The branded restaurant market is set to significantly outperform the rest of the retail and hospitality markets, with 6.5% annual growth and sales reaching an estimated £11.6b by the end of 2012.
According to Allegra's Project Restaurant 2012 report, published in association with Barclays, the branded restaurant market takes a 21% share of the overall eating-out market value, with total eating-out turnover growth forecast of 3.9% for 2012.
The report, which surveyed more than 18,000 consumers about their eating-out habits and close to 300 industry leaders about their expectations for the industry, identifies that the usage of branded restaurants will continue to grow over the next 12 months as the majority of consumers, 70%, expect to eat out with the same frequency.
The growth reflects the combined effect of like-for-like increases boosted by inflation, together with the physical expansion of outlets.
Allegra's report splits the branded sector into pubs, casual restaurants and fast food. In the branded fast-food chains, expansion growth has been led by key players McDonald's, Domino's and KFC, who have the highest value forecast growth of 7.9% reaching £4.6b.
Outlet growth for branded casual chains of 4.6% is driven by Prezzo adding 45 stores and growth of 31%, PizzaExpress with 31 new stores and Carluccio's adding 16 outlets. Expansion is a key feature of casual chains, reaching 3,777 outlets and growing by a total 166 outlets in 2012. The branded pub restaurants are significantly outperforming the overall pub market, with key player JD Wetherspoon still leading expansion.
The frequency of visits and footfall in branded restaurants are being upheld by discounting activity, with at least 70% of the top 50 branded restaurant chains activating promotional discount programmes.
More than half of consumers regularly use discount vouchers when eating out, with one in six stating they would no longer visit an outlet if discounting ceased.
Furthermore, there is evidence to suggest that in order to maintain frequency levels, 28% of consumers more regularly visited lower-priced restaurants in the past year in a bid to save money, and 11% more regularly visited fast-food outlets instead of other restaurants. This is due to 40% of consumers having low confidence in their future incomes and, as a result, 60% are spending cautiously when eating out. Nevertheless, one in three consumers ensure they have enough money to spend on eating out each month.
Long-term growth prospects remain positive with increased spend, supported by continued inflation forecast at 2%, and expansion growth of 5.7%, contributing to the estimated branded restaurant turnover growth of 7.8% in 2013 to reach £12.5b. Allegra Strategies predicts that the branded restaurant market will continue this path and grow to exceed 13,800 outlets and reach £14.5b turnover by 2015.
Speaking at this year's Eating Out Summit, Anya Marco, director of insight at Allegra Strategies, said: "Branded restaurants are outperforming both the wider hospitality market and the overall retail sector. The strength of a brand should not be underestimated in the restaurant market. With established marketing prowess, delivery of consistency and familiarity, and the ability to capitalise on new outlet expansion opportunities, branded chains will continue to drive growth in the market."
"It is clear that UK consumers are refusing to give up on affordable eating out. The report shows that visit frequency is expected to remain stable and people are determined to continue to enjoy themselves when they can. By focusing on innovative ways to deliver added value for money, branded restaurants can benefit from a greater share of consumer spend on experiences that cannot be easily replicated at home."
By Neil Gerrard
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