Why Western brands are taking a chance on the UK
While dining out seems to have lost some of its appeal to US consumers, it's becoming a more popular option for people in the United Kingdom.
"It is a solid fact that the demand for eating out among UK consumers are growing," said Elif Polat, Research Analyst at Euromonitor International.
"Consumer foodservice grew by 3 percent in value terms in 2016, an important achievement for the industry considering the fact that UK is a quite mature market," she said in an interview with FastCasual
Polat predicted that it will continue to grow over the next five years with a value growth of 7 percent from 2016 to 2021.
"This can be linked to the fact that UK consumers eat out more as a result of consumers' changing cooking habits driven by busy working lives and the demand for convenience," Polat said. "Especially, young adults are the main drivers for the sector to grow as they are less likely to cook and seek for ready meals in order to save time or to entertain with their friends by eating out.
Western brands going across the pond
Western brands are already taking advantage of this trend. Over the past few weeks, for example, several have announced their entry into the UK market. Which Wich Superior Sandwiches CEO Jeff Sinelli said the brand is focused on opening 10 locations throughout London in the short term, with a capacity to add more than 100 locations around the country. Canada-based Tim Hortons will open this month in Glasgow, and Wingstopsaid it is planning 100 locations over the next 12 years throughout the UK.
"With this positive picture, it is not surprising that players out of Europe such as Wingstop and Tim Hortons (and Which Wich) fix their eyes on the UK to penetrate the European market," Polat said.
Although they offer different types of products, Polat said Wingstop and Tim Hortons have the opportunity to grow in the UK market.
Wingstop's advantage is that chicken fast food is one of British consumers' favorite foods to order when dining out or ordering takeout. Chained chicken fast food registered a sales value growth of 3 percent in 2016, according to Euromonitor.
"Tim Hortons is even in a better position as Brits' love for coffee is growing especially among young adults," Polat said. "Coffee shops are now one of the most popular meeting points for most consumers to spend time with friends.
While Euromonitor hasn't yet tracked Which Wich, the brand's London franchisees, brothers Rami and Nader Awada, recognized the demand for hot sandwiches with customizable toppings in the London market, where there is a saturation of cold grab-and-go options. The brothers are scouting locations for their first Which Wich to open in London city center in 2017.
"When I first stumbled upon Which Wich in the States, I was drawn by the name, the vibe inside the restaurant, and their creative ordering system," said Rami Awada. "But after trying their sandwiches, I understood why they call them ‘superior.' I knew right then that it was a concept that Londoners would love, and could take the U.K. by storm."
Brands entering the market from the West, however, must bring something new if they hope to compete.
"There are strong brands, which are established quite well in the UK such as Costa and KFC, and it is not an easy job to make consumers change their mind and chose a new brand," Polat said.
Although the UK consumers can be very price sensitive, they are also ready to pay more for something that has a better quality or offers a different experience.
"With this in mind, if these two brands somehow manage to bring a different experience — a new flavor or a new outlet design, for instance, then it is very likely that they can be permanent players of the UK consumer foodservice in the years ahead."
Ross Gilfillan, editor of Global Franchise, agreed that the UK is certainly an attractive proposition to such outlets.
"We have a fast food culture already established, and franchising is becoming a much more acceptable business model," he said. "It helps US franchisors that we operate in English. The UK also manages without the disclosure regulations in force in many other franchising countries."
Learning from one another
Restaurant brands aren't the only Western companies recognizing the potential of the UK restaurant franchise market. Networld Media Group, parent company of FastCasual, QSRWeb and PizzaMarkeplace, has chosen London as the site of its biannual Restaurant Franchising and Innovation Summit.
The event, which is set for July 18-20 in London, brings together top restaurant executives hailing from the US and Europe to learn from one another. Wingstop, Pizza Hut UK, Coyote Ugly, Freshii GB, LEON, Fazoli's and Farmstand, for example, are just a few brands represented on the agenda, said Kathy Doyle, publisher of NetWorld Media Group.
"Our job is to study and always be ahead of market trends," Doyle said. "We saw (a couple years ago) that the UK was going to be ripe with restaurant franchising for brands across the world, which is why we decided to make our global debut there. Watching that prediction come to fruition is exciting, and we are happy to offer an event where brands can come together to help one another grow."
Register here for the Restaurant Franchising and Innovation Summit.
Cover photo: iStock
Topics: Operations Management
Cherryh Cansler Before joining Networld Media Group as director of Editorial, where she oversees Networld Media Group's nine B2B publications, Cherryh Cansler served as Content Specialist at Barkley ad agency in Kansas City. Throughout her 17-year career as a journalist, she's written about a variety of topics, ranging from the restaurant industry and technology to health and fitness. Her byline has appeared in a number of newspapers, magazines and websites, including Forbes, The Kansas City Star and American Fitness magazine. She also serves as the managing editor for FastCasual.com. www