Eating out is the new staying in

Pubs and ‘fast casual’ restaurants have seen a growth in trade from families who are being enticed by clever deals and promotions.

More families are choosing to eat out at pubs and ‘fast casual’ restaurant chains like Nando’s, according to new research seen exclusively by Marketing Week.

The study from NPD Crest identifies a list of winners and losers in the out-of-home dining market in 2013. It finds that takeaway outlets are struggling in the wake of more fashionable quick-service brands and that pubs are benefiting from a more family-friendly approach.

The market research platform calculates the figures from a representative sample of over 80,000 annual transactions from its online panel on which people reveal their daily eating habits. It then scales this against demographic data to produce annual figures for the population of Britain.

One of the standout winners from the research is the fast casual sector, which has seen visits rise by 0.9 per cent and sales increase by 1.7 per cent in the year ending 30 September 2013. This emerging sector has a niche positioning that places it between fast food outlets and traditional full-service restaurants.

NPD categorises this sector by looking at 12 chains including Byron, Wagamama and Nando’s. It defines fast casual as restaurants that have a quality proposition on food but an emphasis on value. This often involves having limited menu options and more informal service arrangements than in other restaurants. Since 2009 this sector has seen sales rise by an average annual growth rate of 3.4 per cent, according to NPD.

“[The sector] resonates with consumers in terms of the recession because it’s good value,” says NPD business development director Guy Fielding. “It also fits with our transient lifestyle where people don’t have the time to spare to enjoy a fine dining experience.”

Most fast casual chains are focused in London, although these brands are beginning to expand into other parts of the country. In October, for example, investment group Hutton Collins acquired Byron for £100m and confirmed plans to expand the 36-strong chain to more locations outside the capital.

justeat-product-2013-200
JustEat helps restaurants to run promotions and consumers to find takeaways

Overseas players are entering the market too. For example, US gourmet burger brands like Five Guys and Shake Shack launched in London this summer. Fielding notes that brands with a ‘fast casual’ approach can operate across all food categories. “It’s resulting in the premiumisation of a lot of traditional food,” he says. “Even hot dogs are becoming a premium item in some outlets.”

Improvements in food quality have also had a positive effect on the pub sector. This year, pubs – both independents and chains – have been the only dining locations to see an increase in visits from families, the research finds. Although the total eating out market saw a 1.9 per cent decline in groups with children, the pub sector recorded growth of 2.2 per cent. Those eating out with children now represent 33.7 per cent of total pub visits.

“Pubs have really encouraged the trend with changes to their kids’ menus and their whole décor,” says Fielding. “They have become far more flexible so that they can accommodate bigger families. There aren’t many pubs now that can survive as beverage-led operations.”

The growth of pubs as family destinations appears to correlate with the rising use of promotions and deals by outlet operators. Pubs were much more active in this area last year, with the number of visits that involved using a promotion rising by 4.2 per cent in the year ending 30 September 2013. That compares with an overall fall of 1.1 per cent in the total dining out market.

Pub and hotel operator Innventure is among the companies to have seen a positive effect on its business as a result of using promotions. The company has developed a number of in-house loyalty tools as a way of driving footfall and encouraging repeat visits across its four restaurants and two hotels in the south of England, including email offers, loyalty cards and gift vouchers. 

Inventure markerting director Charlie Gerard says the company’s use of these tools has become more sophisticated over the last year. It has even set up its own agency, Offertune, to manage its loyalty programme and is in talks to sell its services to other pub and restaurant operators.

“With every offer that we send out, we see growth of about 5 per cent in our [customer] database,” claims Gerard. “We have a viral aspect whereby if someone buys a voucher and recommends a friend who buys one, we give the person doing the recommending a free bottle of wine. That means people are sharing a lot on Facebook and Twitter – it’s a great way to grow the database and reward customers.”

By contrast, the takeaway sector appears to be struggling as a result of its failure to use promotions and other marketing tools more effectively. Purchases from takeaway outlets fell by 1.7 per cent this year, according to the research. The rate of decline has accelerated with the average annual fall in purchases between 2009 and 2013 at 1.2 per cent.

Fielding at NPD argues that the decline is partly the result of the failure by some independent takeaway outlets to innovate in their marketing and presentation.

However, Graham Corfield, UK managing director of Just Eat, says the picture is not the same for online takeaway services. The company, which facilitates purchases from more than 19,000 UK takeaways, helps operators to run promotions and extend their reach via social media. Corfield claims that orders on the site have grown significantly this year, with mobile channels helping to attract customers and drive business.

He argues that in order to keep pace with consumers’ changing behaviour, takeaway outlets must operate online. “We offer independent restaurants an ecommerce presence that they often don’t have the time, infrastructure or marketing budget to do themselves,” he says.

“Restaurants are realising that they need to have that presence – otherwise their competitor across the road is getting that traffic and that business instead.”

Elsewhere, the study shows that breakfast saw the biggest growth as a dining out ‘day part’. In the year to 30 September 2013, total breakfast visits rose by 2.2 per cent, up from an average annual growth rate of 0.6 per cent since 2009.

Fast food restaurants saw some of the biggest jumps in breakfast visits, up 4 per cent in 2013. NPD predicts that new entrants into the breakfast market such as Subway will continue to drive growth while putting pressure on established players.

Marketers’ response

charlie-gerard-innventure-2013-150

Charlie Gerard
Marketing director
Innventure (pub operator)

I agree that the issue of promotions and how to use them is becoming more important for pubs. Our challenge as a family-run restaurant and hotel operator is how to send out offers and vouchers in an automated and easy way, which is why we built our own system.

The important thing with promotions is using them at the right time, rather than all the time. For example, January to March is a very important time for Innventure because it’s when a lot of people are cutting back after Christmas. A lot of restaurants go into the red in that period and we want to avoid that so we sell gift vouchers and offers in the run-up to Christmas to encourage people to come in during those months.

graham-corfield-2013-justeat-150

Graham Corfield
UK managing director
Just Eat

The research shows a very different trend to what we’re experiencing in terms of online takeaway ordering. We are seeing nothing but significant growth – over the last year there has been a 20 per cent week-on-week increase in average orders across our UK restaurants.

Individuals may no longer be visiting takeaways but there has been a shift in consumer behaviour where more people are now ordering them online or via mobile. We launched our two apps this year across iPhone and Android and we’ve already had over two million downloads, with around 25 per cent of our orders coming via app.

Consumers are also extremely value-minded now. They like a deal and they are far more savvy at researching and finding special offers online.

Methodology

NPD Group tracks UK consumers’ eating habits via the web. Working with a pre-recruited panel of individuals who have agreed to provide this information, NPD collects continuous, daily data from more than 80,000 consumers per year. 

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