There is still growth in the British foodservice industry and it has remained resilient, despite early signs of a possible slowdown.
That's according to global information company the NPD Group, which has examined the performance of the British out of home (OOH) foodservice market since the June 2016 Brexit referendum result.
NPD found that while visits after the referendum (the 10-month period July 2016 to April 2017) were still 0.7% higher than during the equivalent period a year earlier, this was slower than the 1.5% visit growth seen in the period before the referendum (six months January to June 2016 compared to same period the year before).
Cyril Lavenant, foodservice director UK at the NPD Group, said: "The British foodservice market has slowed since the Brexit referendum one year ago and the industry remains smaller than it was in 2009. However, the main message is that there is still growth and the industry is currently showing resilience. This is because operators have spent the past 10 years since the last downturn creating a lively and appealing foodservice environment that encourages consumers to keep eating out.
"However, there are big challenges ahead. The weakness of sterling means foodservice operators will have to replace global sourcing with local sourcing while ensuring they still get the quality they need. Inflation will prompt consumers to make savings and so we expect it to dampen demand for eating out. Tighter immigration rules will make it harder for operators to hire staff. This is a huge issue in an industry where around 20% of employees are not from the UK. Even if a work-visa system operates when the UK leaves the EU, hiring EU staff would still be more difficult because it will absorb time and create costs. Any sustained staff shortage would damage Britain's foodservice sector."
NPD said that consumers have started to drop the more expensive dinner occasion, which is down nearly 3% in visit terms, although breakfast and lunch appear to be taking up the slack with faster growth since the referendum than before. Meanwhile, there has been a drop of over 2% in visits by adults accompanied by children of 17 years of age or less.
But contrary to the trend seen in the recession that began end of 2007, visits not involving a deal or promotion are still growing faster than promoted visits, indicating that consumers feel they are getting good value for money from British foodservice operators. However, the perception of value might change if operators introduce large price increases to cope with strong inflation, NPD said.
Meanwhile, the company said there was no evidence that consumers were choosing lower quality food and drinks. The number of visits where a consumer chooses an outlet for its 'quality' has increased by 3% since the referendum. However, inflation is definitely evident in foodservice and has pushed the average bill per visit up by slightly more than 2%.
However, less affluent consumers are showing the most caution over spending. Visits among the C2DE demographic have dropped nearly 1% in the 10 months July 2016 to April 2017 since the Brexit referendum. Prior to the referendum, this demographic was recording growth in eating-out visits.
Lavenant added: "We are only one year beyond the referendum and the full effects of Brexit on Britain's foodservice industry have not yet appeared. But one thing is for sure - the industry will need strong growth rates if it is going to match and exceed the size it enjoyed before the 2008/2009 recession. The post-referendum slowdown will make it more difficult to get there."