Food-to-go sector to be worth £23.4bn by 2024, IGD forecasts

It is set to experience double the growth of the wider UK food and grocery market.

Food-to-go remains a key growth opportunity for businesses, particularly attractive given structural and growth challenges being faced by UK supermarkets and hypermarkets at present.

IGD forecasts that the UK food-to-go market will be worth £23.4bn by 2024, up from £18.5bn in 2019, growing by 26.4%.

“While there continue to be good opportunities for growth in this area, the gap will continue to grow between those businesses who are actively targeting food-to-go growth and those who simply want a presence in the channel. Opportunities remain, however, for those with clearly defined and relevant strategies,” IGD Head of Shopper and Food-to-Go Insight Rhian Thomas said.

Convenience, forecourts and other retailers, such as Spar, Co-op, Tesco Express and Boots, IGD says, will have their sales increase from £2.9bn in 2019 to £3.8bn in 2024, a market share rising from 15.5% in 2019 to 16.1% in 2024, and a CAGR (compound annual growth rate) of 5.4% between 2019 and 2024.

“Convenience and food-to-go are increasingly intertwined, as food-to-go success becomes increasingly critical to the prospects of most convenience stores. Similar principles apply to the forecourt channel, where the added need to encourage dwell time among shoppers will grow in importance as the factors influencing where and how people stop on the road shift,” Thomas explained.

Coffee specialists, such as Costa Coffee, Starbucks and Caffè Nero, will see sales increase from £3.3bn in 2019 to £4.3bn in 2024. Market share will increase from 17.8% in 2019 to 18.2% in 2024 whilst experiencing a CAGR of 5.2% between 2019 and 2024.

Thomas says there is a “clear trend” towards the expansion of smaller and more niche chains.

“Expansion at the likes of Coffeesmiths Collective, with a repertoire of coffee chains under its umbrella, shows how the barista coffee experience is evolving,” she said. “We are also seeing coffee shops developing their offer to appeal to different shopper needs, whether it’s a stronger all round food offer at the likes of Costa, Starbucks and Caffe Nero, a very targeted offer – such as waffles at Black Sheep Coffee – or a broader push into evening and alcohol. Travel is also a growing priority, with Eurogarages being perhaps the highest profile driver behind Starbucks’ recent UK expansion, adding sites alongside forecourts across the UK and beyond.”

Food-to-go specialists, such as Greggs, Subway, Pret, Eat and Leon are projected to see sales increase from £5.0bn in 2019 to £6.3bn in 2024. Market share will move from 27% in 2019 to 26.9% in 2024 and experience a CAGR of 4.6% between 2019 and 2024.

“While menus continue to evolve, with vegan and vegetarian lines gaining more profile on many menus in 2019, the location question is a fascinating one right now, as the combination of high rents and increased competition on high streets encourages a growing number of operators to vary their location strategy,” Thomas said.

Despite a greater focus on healthier eating, QSR sales are forecast to rise from £5.8bn in 2019 to £7.2bn in 2024. Market share will move from 31.5% in 2019 to 30.9% in 2024 and have a CAGR of 4.5% between 2019 and 2024.

“While not all players in this area have experienced fast growth, the combination of improved in-store environments and technology, along with targeting the online meal delivery channel have all been factors that are driving driven growth,” Thomas said.

Supermarkets and hypermarkets, such as Asda, Morrisons, Tesco and Sainsbury’s, will see sales increase from £1.5bn in 2019 to £1.8bn in 2024. Market share will move from 8.1% in 2019 to 7.8% in 2024 and experience a CAGR of 3.6% between 2019 and 2024

“While IGD’s wider food retail market forecasts show continuing challenges for the supermarket and hypermarket channel, most of us still do a large portion of our food and drink shopping at these types of stores, meaning there is still much to play for,” Thomas argues. “Expanded food-to-go and foodservice zones are a key strategy for these retailers to bring more shoppers into stores and encourage them to spend more while they’re there.”

Format thinking "shifting fast"
IGD says leading retailers are already considering how they evolve their propositions in food-to-go, resulting in the reshaping of their stores.

"London is a great test bed for this, with the likes of Co-op, Marks and Spencer and Sainsbury’s all innovating in their smaller format stores in London, as they look to better optimise their propositions around changing consumer behaviour and a growing appetite for food-to-go solutions," IGD explained.