Credit Crunch and the Catering Trade

The UK catering market, sometimes called food service, is big but woefully under-reported. Whilst goings on in the grocery trade seem to be analysed almost daily, figures about performance in catering are difficult to find.
Yet,having some understanding of sales may be helpful for producers to gauge whether demand is rising or falling and to take a view on likely future prices. For the many producers selling direct to catering outlets, this understanding becomes vital,not only to assess impact on demand and prices, but to monitor the trading performance of their customers to avoid bad debts.
So here's a go at pulling together available data.
First, not all catering outlets will see a change in demand. Schools, hospitals, prisons, care homes, will still need to feed those they look after. But local authorities work to a strict budget, and may change the type of food they offer and bargain over prices paid to suppliers.
In the profit making sector, there is evidence that the cheaper or budget end of the restaurant market is doing well. McDonalds Europe reported that its sales for May were 9.6% ahead of last year, with the UK believed to have done even better.
At the other end of the spectrum, the Guardian contacted 8 of the smartest restaurants in London and only one had a table for 4 free at 8.00 on a Saturday before the end of July.It is the middle ground, outside of London which seems to be suffering. The Cumberland News reported on 3rd June that Carlisle had seen a slump in diners and that a number of eateries had closed.
Restaurants and eating places located in out of town shopping malls will be struggling. The Financial Times yesterday reported a survey by Experian, the market research company,which found that 5.8% less people visited such malls in June, as consumers, spooked by high petrol prices, decide not to travel. The survey also found that traffic in town centres had fallen by 1.8%. Eateries are bound to be affected.
The picture in pubs is mixed, as are views about whether the smoking ban has been a good or bad thing for food sales.J.D Wetherspoon has reinvented itself as an all day food provider, and recently reported rising food sales, although bar takings were down.Whitbread also seems to be defying the gloom. In the 13 weeks to 29th May their Beefeater and Brewer's Fayre chains grew by 3.6%. Mystifyingly, their Costa Coffee shops, despite purveying extremely high priced coffees, grew by 6%. Other good news from catering operators is thin on the ground though.
An email from a market researcher with the new meat levy board says that in the early1980's recession catering was worse hit than grocery, and that eating at home increased particularly at lunchtime. Some work they have done with consumers recently indicates that they intend to eat out less, and it is likely to be pubs which suffer most.
So catering businesses are facing a difficult time. But as ever, whether premium budget or somewhere in between, those giving great food, great service and value for money (which is not the same thing as cheap), should weather the storm.