Fancy a challenge? You've got one
25 April, 2012
It’s been a decidedly wobbly start to 2012 for pub and restaurant groups, Peter Martin writes. March may have seen a modest return to overall market growth, but January and February were distinctly nervy times for most.
Coffer Peach Business Tracker figures showed a 1.9% upswing in collective like-for-like sales in March against the same month last year, but that followed a 3.7% fall in February and a 2.1% decline in January.
Should we be worried? Over the last two years, the eating and drinking out-of-home market has generally managed to keep its head above water—or to be precise chains, and in particular branded businesses, have.
But, a bit like the economy overall, shouldn’t we be seeing some tangible uplift in fortunes by now? Or is ‘more of the same’ the best we can expect?
Our annual Peach Business Leaders’ Survey, published in the last issue, showed high levels of optimism among industry leaders, but any trendline coming out of the hard data collected by the Coffer Peach Tracker will only point to another essentially flat year for the sector.
It’s not a case of being downbeat, just realistic. The good news, and not just for those in the London bubble, is that the market has seen some important investment deals already this year, with the likes of Barburrito, Loungers and Brasserie Blanc securing new funding for expansion in only the last month.
Over the last year, new openings have meant that total sales across the 24 companies making up the Coffer Peach sample have been growing positively, with increases as high as 6% or 7% some months.
The roll-out of established brands and launch of new concepts will only continue—and will help sustain profitability in the corporate end of the market. But will that in itself persuade consumers to spend more and come out more often?
Chains have gained market share, principally at the expense of the independent sector, particularly at the bottom-end. But there is clear evidence that the battle for share is increasingly pitting brand against brand, chain against chain. The public is becoming more promiscuous, and especially brand promiscuous.
While our own Peach BrandTrack research shows that more people are using eating-out brands, especially at the blue-collar end of the market, their repertoire is also growing. Loyalty is hard to find as consumers seek a better deal, more quality, a new experience or just some extra excitement. An average consumer will typically eat at seven different brands over six months, up from just four two years ago.
While quality remains the main driver of choice, value is still a big reason for deciding where to eat out—evidenced by the fact that the big pub restaurant brands have been consistently outperforming high street casual dining over the last year and that vouchering remains a potent force, especially among young, educated Londoners, as our own exclusive investigation into the phenomenon in the latest edition of Peach Report shows. Much as the sector might want to move away from discounting, consumers may be a little more resistant.
What our Business Leaders survey correctly highlighted was the need for management to concentrate on delivering ‘a clearly differentiated offer’ and ‘a strong brand identity’. This was the theme that ran through our recent Peach Marketing & Consumer Insight seminar—and as well as harnessing every bit of new technology and customer insight to give them an advantage, operators will also have to make sure their teams are all pulling together, especially operations and marketing, to deliver on the promise for ever-demanding and fickle customers.
It’s all about competition, and ever increasing competition. Winning market share will be ever tougher. The hope will be that all this effort, not to mention innovation and creativity across the sector, will help expand the market by giving the public more reasons to go out. The prudent view may be a little different.