Will drive-through and digital orders dominate foodservice in the coming years?

The NPD Group predicts out-of-home foodservice visits will continue to decline as delivery, takeaway and grab-and-go continue to grow in popularity.

23 January 2019
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  • By the end of 2018, drive-through still only represented 6% of the off-premise market in visit terms but is forecast to grow by 60m visits (14%) by 2020.
  • NPD estimates there are now close to a thousand drive-through outlets in Britain as operators continue to diversify their store estates away from the high street and find other locations that consumers frequent.
  • Visits originating digitally – either via digital kiosks, order screens in a foodservice outlet, or by ordering online or via apps for takeaway – will exceed 1bn per year for the first time by end of 2020.
  • The use of apps in particular is expected to continue to see a rapid increase in use, with visits that originate from an app (both click-and-collect and delivery apps) forecast to leap by 88% between now and the end of 2020.
  • If app-based orders perform as predicted, they will have grown 2.5 times in visit terms since the end of 2017.
  • NPD forecasts off-premise visits, such as delivery, takeaway, grab-and-go and drive-through, will reach 7.21bn visits by the end  of 2020 (4% higher than 2018), while spend is forecast to jump 10% to £27.87bn.
  • Takeaway and grab-and-go visits are expected to increase by 1.6% and spend to go up 6% by the end of 2020. Currently, these two areas make up 83% of the total off-premise trade.
  • The delivery market currently accounts for 13% of all off-premise foodservice visits, but by end of 2020, its share will have increased to 15%. In fact, in two years NPD believes delivery could comprise almost 10% of spend in the total British out-of-home (OOH) foodservice market, piling additional pressure on operators that rely heavily on on-premise visits.
  • Consumers could spend 22% more on delivery by the close of 2020 to create a delivery market worth £5.8bn annually, while the number of delivery visits will jump 17% to reach 882m.
  • Despite these prognostications, at the moment the average on-premise bill of £7.17 is nearly twice the £3.66 seen for off-premise purchases.
  • The established trend of consumers trading down to cheaper eats when eating out is forecast to continue. The QSR channel, including well-known burger and bakery chains, is expected to attract 41m more visits each year by the end of 2020 to reach nearly 6bn annually. This represents more than 53% of the entire British foodservice industry in visit terms. NPD estimates that QSR will attract £1.53bn more spend by the end of 2020 to reach £24.6bn.
  • During the same period, casual dining will be attracting an additional 43m visits to represent 5.5% of all OOH visits, while spend will rise 15.5% to £960m. But full-service restaurants will continue to decline with a loss of 63m visits, a drop of 9.3%.
  • The OOH market peaked at 11.35bn visits in 2017 but dropped 0.5% to 11.29bn in 2018.
  • Despite population growth of 0.6% per annum, there will be a further drop in the OOH market of 0.5% in 2019 and another of 0.1% in 2020 to reach 11.23bn visits.
  • However, NPD is predicting a 5% increase in spend to £59.47bn, against the £56.62bn for 2018. This will be mainly driven by operators increasing menu prices as they respond to cost pressures, including inflation.
  • The average individual bill of £5 in 2018 will rise an additional 5.6% by 2020 to £5.30.

 

“The pressures affecting on-premise eating and drinking is a big theme in British foodservice,” said Dominic Allport, insights director at the NPD Group.“The old habit of going shopping and finding a place to sit down and eat is on the wane as more people shop online. We are predicting that all the meaningful growth in foodservice will be ‘off-premise’ and this is where the industry will address the decline on the high street.

“We forecast that the modest growth in the large takeaway and grab-and-go channel, supported by the continuing delivery revolution, is enough to provide 85% of the growth in spend over the next two years for the entire British foodservice industry. The growth of drive-through is part of a trend towards more convenience and a result of consumers spending less time on the high street. But operators must address the big price gap between on-premise versus off-premise.”

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