Branded chains face seeing lunch trade cannibalised

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The competition to attract consumers for lunch out-of-home (OOH) has become “more intense than ever”, research firm NPD declared yesterday.

It said that branded operators and independents were slugging it out for market share, while the growing popularity of breakfast out threatens to cannibalise lunch trade.

With high-street restaurant chains having invested vigorously in their lunch products since the 2008/2009 downturn, the well-known branded foodservice chains are successfully building business at the expense of independent operators, figures show.

As of year-end June 2008, there were 13 chains with a 1%+ share of the OOH lunch market. By June this year, the figure had grown to 17 chains as the market becomes more fragmented.

Cyril Lavenant, NPD’s director of foodservice UK, said that foodservice operators providing lunches of all kinds are working in an intensively competitive marketplace.

“The well-known brands are succeeding at the expense of independent operators. But the bigger story is that it’s easier than ever before to buy a good breakfast on the high street. In addition, some 16% of breakfast occasions away from home occur at the relatively late time of between 10am and 11am, meaning that lunch for some might then become just a quick bite of something light that people bring from home. In that case, they would skip buying their lunch from outside. So as breakfast away from home grows, especially if this happens later in the morning, there is a danger breakfast will cannibalise lunch business. That’s a trend foodservice operators should watch.”

NPD data shows that the average bill for eating an OOH breakfast is 31% higher (at £3.30) than it was eight years earlier. In contrast, the average bill for lunch is only 6.5% higher over the same period (£4.57 vs £4.29).

While people still spend more at lunchtime, the gap is closing. As of year-end 2008, the price of an eat-out breakfast was 59% that of lunch; fast forward to year-end 2016 and it is 13 percentage points higher at 72% the price of lunch.

The same story emerges when viewed in terms of visits. Since year-end June 2008, lunch has lost more than 80 million visits, while breakfast has added an extra 107 million. Dinner is flat.

NPD Group says that more people are having breakfast out because they don’t have the time to focus on that meal at home. Breakfast offerings on the high street – both food and drink – are also more numerous than before and offer wider choice. With operators opening much earlier too, breakfast out amounts to a much better option than anything we could prepare at home.

Meanwhile, NPD said that consumers’ tastes for lunch purchased away from home are showing no evidence of change. Sandwiches or wraps are the main food of choice, with one-third (33%) of all lunch visits including these items, much higher than burgers (16%) or chips/French fries (14%). Over 25% of visits involve the purchase of a carbonated soft drink. More than twice as many OOH lunch visits (15% vs 7%) involve coffee rather than tea.

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