As we enter 2020, director Ashley Cairns draws on the CGA team’s long experience in the on-trade to set out where the market might be heading over the next couple of decades.
This is an edited version of an article that first appeared in The OnTrade Preview 2020.
1. Eating and drinking will remain a part of the national fabric
There will be many threats to the out-of-home sector in the coming years, but even a cursory study of history shows that ever since the founding of civilized and regulated society, a public social gather establishment has been at the heart of that society. There is always a place for a pub, bar, restaurant or club.
2. More churn and change
The last two decades have been characterised by huge churn across the out-of-home sector. The British on-trade has seen 67,204 licensed premises close over the last 20 years, but 42,843 have opened in the same period. And even within the on-trade’s ‘core’ of 73,709 premises—sites that were trading in 1999 and still do today—there has been significant upheaval, with a third of them moving between CGA’s classifications of venue types. For example, well over 5,000 community locals are now classified as food-led pubs, and around 1,500 sites have become hotels. This trend away from drink and towards food and higher standard accommodation looks set to go on.
3. A focus on experience
With out-of-home footfall flat and loyalty at a premium, outlets have to work harder than ever to get people through the door. Consumers are increasingly demanding, and younger generations in particular are looking for exciting entertainment as well as a high-quality food and drink offer as standard. This has led to the emergence of experience-led venues where activities like crazy golf, darts and retro arcade games meet great food and drink. This is now going a step further, with a new wave of venues throwing consumers into a fully immersive story, with actors and Virtual Reality creating the sense of being in another world. With advances in technology, the experiential style of venue is likely to become the norm over the next 20 years, as the industry creates a kind of escapism from everyday life.
4. Personalisation
Tech and social media give companies a wealth of personal information about consumers, and sophisticated, targeted activations and marketing campaigns are increasingly tailored to our personal interests and life stages. As Artificial Intelligence is combined with this data, the out-of-home experience is going to become even more personalised to our needs and desires.
5. Transformation in ordering and paying
With life busier than ever and patience for queuing and bill paying getting ever thinner, the out-of-home sector is being forced to innovate on payment and ordering methods. App payment and ordering is on the rise, and completely cashless premises could soon be commonplace.
In the US and China, we are seeing restaurants and food chains adopt technology in another way: through robots flipping burgers, cleaning grills and taking orders. At least one fast food chain has trialled a completely human-free concept in Shanghai, while some drive-through windows in the US are now operated by AI voice assistants. With 22% of UK households owning a voice-controlled digital home assistant device, and another 41% planning to get one in the next five years, it is not too far of a stretch to imagine that this is how we could be ordering in bars and restaurants by 2040.
6. Investment in people
These tech innovations in the US are partly driven by labour shortages. The basic need for interaction suggests not all human roles will be replaced by machines, but it will be interesting to see how the industry balances the use of technology to fulfil low-skilled functions with investment in people and jobs to create fulfilling, long-term careers. With three quarters of business leaders telling us that developing staff is ‘very important’ to their brand purpose or values, we should see greater investment in training, development, reward schemes and work cultures in the coming years.
7. An emphasis on sustainability
Sustainability is a hot topic in the out-of-home sector in 2020. Greater public focus on waste and recycling is forcing brands to reduce environmental impacts, and the sourcing of food is going to become more closely scrutinised. The impact of climate change on food sources may force the industry’s hand further, driving a necessity to source food sustainably and locally. But the crisis will drive further innovation too, and the out-of-home market can evolve and seize opportunities from environmental challenges.
8. Focus on health
CGA’s BrandTrack survey suggests that two thirds (66%) of consumers are proactively trying to lead healthy lifestyles now. According to our Food Insights report, Vegetarianism and veganism are rising, sales of low and no-alcohol drinks are increasing, and the government is moving to tackle obesity—and food and drink operators will have to respond accordingly. In spite of this virtuous trend, the out-of-home sector will remain an opportunity for treats as well—so brands will have to become more adept at tailoring their offer for different occasions.
9. Competition from workplaces
A growing number of employers are using food and drink to make workplaces appealing to current and prospective staff. As more leisure time is absorbed into workplaces, they are likely to become even bigger and better places for eating, drinking and socialising—though a step up from the old sports and social clubs of industrial companies. Restaurants, pubs, bars and on-the-go operators will need to rise to the challenge of this new competition.
With years of collective on-trade experience, CGA’s experts are ready to help you plan for the future with confidence. For more out-of-home eating and drinking insights and to discuss our forecasts for future trends and opportunities, explore our website and get in touch by emailing us at hello@cga.co.uk.
This is an edited version of an article that first appeared in The OnTrade Preview 2020.
