Is 2020 set to be a more stable year for restaurants and hospitality? After a highly unpredictable 2019 with low consumer confidence and the economy narrowly avoiding recession, is the industry feeling confident about what the year ahead holds?
As widely predicted the rising costs, strong competition and weakening consumer demand have seen the extensive decline of the UK restaurant market during 2019 and it seems likely that there will be no quick fixes in 2020.
According to MCA UK Restaurant Report 2019, the UK restaurant market is set to contract by 3.1% in 2019 - the biggest decline in 7 years. More than 1,400 UK restaurants collapsed in 12 months to June 2019 and the number of restaurant insolvencies was up 25%. Customers have turned their backs on chains like Byron, Strada and Jamie Oliver’s restaurant empire.
But it’s not just the chains that have taken a hit, independents make up the majority of the UK restaurant market with 64% of the value and 84% outlets (MCA) and have taken their share of closures and insolvencies. Visit frequency to independent restaurants per month has fallen -8.3% in the last year.
Pubs and fast food outlets continue to outperform restaurants as they are well-positioned to satisfy the demand for lower-cost convenience.
Millennials (under 35s) make-up almost a quarter of the UK population (source: Statista) and spend a whopping 13% of their income in restaurants and bars (source: Foodspark) so cracking this market is key to restaurant and pub operators’ success in 2020. Yet Millennial consumers are increasingly difficult to attract and have different expectations and habits to their parents so restaurants need to adapt in 2020 to drive footfall and sales from this key market.
Here are some of our predictions for the UK restaurant trade in 2020.
1. Keeping Millennial Diners Happy
Millennial diners value individuality, uniqueness and adventure. They are less loyal and more likely to follow the crowd to the latest opening for the real life and social media kudos.
For this generation dining out is an experience to share with friends and meet new people. They choose restaurants for the atmosphere - they enjoy communal tables and open kitchens that let them engage with the creativity and character of your kitchen team.
It’s no coincidence that the popularity of street food coincided with the rise of millennial diners as it fulfils their desire to experiment and explore different styles of food and new cuisines. Each month the average millennial eats at a restaurant four times but has street food, orders delivery and has food to go 11 times. Food trucks offer unique foods in a fun and often social setting.
Convenience and affordability are also key to this generation - it’s not just about fast food but also efficient service. They like to use technology from booking platforms and self-ordering and payment apps that offer them control and convenience.
2. Pop Up to Permanent
Millennial diners’ interest in trying the unique and new is also driving a trend towards pop-up restaurants.
For chefs and restaurant operators launching a pop-up site is an opportunity to test a new concept, gain a following, fine-tune details and secure investment before making a long term commitment. These take two forms: ticket-only events or short-term residencies and medium-term site take-overs.
The pop-up concept is also attractive to landlords and property companies who are increasingly nervous about signing long leases following numerous high profile restaurant closures. The bad PR and inconvenience that goes with a failed leaseholder can have a negative impact on property value so they will be incentivising take-overs and rotating pop-ups.
Examples include the former Magpie site at 10 Heddon Street, where eponymous hand-made pasta concept ran for three month - their website now says ‘Details of relocation to follow. Watch this space.” Meanwhile at the same site, Australian chef Shaun Presland has brought his take on Japanese cuisine, Pacific, to London with a strong hint that a permanent site will follow.
Spanish small-plates restaurant, Pilgrim, began its journey as a six-month residency in Hackney before they sent off an application to BBC Two’s “My Million Pound Menu”. The three founders gained the backing of Graffiti Spirits Group with an invitation to open their first permanent site at the group’s Duke Street Market which was then under redevelopment in Liverpool. Following the show, they tested the concept further with pop-ups in London and Liverpool allowing them to refine their menus and build an audience.
3. Do you deliver?
The insatiable appetite for food delivery services shows no signs of waning in 2020 driven by the quest for convenience and affordability, especially from the Millennial generation. The food delivery market is expected to grow in value by 17% over the next two years, indicating it could be worth close to 5 billion by 2020 according to market analyst NPD.
Restaurants and pubs can do more to tap into this trend with the potential to reach new audiences and increase turnover at quieter times. There’s particular scope for more sophisticated options from high-end restaurants.
However, commissions payable to these platforms are typically in the range of 20% to 25% of the total order value and with the loss of drink sales associated with delivered food, restaurant operators will face a challenge to adapt to this fundamentally altered business model.
4. Family-friendly dining
By 2020 over 5.5 million millennials in the UK will be parents and by 2025 they will make up 83% of all parents. Restaurants, pubs and cafés that may have turned their noses up at family groups must welcome them.
This is a generation which has grown up eating out more often than their parents and will take their children out with them and will expect more than a traditional nostalgic children’s menu of fish fingers & chips or sausages & mash.
WholeFoods US has predicted the shake-up of the kids’ menu as one of the top ten food trends for 2020. Parents are introducing children to more adventurous foods and putting health and nutrition higher up their priorities and will demand more child sized portions from the main menu as well as organic produce, wholegrain bread or pasta and more fresh vegetables than you see on usual kids’ menus.
