Latest food to go insights reflect a more value-conscious consumer

According to Lumina’s recently published UK Food to Go Market Report 2023 (published February 2023), the food to go market is set to see a net increase of +1,397 sites in 2023F (F meaning the full year) to a total of 152,120 from 145,522 in 2017, and led by retail segments with leading operators in the food to go market including Greggs, Pret A Manger and McDonald’s continuing to expand outlets, targeting more drive- thru, travel hub and high street locations.

Lumina define food to go outlets as total outlets of eating out segments where food to go sales make up 10%+ of turnover, including branded traditional and contemporary fast food, independent fast food, coffee shops, sandwich/bakery, supermarkets, convenience stores, supermarket cafés and department store/garden centre cafés, roadside and MSA (motorway service areas), airports, railway and train stations, boat/ferry cruises and ports, petrol forecourts, street food and mobile street vans, event and mobile catering and contract catering.

Key trends present in brand strategies include exploring opportunities in drive-thru and travel hub sites, franchise operation models as well as technology and digitalisation, observe Lumina. For example, Greggs has announced that it is exploring opening 24-hour drive-thru sites, as evening is its fastest growing day part. It is also trialling stores at select supermarket locations as well as opening a site in London’s Gatwick airport.

Co-op’s franchise operation is the focus of site growth as this model is light on capital investment, with the operator hoping to grow the franchise estate to 150 stores within three years, report Lumina. Premier has started a technology drive, they observe, trialling features including self-scan checkout and a QR code for shoppers to access promotional deals in the place of printed leaflets.

Unsurprisingly, the cost of living crisis has led consumers to be increasingly value-conscious and prioritise cost above other credentials, Lumina have found. A proportion of consumers are already limiting discretionary spending due to the weak economic outlook, so operators will need to ensure value is at the core of their offer to remain competitive and relevant, they propose.

Indeed, the researchers found (Lumina Intelligence Top of Mind Report, Food to Go Report, data collected 52WE 25/12/22, MCA, The Grocer, February 2023), that the top two most important longterm consumer trends impacting the food and beverage industry are a squeeze on household budgets (50%) and value consciousness (41%), with 76% of food to go consumers surveyed being “very value conscious” (up 3ppts year on year, it was found).

By way of illustration of this, LEON has announced that it is launching a hot food meal deal of £3.99 for a rice pot and drink to enhance its value for money credentials, and Pret is expanding its value and range (its new ‘Made Simple’ range starting at £2.99 and coming alongside the launch of its new January meal deal offer to help customers with the cost of living). At the same time, consumers aged 45-54 have seen a -2.1ppt decline in food to go occasion share year-on-year, with the over 50’s increasingly opting to leave the workforce in what has been dubbed the ‘great resignation’, report Lumina.

However, food to go is expected to hold a 23.9% total market share in 2026F and outpace growth seen in the wider eating out market, fuelling share growth. Key drivers include further physical expansion of key food to go players, say Lumina, broadening availability across different day parts and omnichannel propositions whilst transient lifestyles are set to endure.

The food and drink industry accounted for 6% of administrations in 2022 – the sixth highest sector in the UK – according to analysis by full-service law firm, Shakespeare Martineau.

A total of 1,340 businesses – 87 of which came from the food and drink industry, which included several breweries and restaurant chains – filed for administration last year, marking a 56% increase compared to 2021, the firm report.

Construction, manufacturing and retail were the sectors worst hit, accounting for 39% of administrations. Greater London led the way with 20% of the filings, followed by the South East and North West (16% each), data from The Gazette Official Public Record has revealed.

While January (55) was the quietest month, administration numbers leapt to 160 in November – the most recorded for 28 months – before dipping to

120, 93 and 104 in April, May and June respectively. And while administrations are still yet to hit pre-Covid levels (1,794 in 2019), recession fears and the financial pressure on households and businesses means the worst is still yet to come, an insolvency and restructuring expert has warned.

Andy Taylor, partner and head of restructuring at Shakespeare Martineau, said: “The latest statistics show that the true costs of living and doing business are beginning to bite.

“Numerous headwinds – such as the cost of borrowing, and increasing energy, fuel and raw material costs – have become a new normal at this point and businesses are being pulled from every direction. Furthermore, while supportive in the main, pressure from lenders is increasing and HMRC is taking a firmer stance, seeking to cap levels of liability for non-payment of tax.

“While the UK is perilously close to recessional phase, businesses must have a clear focus on cash flow and look to save costs where possible. Directors must continue to plan strategically for the ever higher costs of ‘doing business’.

“For businesses to survive longer term, they will need to act now to address underlying issues. I cannot overstate how important it is to get to grips with matters at the earliest possible juncture and to take the appropriate professional advice, if needed. Taking a proactive approach will provide options and help to keep businesses afloat.

“If things continue as they are, we expect to see an increase in businesses failures as they battle tough trading conditions. However, resilient businesses with a strong balance sheet and with the right planning and oversight in place, may well find opportunities for growth as we head further into 2023.”

Pret to give third pay rise in 12 months

Pret A Manger has announced a third pay rise in 12 months for its 7,870 UK shop staff, further supporting its workforce amid the high cost of living, say the brand.

From 1 April 2023, team members, baristas and shop managers will receive an additional 3% pay increase, on top of the 5% increase that came into force in December 2022. Average base pay for shop staff will increase by 19% in the year to April, while average entry level pay will have increased by 15% year on year to above £12, including the Mystery Shopper Bonus, which is above the UK National Living Wage and inflation.

The latest pay increase will be applied to shop employees irrespective of age, although some differences may apply depending on role, experience, and location. Team members will see a pay increase from between £10.30 and £11.55 per hour to between £10.60 and £11.90 per hour depending on location, or between £11.85 and £13.15 per hour with Mystery Shopper Bonus. Barista pay will increase from between £10.85 and £12.50 per hour to between £11.20 and £12.85, depending on location and experience, or between £12.45 - £14.10 per hour with Mystery Shopper Bonus.

Pret says that it has also been looking at ways to improve its benefits package to help shop staff through the cost of living crisis. A new discounts portal is now live which provides staff with access to fresh food and other essential items from major supermarkets and other businesses at a lower cost. This new portal builds on Pret’s existing benefits package, which includes free food and drink while on shift (including breakfast and lunch) and a 50% discount for all staff otherwise.

Guy Meakin, interim managing director at Pret A Manger UK & Ireland said:“We’re proud to be making another significant investment in our people’s success and wellbeing. Whether it’s paying above the National Minimum Wage, providing career development opportunities, or leading the industry on barista pay we’re committed to making Pret a rewarding and supportive place to work for all our teams and paying the best we can afford to.

“Our people work incredibly hard to make Pret such a well-loved place on the high street, and we wanted to thank them for their continued energy and commitment. As the cost of living continues to rise, we hope this latest increase in pay, and our expanded benefits package, goes some way in providing further support for our hardworking teams.”

This latest investment in Pret’s people furthers Pret’s ambitious growth strategy announced in 2021, including opening more than 200 new UK shops by 2023 and doubling the size of the business within five years. As Pret delivers against these targets, it continues to invest significantly in recruitment and staff pay to support its growth including a third shop staff salary increase in one year, they report, having also recognised and promoted nearly 30% of shop employees in the last 12 months with more than 2,000 growing their careers at Pret.