some extent.
But that’s been known for some time. Perhaps more concerning is that levels of eating out frequency don’t, as yet at least, seem to be changing as the economy improves. This may seem counterintuitive given the vibrancy of the food-to-go and the home delivery sectors, but these are the frontlines where the boundaries between in and out-of- home consumption are becoming blurred as the old conventions of eating out change.
Our numbers show that only 12% of people eat out at least three times a week but, significantly, that percentage has not changed in our last three autumn surveys, despite rising discretionary spending power meanwhile. Trading up through higher spend or a switch of share between market channels can provide marginal value benefits to the market, but our respondents’ claimed brand usage shows no meaningful or consistent shift from, for example, pub restaurants to restaurants. The principal growth in brand usage is among the coffee/sandwich sector which serves to depress average spends, and this changing nature of eating out is a recurring theme in this report.
Population growth may be a contentious political issue but for consumer markets it is plainly a benefit. Recent Office for National Statistics forecasts suggest the UK’s population will grow 3.6%, equivalent to 2.3m people, by 2019—and with a significant element of this coming from inbound migration, with young adults disproportionately represented, this will provide a positive contribution to annual market growth, particularly in the big cities—a subject we will return to later.
But the most obvious latent potential in the market lies in the large proportion of adults—one in five—who eat out less often than once a month. In a maturing market, with rising discretionary incomes, it would be logical to anticipate a reduction in this infrequent user base, as more people eat out more frequently. However, here again, there has been no meaningful change over the last three years in this data.
2 Who eats out most frequently?
Frequent eating out is still a behaviour skewed to young adults under 35, and to those with the highest levels of household income. As those two subgroups are both disproportionately present in London, close to two thirds of Londoners eat out at least weekly compared with 37% elsewhere.
High-frequency eating out is an essentially metropolitan behaviour. It’s analogous to the old Coca-Cola mantra of being “within arm’s reach of desire”. But, conversely, for those same geographical access reasons, high-frequency eating out outside cities is necessarily constrained.
Arguably this is a more influential factor than the long-term growth potential from higher incomes because we only really see high frequency dining move up a gear with annual household incomes of at least £75,000. This embraces just 8% of all those who report their household income in our survey.
3 High-frequency eating out is an essentially metropolitan behaviour
More fully exploring this metropolitan theme, we’ve examined the difference between those with the highest incomes and others, in London and elsewhere, and the evidence is stark: the incidence of high frequency eating out—doing so at least weekly—among lower/ medium income households in London is still much higher than it is among the highest earners living in the provinces.
But this is not just a London issue. In the provinces, selecting people living in the postal districts covering the six main English cities of Birmingham, Manchester, Leeds, Liverpool, Sheffield, and Newcastle, we also find there is a higher incidence of weekly eating out—and weekly out-of- home drinking—than in the English regions overall; yet the proportion of the population with annual household incomes of more than £50,000 is almost identical. What is different is the age profile, with almost 40% of these cities’ population aged 18-34, against only 25% in the regions overall.
With their pattern of higher-frequency out-of-home socialising, the residents of the larger cities are also eating at more brands than is typical in the provinces—but this is driven by higher usage of coffee/ sandwich brands and, particularly, quick- service brands.
After decades of decline, the provincial cities are now regenerating fast, and there is significant population growth, particularly around the city centres, from young professionals. With greater access and availability of eating out options, as the population becomes more metropolitan, so the potential for market growth increases. But this is not a benefit to all branded players because city living brings change in the nature of eating out.
4 Those who eat out frequently also drink out more often
High-frequency eating out is also a symptom of a more out-of-home lifestyle. Almost four out of five people who eat out at least three times a week also go out to drink at least weekly. But weekly out-of-home drinking in the overall adult population is much less common and only one in three currently do so.
Conversely, three quarters of those who haven’t eaten out in the past six months also haven’t been out to drink. Their life is home-centred. So eating and drinking are competing for the same leisure time, and for the younger market it’s becoming equally clear that they are blurring and becoming increasingly interchangeable.
Those who eat out and drink out with the highest frequency are skewed strongly towards the under 35s, the highest income groups, and those living in London.
