A Look at the U.K.’s Fastest-Growing Limited-Service Segments

For the U.K.’s top chain restaurants, 2013 was a year of healthy growth, even if trade gains weren’t quite as robust as in 2012.

The concepts that made Technomic’s 2014 list of the 100 largest U.K. chain restaurants (by U.K. systemwide sales) as a group saw sales rise 6.4% last year, compared with a gain of 7.1% the previous year. McDonald’s, not surprisingly, was the largest chain overall, posting 2013 U.K. sales of more than £1.8 billion—but that reflected year-over-year sales growth of just 1%.

Meanwhile, among the top 10 U.K. restaurant chains, industry outperformers were Wetherspoon (sales growth of 9% in 2013), Costa Coffee (18.4%), Domino’s Pizza (14%), Subway (7.3%) and Nando’s (7.8%).

Costa helped drive growth of the Top 100’s limited-service coffee-café segment, which as a whole posted trade gains of 10.9% to £1.9 billion. But as strong as that almost-11% segment growth was, it still wasn’t enough to rank the coffee-café segment among the fastest-expanding limited-service menu categories in the U.K. last year. The three fastest-growing LSR menu categories in the U.K. in 2013 were as follows:

Asian/Noodle: sales up 17.9%
Patisserie: up 17.7%
Frozen Dessert: up 12.5%

What’s allowing these menu categories to stand out within the LSR category? Let’s look at high-growth concepts within the segments and the dynamics that may be contributing to the segments’ strong performance.

Asian/Noodle: Itsu was the only limited-service Asian concept to make the U.K. Top 100, meaning it was solely responsible for the Asian/Noodle LSR subsegment’s 17.9% growth. (Because it’s significantly smaller than LSR menu segments such as burgers and pizza, the Asian/Noodle subsegment falls under Technomic’s “All Other” LSR menu-segment heading, along with Frozen Dessert and Other Beverage/Snack. The “All Other” LSR segment overall saw growth of 10.1% in 2013.) Itsu has been buoyed by the success of the expanding fast-casual category, and its positioning as a fresh, contemporary, more-healthful option for lunch, dinner and snacks seems to be resonating with consumers. (The chain also offers a line of retail products.) Sales in 2013 rose to an estimated £21.7 million; Itsu closed out the year with 43 units—an increase of 10%. Notably, two up-and-coming Asian LSR chains, The Real China and Wasabi Sushi & Beneto, also posted impressive sales gains in 2013. The Real China’s sales rose nearly 16% to £19 million, and Wasabi’s sales climbed almost 20% to £14.6 million.

Patisserie: Four patisserie chains made the 2014 U.K. Top 100 list—Sayers the Better Bakers (estimated 2013 sales of £78 million), Patisserie Valerie (£53 million), PAUL (£30.4 million) and Muffin Break (£23.3 million). Among these, Patisserie Valerie has had perhaps the most remarkable performance of late: 2013 sales grew almost 25% and units grew 24%, and last month the chain debuted on the London Stock Exchange’s AIM, for smaller growing companies. Patisserie Valerie, backed by the founder of Pizza Express, stays on trend with an extensive menu of speciality sandwiches and snacks, all-day breakfast and brunch offerings, speciality coffee and espresso beverages and traditional patisserie treats. The chain also specialises in special-occasion cakes and now offers delivery service across London.

Additionally worth noting in the patisserie segment: Sayers’ 2013 success—sales up nearly 22% while units were flat—illustrates that while emerging fast-casual concepts may grab the most buzz, traditional, family-friendly, quick-service concepts still have room to grow, too.

Frozen Dessert: Only one frozen-dessert concept, Ben & Jerry’s, made the U.K. Top 100 list (ranking No. 46 on that list with £72 million in trade). But Ben & Jerry’s sales rose 12.5% in 2013 while units climbed 7%, suggesting that the ice-cream treats purveyor hasn’t scooped up more than it can manage from an expansion standpoint. Competitor Baskin-Robbins ranks as an emerging/regional chain, with U.K. sales an estimated £20.5 million in 2013 (up nearly 11%).

Overall, limited-service restaurants within the Top 100 saw growth of more than 6% in 2013. Fast-casual concepts as well as quick-service chains that pay heed to consumers’ rising demands for more-convenient, higher-quality, fresher-tasting meals and snacks are poised to continue to grow their audiences—and sales—through the rest of 2014.

Next time: A look at the U.K.’s fastest-growing full-service menu segments.


Darren Tristano

Darren Tristano is President of Technomic Inc. Since 1993, he has led the development of Technomic’s Information Services division and directed multiple aspects of the firm’s operations.

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