‘Big ideas for ambitious brands’, a Peach 20/20 Atlantic Club webinar hosted by Peter Martin, brought together industry experts to explore the future for the On Premise in the US, UK and beyond. CGA’s Alexandra Martin and Andrew Hummel set the scene with the latest market insights; here are ten of their top messages.
1 Sales are recovering…
CGA research shows the US On Premise has shrunk by 7.9% in outlet terms since March 2020—but also that velocity of sales is returning to pre-pandemic levels. Three quarters (77%) of consumers are now spending as much or more as they did before COVID, and average check values have jumped from $36 to $43 in two years. Casual dining (up 7%) and neighborhood bars (up 17%) have been among the best performing segments. “For those outlets that have survived, the return of the On Premise is well under way,” said CGA’s Alexandra Martin.
2 … And so are business and consumer confidence
Business confidence is coming back too, with 57% and 76% of US operators feeling optimistic about the eating and drinking out market over the next six and 12 months respectively. US consumers’ levels of optimism are rising as well, to levels well above global averages. “It’s a hugely promising story for the On Premise… there’s a real resilience in the industry,” said Martin.
3 Delivery is still booming
Lockdowns saw a surge in consumers’ orders of deliveries and takeaways, and while demand may well subside as venues return to normal, many people will take their habits forward. Four in five (80%) consumers expect to use delivery more or as often as they currently do. Alcoholic drinks are increasingly part of the mix, and more than a third (37%) of consumers have ordered them in the last three months, up by 10 percentage points from Fall 2020. These channels complement rather than cannibalise eat-in trade, Martin said. “Delivery doesn’t have to stop consumers from visiting venues—it increases the number of touchpoints operators can have with their base.”
4 Staffing is a big concern
Asked about their most important operational issues in the next 12 months, more the four in five business leaders identify staff retention (89%) and availability (82%). Redundancies and team members’ movements have left many businesses short of staff in 2021, and there is likely to be intense competition for available talent in the months ahead.
5 Occasions have shifted
CGA data at the webinar showed a variety of COVID-related shifts in consumers’ interaction with restaurants, pubs and bars, Family visits remain the most common occasion in the US, while numbers preferring to meet in small parties (81%) is four times higher than those preferring big ones (19%). “A theme across all markets is the desire to meet in small groups,” said CGA’s Andrew Hummel. Consumers are also much more confidet in open-air venues, and are moving their meals and drinks out to quieter days of the week and dayparts—though bigger, more celebratory occasions will increase their share in due course. “City centres will eventually get busier, but these shifts in sales shouldn’t be ignored in business planning,” Hummel said.
6 Returning drinkers want familiarity and cocktails
Two of the big drinks trends emerging in the post-lockdown market are a return to tried-and-trusted brands and a thirst for cocktails. CGA’s BeverageTrak shows nearly half (45%) have only chosen brands they are familiar with and trust since COVID. The cocktail market has been thriving too, as consumers select drinks they’ve missed during lockdowns. “Consumers are looking for something they couldn’t recreate at home,” Martin said.
7 Range has narrowed
The appeal of familiar drinks has contributed to a contraction in range, and the number of different brands ordered in outlets has dropped by 21% from 2019. Trial of new drinks will increase as people settle into new habits—emphasising the need for operators and suppliers to constantly work together to identity the right assortments.
8 Pre-packaged drinks are set for growth
Bar and pub closures and efforts to recreate On Premise experiences at home have left consumers more familiar with packaged cocktails. This opens the door to greater out-of-home sales too, said Hummel, with products like pre-mixed cocktails and single-serve wines already seeing growth. “There’s definitely On Premise potential… there’s a clear consumer preference shift towards convenience,” Hummel said.
9 Interest building in no and low
Interest in no and low alcohol drinks has been steadily increasing in recent years, but the sharp focus on health during the pandemic could propel them further into the mainstream. One in nine (11%) consumers has chosen them since returning to the US On Premise, CGA’s data shows. “A strong no and low alcohol offering is essential for operators now,” Hummel said.
10 Customer understanding is essential
Consumers’ habits and priorities have been reshaped by the pandemic, and all brands need to work out how to respond. “It’s more important than ever to get that deep understanding of consumers… to understand the path of purchase for each consumer group and each occasion,” said Alexandra Martin. Suppliers have a big role to play here: when operators were asked how they could support them, the top response was through market insights and thought leadership.
The ‘Big ideas for ambitious brands’ webinar was hosted by Peach 20/20 Atlantic Club in partnership with CGA, Harri and Harrison. You can watch a full replay of the webinar below or by clicking here
To learn more about CGA’s suite of US and global research sources and how they can help suppliers and operators, email alexandra.martin@cgastrategy.com.
