Recession turns the UK into a fast-food nation

An interesting way to measure the winners and losers of the recent recession in the UK is to examine what has happened on the ground in the retail sector. One annual survey which paints an interesting picture of how the recession has changed Retail Britain is conducted by the Local Data Company, which sends its researchers walking around the UK’s largest towns and cities marking which retailers are trading.

Its an interesting way of measuring market share. The assumption is that the number of outlets for each retail brand, or type of retailer & outlet, is a proxy for the relative market shares. Of course each outlet will vary in terms of revenues generated. However, retailers do measure their activity in terms of how many stores they have.

The results of the 2009 survey make interesting reading. The clear winners are leading fast-food brands, who have bucked the effects of recession felt by competing retailers, particularly restaurants.

The fast-food sector increased its presence by more than 8% in 2008. While the leisure sector on a whole saw a closure rate of 10%, the number of fast-food restaurants in the UK’s top 10 cities increased by 8.2% to more than 1,450.

The survey of fast-food outlets found that the most successful brands in 2009 were Domino’s, Eat and Prêt A Manger. Domino’s increased its presence by a whopping 50%, while “healthy” fast-food group Eat boosted its portfolio by 36.4% and sandwich chain Prêt A Manger by 29.7%.

Burger King was the least successful, having closed 11.8% of its outlets in the top 10 cities which include London, Edinburgh, Manchester and Cardiff.

Of course, the major operators of fast-food outlets would not be expanding at such a fast rate if there wasn’t the consumer demand to make the extra locations viable. According to Keynote, the fast-food and takeaway market was worth around £9.3bn in 2007, having risen by 16% over the previous four years. All the evidence from results reported by the likes of Pret A Manger, Domino’s, Subway etc during 2008 and 2009 suggests that the market has increased its growth rate during the recession. The growing popularity of fast-food has been driven by simple economics, as people trim their budgets and stay at home more in the face of rising unemployment in the UK.

The FT had a useful summary comment on the results of the survey, focusing on the strategic response of fast-food businesses to the recession:

“At a time when restaurant chains, hit by higher operating costs and lower spending among diners, are scaling back growth plans, fast food companies, emboldened by new custom and lower rent, have expanded their presence on high streets.”