Executive Summary

The UK restaurant market has been one of the most buoyant in the catering sector over the last 5 years. In 2000, the market continued to expand. The market includes both fast-food restaurants and other restaurants. The total restaurant market including fast-food grew in 2000 at current prices to £15bn. Price increases in the restaurant sector are a contributory factor to market growth.

Key sectors in the restaurant market are miscellaneous restaurants, burger chains, public-house restaurants, pizza and pasta outlets, roadside catering and chicken outlets. Pub restaurants registered their lowest annual growth for some years in 2000 as overcrowding and a lack of differentiation between brands hampered growth. Roadside catering registered steady growth in 2000, with improvements in menus and facilities. The pizza and pasta market experienced modest growth, due mainly to limited growth in the traditional High Street sector. However, the premium sector continued to expand. Burger restaurants witnessed only limited growth but chicken restaurants boosted sales as more restaurant-type outlets were developed in prime sites. The other restaurants sector includes a range of outlets and cuisines, from ethnic outlets through informal-dining concepts to premium outlets. The latter sector has experienced strong growth through the expansion of branded chains and trading up by consumers. The informal-dining and ethnic sectors have shown less impressive growth.

A relatively strong economy and increases in personal disposable income have helped to boost spending on eating out. The share of household food and drink expenditure taken by expenditure on food eaten outside the home is growing year-on-year. However, while demand for restaurant food continues to grow, the number of outlets has increased at an even faster rate and there are clear signs of overcrowding in some market sectors. Some of the leading chains have concentrated on outlet expansion at the expense of menu and outlet development and innovation, and the effect is likely to be a reduction in outlet numbers in the coming months as some underperforming brands are culled. Some of the more innovative menu ideas have come in the premium-restaurant sector.

The recent foot and mouth epidemic, travel problems, and the difficult UK weather in the summer of 2000 have all had some negative impact on the restaurant sector, but growth has still been achieved as eating out has increasingly become part of the leisure culture. In 2000, restaurants accounted for a larger share of the value of the total catering and restaurant market than in previous years.

The broad trends of the last few years are continuing in 2001, with further increases in disposable income and more restaurant choices continuing to boost sales. The possibility of some economic downturn and market saturation in some sectors are the key factors that are likely to limit growth from 2002 onwards.

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