CGA by NIQ’s Daisy Yates reveals the big trends and opportunities there and explores how Germany’s hospitality sector measures up to the UK.
The Italian focus of Germany’s L’Osteria makes it a good fit for Pizza Pilgrims, and with around 200 sites in Germany and neighbouring countries, it is well placed to help the UK-based brand expand into Europe. It’s a well-known operator in Germany, and CGA by NIQ’s OPUS research indicates that 24% of consumers have visited one of its restaurants in the last six months—which gives it a similar profile to Nando’s in Britain, which has been used by 26%.
However, big managed groups like L’Osteria are rarer in Germany than in Britain. Three quarters (75%) of Germany’s hospitality operators are independent, and much of the sector is made up of unlicensed sites like cafes and bakeries. This split is notably higher than in Britain, where CGA by NIQ’s Outlet Index reveals only 63% of the licensed market is independent.
While there are fewer managed operators in Germany, there have been some successful arrivals there from the UK and US, like Domino’s, Pizza Hut, Whitbread’s Premier Inn and Mitchell & Butlers’ ALEX brand. But it’s less common to see movement the other way, with Vapiano—which started in Germany and now has five sites in Britain—one of the rare examples.
Casual dining and its competition
Casual dining restaurants make up just over half (53%) of Germany’s licensed venues, but this segment is much broader in definition than in Britain. It is made up mostly of indies and covers a range of venue sizes, styles, cuisines and food and drinks sales mix, and is adjacent to the country’s bars and pubs, which are less likely to serve food.
As in Britain, Germany’s to-go sector is a big and growing part of consumers’ engagement with out-of-home eating and drinking, and it accounts for 20% of all hospitality venues. It also has an 8% share of the licensed sector, because some cafes and bakeries open all day and serve alcohol. Off–licenses, or späti, often have tables and chairs at which customers can drink and eat, and they provide a lower–cost alternative to eating and drinking out. It is also legal to drink alcohol in public spaces, so German consumers are much more flexible about where they socialise, and can usually find cheap ways of doing so.
Squeeze on spending
This is important, because consumer spending is under pressure in Germany. Half (49%) of all consumers say they have noticed significant increases in the cost of living in the last year—5 percentage points more than the number who say the same in Britain. The crisis is affecting frequency of visits and spend—particularly among 18-24 year-olds. Only 11% in this cohort say they will increase their frequency of eating and drinking out in the next six months, compared to 18% who will reduce it—a number that is 4 percentage points higher than a year ago. With disposable incomes squeezed, these adults are prioritising planned and more functional visits to the On Premise, and cutting high tempo occasions like big nights out and bar crawls.
Another difference between Britain and Germany is in regional preferences. A quarter (24%) of Germans say it is more important to them that their food is local than it was a year ago—significantly higher than the 16% of British consumers. In addition to the high proportion of independent outlets, there are many small brewers beyond the eight major beer manufacturers that have strong local identities and appeal.
The need to plan
With all these factors, location planning is especially important in Germany at the moment. As people double down on value, and to-go operators and other outlets intensify the competition among casual dining restaurants, identifying the right locations and understanding the nuances of consumer behaviour will be vital for all brands—whether domestic one like L’Osteria or arrivals from overseas like Pizza Pilgrims.
Daisy Yates is client director at CGA by NIQ. For more information about CGA by NIQ’s solutions, including in consumer research, sales measurement and location planning, contact the team.
