New, emerging operators predicted to "swiftly" replace some closed locations
CGA details other developments they expect to happen in 2020.
Entering the new year, the foodservice sector must watch out for volatile food prices and the rise of experience-led food venues, data and research consultancy firm CGA forecasts.
There have been 2,423 restaurant closures and 1,789 new openings in 2019, based on CGA’s joint report with Alix Partners.
Closures in the sector, CGA says, have come primarily from independent operators as well as "underperforming" businesses. Whilst more closures can be expected in, they say some of those sites will be swiftly reopened by new and emerging operators with "exciting" new concepts.
Despite closures, generally due to store underperformance, the consultancy firm also highlighted from a separate survey with Fourth Business that 64% of businesses are optimistic about their operations in the new year, up by six points from the past three months.
CGA took note of the rise of experience-led venues, or those innovative food places which offer sorts of activities like darts and virtual reality games. Customers, CGA said, also seek food places with “enviable footage for social media,” as 84% of consumers on a night out are said to upload photos on online social platforms.
Prices are “likely” to remain volatile should uncertainty surrounding Brexit remains unresolved, which in turn would keep the exchange rate low, as well as imports could be affected in a no-deal scenario. According to the Foodservice Price Index report, inflation has settled around 5% to 10% since the start of 2019.
More sustainable products, more demand for vegan
On sustainability, half of consumers expect that foodservice outlets will reduce their carbon footprint issues through menu engineering and commodity usage with nearly 20% said they would not pay stores a visit without resolving them, CGA’s BrandTrack revealed.
“We will continue to see big moves made by supplier clients to deliver a more sustainable product to outlets and consumers as we move into the new decade,” CGA commented.
Moreover, there is still the rise of the veganism trend, with 29% of consumers claiming it is very important for their meals to be meatless as they aim to reduce their meat consumption. CGA’s Food Insights highlighted the five fastest emerging cuisine types: Burmese, Peruvian, Filipino, Pacific Rim and Scandinavian foods.
Increased alcohol sales, spending amongst young people
Overall frequency of drinking alcohol was stable for the past few years, with 63% of adult Brits drinking alcohol at least weekly, compared to their younger counterparts, both millennials (57%) and Generation Z (48%).
However, when young people do drink, they spend more, with total wet on-trade sales up by 2.3% by value.
Cocktails, enjoyed by some 10.3 million consumers, have boosted the sector’s sales by 10% to a market value of £604m over the past 12 months, according to CGA’s Mixed Drinks Report. Licensed outlets selling cocktails have risen by 7% to 42,000 in 2019.
Sales of gin have risen more than eight-fold to £392m in May 2019, driven by pink and flavoured varieties.
A joint report with Drink Up London also revealed that one in ten of the city's most influential bars, with some 11 stocked rum brands on average, plans to expand their rum range. “Growth in flavoured and spiced rums opens the doors for experimentation, whether through cocktails, new or limited-edition products or innovative serves,” CGA said.
Amidst the spike in sales of alcohol, there is also a trend of moderation with one in three adults or some 15.5 million consumers has tried a no or low alcohol drinks in the last six months, which another 8.9 million consumers find appealing, CGA’s Understanding Moderation in the On-Trade report has shown.
The category has increased by 48% in the last 12 months to more than £60m a year, though completely alcohol-free options have grown even higher at nearly 80%.
