By Darren Yates, Head of EMEA Retail Research & Insight
Since 2008, the UK Food and Beverage (F&B) market has experienced a period of sustained expansion, which has not been mirrored in most other retail and leisure sectors. The rapid increase in the number of new entrants and unit numbers has caused concern over the sustainability of this growth, notably in view of the economic and political uncertainty surrounding Brexit.
However, our latest research reveals that the recent strong growth seen in the UK F&B market shows no sign of slowing. Our UK Food and Beverage report includes results of a survey undertaken by our Leisure & Restaurant team of planned openings by 95 major F&B operators, in addition to forecasts for total growth.
Encouragingly, the research shows that this planned expansion – driven mainly by multiple operators opening new outlets around the country – will be supported by continued growth in the overall market.
However, several downside risks remain and the growth in expenditure on eating out is forecast to ease in 2017 and 2018. The main risks include higher inflation, possible business rate increases (with London more affected than the regions), a rise in the living wage and, potentially, tighter labour laws due to Brexit.
Retail destinations are evolving to accommodate more food and beverage units to improve the shopping experience, increase dwell time and extend shopping hours (evening shoppers) – designed ultimately to capture more spend. Successful shopping centres will need to continue to evolve from purely retail destinations to experience and lifestyle centres.
Understanding the macro environment is important, but landlords and operators also need to have a detailed understanding of local market drivers. These include existing and future competition, as well as local catchment and expenditure profiles, in order to make the best possible decisions.
An analysis of shopper populations and available catering spend versus local supply allows occupiers and investors to identify those centres offering capacity. It is then a question of developing strategies to capture this spend, with relevant operators matched to local demographics and shopping habits.
Darren Yates is Head of EMEA Retail Research & Insight