Meanwhile, there is now a significant minority of people who do eat out but who don’t drink out. It equates to about one in six adults in our latest survey, a group skewed towards those on low incomes or unemployed, to the over 65s and/or the retired, and it’s also a more likely behaviour among those who are widowed. With growth forecast in the older single-living population, this represents a long-term challenge to the out-of-home drinking market.
5 Occasions—the fast and the future
The evident growth of on-the-go eating, as we touched on earlier, has an impact on the nature and make-up of consumers’ eating out occasions. Already, the main market segments have a very different exposure to the “quick- bite-to-eat” opportunity. It is the most mentioned type of occasion in our BrandTrack survey for coffee/sandwich brands, and for QSR brands.
In marked contrast it is the ninth most mentioned occasion type for pub restaurant brands, and it is ranked eighth for the restaurant brands. It’s been said that the future belongs to the fast, and as our data shows, not all our market segments start on the same place on the grid.
A second key feature of our occasions data is the marked income and age differences in the relationship of pub restaurant and restaurant brands for the three main meal occasions with friends, family, and partner/ spouse. Younger and more affluent households show a greater propensity to use restaurants. As these generations age, this poses a challenge to pub dining brands.
And in the more short-stay occasions, while out shopping and a quick bite to eat, there is a similar age and income shift in the balance of occasion usage between coffee/sandwich brands and the quick service sector. Older more affluent diners lean more towards the coffee/ sandwich segment.
6 Channel choices
Not only does the occasion profile of each market channel differ, but so too does the relative significance of factors behind the brand choice. Here there are three broad distinctions in our data. Firstly for pub restaurant and high-street brands, value for money is the most commonly cited factor; secondly, for restaurants, food quality is most likely to be mentioned; and thirdly, for QSR and coffee/ sandwich brands, unsurprisingly location and convenience are the leading factors.
We see a similar difference between restaurant and pub restaurant brands in their customer ratings—the former are generally better rated for food quality, the latter for value for money—although in no segment does one single choice factor dominate.
In that context, it’s worth pointing out in passing that at the average brand, fewer than 5% of customers cite “recommendation from someone I know” as an important factor in their choice of eating at the brand—and that’s true for all the market segments we cover.
Considering the effort made to measure this question in customer surveys, and the importance this recommendation question is accorded, we might politely question whether enough focus is given to customer ratings on value and food quality.
There are also nuanced differences in the brand associations we pick up in each market segment. Although “friendly” and “reliable” are commonly the two most-mentioned attributes across the restaurant brands, “reliable” is less likely to be mentioned than in all the other segments. Similarly, “it’s a brand I trust” is less likely to be mentioned than it is for the QSR and coffee/sandwich brands. Embedding consistency is a continuous challenge for all brands, but perhaps for the restaurants, where spend per head – and therefore the risk factor for consumers—is highest, the issue is particularly pertinent.
7 The brand scene
In this review we are not drilling into the comparative profiles and ratings of the market’s leading brands. However, with our Coffer Peach sales tracker clearly suggesting that brands are making total sales and share gains in the eating-out market, it’s well worth revisiting the issue of consumers brand repertoires, and their brand “mindshare”.
For some years now, our BrandTrack research has monitored the average number of brands used in the six months prior to interview. The evidence shows that despite the rapid expansion of brand networks and market shares, there could potentially be a limit to consumers’ “brand capacity”. When looked at with our evidence that frequency of eating out is not yet meaningfully changing, the implication is that as the market gets more crowded, there may also only be so much consumer headspace to go around.
Consumers will ultimately settle on their favourites—those that deliver the most compelling concepts and experiences—that brand- to-brand combat we regularly refer to.
How CGA Peach BrandTrack rankings work
Every three months CGA Peach BrandTrack surveys about 5,000 GB adults who eat out—with the sample weighted to reflect the make-up and balance of the general population. Data from these tables comes from the most recent October/November survey asking consumers a wide range of questions about their eating and drinking-out habits and specifically their attitudes to the 60 most used brands in the sector. Many leading brand owners already use the data to benchmark their performance against competitors.
To discuss consultancy services, bespoke brand analyses or to obtain a full pack of key league tables contact Jamie Campbell at CGA Peach, email Jamie.firstname.lastname@example.org.