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Growth Through Digitilisation

IRI GIRA Foodservice is a research consultancy focused on the out-of-home food market across Europe providing a range of market measurement and predictive trend modelling services. Virginie Pernin, Chief Analyst, IRI GIRA Foodservice looks at a recent study on Europe and explains why digitalisation is a key driver for the sector’s growth.

IRI GIRA Foodservice predicts that the foodservice market in the UK will be worth £61.4 billion by 2020. Sales in the out-of-home sector (i.e. places where food and drink are bought to be consumed by people away from their homes) increased in the UK by £1.4 million in 2017 alone and are now worth £58.2 billion. One in four (25%) of all meals eaten in the UK is consumed out of home (OOH), according to a new report on the foodservice sector in the region by IRI GIRA Foodservice.

The IRI GIRA Foodservice report reviewed more than 290,000 foodservice outlets in the UK as well as outlets in nine other European countries – Austria, Belgium, France, Germany, Italy, the Netherlands, Portugal, Spain, Switzerland – between 2015 and 2017.

With increasingly fluid families – in particular fewer families with children and more single parent or single occupant homes – and more people working away from home, there is greater demand for convenient meal solutions.

Despite a boom in sales of ready meals and meal kits in supermarkets catering to the trend for convenient meal solutions eaten at home – with sales in Europe at €8.3 billion in 2017 – it seems many Europeans prefer an eat out to be eaten in.

PhoneAll-day options

Restaurants and other foodservice outlets have capitalised on this trend by providing options for more meal occasions including breakfast and brunch. These establishments are also diving into the digital era in a big way, making it as easy as possible for consumers not only to find them in the first instance, but also to order and pay.

Eating out is no longer a special occasion. It is now widely perceived that eating out is easier – and a more attractive proposition – than buying food and cooking at home.

Harnessing data

The opportunity that digitalisation presents for the foodservice sector is huge as data becomes more available and important to the industry. Being able to understand customers better and consequently being able to target them according to their needs at different times of the day and for different eating occasions is critical in this new world. Creating an offer that can appeal throughout the day is one way that outlets have been able to expand the market in recent times.

Bicycle deliveryOOH takes on new meaning

Digitalisation is also directly responsible for growing the market by creating a slightly different take on the concept of out of home. Foodservice providers are increasingly focused on offerings that are consumed in the home. This change has been expediated by working with delivery partners. In some cases this is a front-end app such as Just Eat or an end-to-end solution like UberEats, Deliveroo and Amazon Restaurants. Deliveroo has just launched a global advertising campaign to showcase the breadth of food available on its service, which ties in with IRI GIRA’s prediction that this an area with considerable room to grow, with a particular focus on healthier and premium options.

Virtual restaurants

In some cases the OOH change is going yet further with the development of delivery kitchens where activity is focused only on delivery without a bricks-and-mortar restaurant at all. This can be a smart solution for foodservice providers as it allows them to expand their reach without having to locate in prime geographic areas in order to attract footfall. Since all the ordering is done online and delivery drivers take the food directly to consumer, the kitchen location needs significantly less space and prominence than a restaurant would, allowing for higher margins.

As the UK market is more mature than the rest of Europe, growth opportunities are limited for the moment, but digitalisation provides a significant opportunity for providers to cut through and gain competitive advantage.

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