5. Provenance, sustainability and tackling food waste
Consumers are increasingly making more thoughtful choices about what they eat. There’s a collective consciousness that by choosing carefully sourced sustainable options we can make a difference to climate change. 73% of Millennials will pay more for sustainable produce compared to 63% of the general global population and they want to buy into a whole sustainable lifestyle rather than token gestures.
Regenerative Agriculture is a term you should expect to hear more in 2020 - the idea that farmers and food producers must improve growing and grazing practices to improve soil health, increase biodiversity and sequester carbon.
For restaurants, this means sourcing organic or low-input produce, sustainable fish, seafood and meat.
The rise in flexitarianism means not only offering vegan and vegetarian options but also finding ways to reduce meat on the menus. Sustainable Restaurant Association Award winner, The Wheatsheaf in Chilton Foliat has cut meat by a third by taking roasts of the menu and substituting mushrooms for a third of the meat in its burgers aiming to continue to satisfy carnivorous customers.
Fruit and vegetable retailer and wholesaler Turnips Borough which supplies some of London’s top restaurants reports that chefs are demanding produce with a clear provenance or geographic designation from small producers. They believe this is a result of a growing awareness that sustainable farming practices and better soil produce the best tasting ingredients.
Awareness about reducing food waste and single-use plastic will grow further in 2020. Consumers will expect restaurant operators to demonstrate the steps they are taking to improve and show that tackling food waste doesn’t have to be an afterthought. This trend is spearheaded by a series of new restaurant launches putting tackling food waste at the forefront of their brand: including Doug McMaster’s reopening of Silo in London; and Adam Handling’s new ‘sustainable causal’ restaurant, Ugly Butterfly, which opens in Chelsea in December serving dishes made from waste predominantly sourced from his nearby fine-dining restaurant at the Belmond Cadogan Hotel.
6. Healthy Pleasures
8 out of 10 millennials say it’s important to eat healthily and indulge occasionally and people of all ages are looking to mix and match balancing health with the occasional indulgence. Consumers are more likely to seek healthy options on weekdays and at lunchtime and treat themselves at the weekend.
Millennials always have their eyes on the latest health trends. Operators must offer healthy options and whether that’s alternative milk and dairy, gluten-free or vegan options. Other trends that will continue to grow in 2020 included fermented products for their gut-health benefits, ancient and heritage grains including spelt, emmer and naked oats from producers like Hodmedod; as well as alternative gluten-free flour from peas and quinoa.
Younger diners also like the opportunity to personalise their menus making choices that are more or less healthy by picking their own pizza toppings, salad dressing, or burgers with or without a bun.
7. Would you like wine with that?
An extension of the health trend is that numerous reports suggest that younger people are drinking less than their parents. 25% of young people class themselves as non-drinkers (BMC Public Health) and 65% of alcohol consumers aged 25 to 34 “are trying or have tried to cut back on their alcohol intake”.
Dry months Dry January and Sober October are increasingly popular across all age groups and are key periods for operators to offer exciting alternatives and an opportunity to retain some of the margins. Yet restaurants and pubs must offer grown-up, sophisticated alcohol-free options must be available all year round.
There’s an increasing choice no-alcohol spirit alternatives spearheaded by Seedlip who launched Aecorn Aperitifs in 2019. These brands are driving innovation in no-alcohol cocktails or mocktails. Low/No Alcohol beer is seen as more socially acceptable than it was and many more premium brands are entering the market and Michelin starred restaurants including Clove Club and the Standard Hotel have added no-alcohol wines to their lists.
Real Kombucha, launched in 2017, is now stocked on 60 Michelin-starred restaurants and is also served as an aperitif at l’Enclume. While sommeliers at restaurants such as La Gavroche, Clove Club, and Restaurant Nathan Outlaw are creating their own no-alcohol ferments from loose leave teas.
8. Up your Tech Game
We know millennials love convenience so it’s no surprise that many of them turn to technology to improve their dining out experience. 77% of millennials say restaurant technology improves their dining experience.
This generation is tech-savvy and will use apps and mobile technology to research where to eat out, to book, to check wait times, to pay and to share reviews. The prevalence of smartphones has put consumers in control; while portable EPOS systems help businesses run more efficiently.
We’re seeing an increase in technology for branded apps helping restaurant operators to improve loyalty and drive repeat business as well as build efficiencies in ordering and inventory management, and staff scheduling and payroll.
Voice-activated technology will transform the way consumers order food and drink and is expected to change how we book too. Restaurant booking platform, Qundoo believe that 50% of all searches will be voice searches in 2020 while ResDiary now offers bookings through a Facebook chatbot.
Social media has changed the way millennials choose restaurants, bars and cafés and booking through social is expected to grow to. 18-35-year-olds spend five days a year browsing food images on Instagram, and 30% would avoid a restaurant if their Instagram presence was weak.
So restaurant operators must make sure that they are easy to find online and on social media with up-to-date menus and strong images, and adapt the latest technologies to drive online booking.
