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Food service sector should 'expect growth'

08 | 05 | 13

The UK food service sector is set for long-term growth, according to the managing director of Horizons. 

Speaking at the company's annual briefing, Peter Backman claimed the worst of the recession is now over, but warned it will take until at least 2016 before food sales return to 2007 levels. 

While the industry grew nominally by 2.1 per cent last year, it actually declined by 0.4 per cent once inflation was accounted for, with total food and drink sales of £44.1 billion. 

Mr Backman said customer spending habits have changed and businesses must now adapt if they are to grow. 

"Consumers are not confident at the moment although confidence is stabilising. There are grounds for optimism and some catering sectors are now demonstrating growth. 

"Many operators have responded to trading challenges by looking at new opportunities and serving food throughout the day. The real winners have been snacking and the breakfast market. We think the two will grow considerably over the next few years."

The most recent Horizons data shows that food sales in the eating out market were worth £32.8 billion in 2012. Snacks accounted for more than a fifth of this and are expected to grow by 4.4 per cent in 2013. 

Breakfast is predicted to rise by the same amount and lunch, which currently has a 45 per cent share of the market, will have a small increase of 0.6 per cent. 

However, this growth will have a negative impact on evening dining, which is expected to decline by 2.1 per cent in the next 12 months. 

These figures will be of interest to catering equipment suppliers, as they may affect the level of demand for certain types of product.

Horizons believes meal sales through restaurants will grow by 2.3 per cent  this year, while hotels will increase sales by 1.3 per cent and the quick service sector will see a one per cent rise.

Mr Backman also provided a warning about the types of business that could struggle in the year ahead. 

"Companies that are financially stretched, dependent on the public sector, are unprepared to adapt and those that are failing to offer value for money, will be the ones to suffer in 2013. These are likely to be independent, tenanted or leased pubs and the healthcare and education sectors."

The pub sector is expected to see a fall in meal sales, with a drop of 1.5 per cent mainly caused by tenanted outlets struggling and more sites converting into restaurants.

Mr Backman identified four key issues, which he believes will be crucial for operators in 2013 - winning and retaining business, meeting customer expectations, protecting margins and coping with strong comparatives from the Queen’s Jubilee and the London Olympics.

Chris Watling, chief executive and chief market strategist with Longview Economics, said the economy is unlikely to get back to the gangbuster years of three per cent growth, but the outlook for manufacturing and employment have "never been better".

"We have about four or five more challenging years ahead, but we will get there in the end," he statedADNFCR-16001031-ID-801582811-ADNFCR

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