Why are chain restaurants losing customers?

After the recent news of Jamie Oliver’s restaurant chain going into administration, concerns have been raised that the food industry is on a steep decline. Food and drink chain establishments such as Carluccio’s, Byron Burger and Gourmet Burger kitchen have also closed down some of their stores to cut costs, with Gourmet Burger Kitchen announcing £47m losses in 2018. Despite many chains closing, it appears that the food industry is booming. Since 2015, the industry has seen a growth in turnover - £86bn in 2015, £92bn in 2016 and £98bn in 2017, with predictions showing that the industry would hit £100bn in 2018. So much so employers in the UK have said that one of their main concerns is recruitment, because they can’t hire enough staff to fill the demand for their staffing requirements. New insight provided by Mediacom North to Premier line suggests that changing consumer behaviour may be the cause of chain restaurants losing market share. It showed that over the last two years, chain restaurants had shown a fall in value, from £4.8bn to £4.6bn, a drop of 3.68%. However, independent restaurants had shown a growth of 3.71% from around £13.8bn to £14.3bn in two years. This clearly shows that customers are becoming less interested in chain restaurants and are starting to move to independent restaurants. The insight also listed some trends in the chain vs independent food market. Over saturation – Whilst some believe that the UK restaurant market has too many restaurants, this is not actually the case. The problem is that the market is saturated with too many of the same restaurants. Individuality – Casual dining has seen a decline in growth, but creative entrepreneurs are ensuring that there is a steady growth in the independent restaurant industry. City growth – Liverpool and Manchester have both seen a 25% increase in independent food and beverage concepts since 2014. Chain restaurants are perceived lacking individuality and authenticity. Chains will use the same recipe across their restaurants throughout the country, which means that a meal that you might choose in Glasgow will taste the same as the same meal in London. Whilst customers are getting the same experience regardless of the location, they don’t receive much variety. On the other hand, independent food businesses can work to a recipe, changing menus to take advantage of seasonal produce, or if they receive customer feedback to make a change, they will be able to do this at short notice without having to make substantial changes to how they operate. This flexibility can offer customers a higher level of variety when choosing to eat or drink at smaller businesses. The insights also looked into examples of attempts by chain restaurants to mitigate the changing preferences of consumers. Wahaca decided to rebrand themselves with the “independent spirit” of the company’s co-founders. They noticed that more independent restaurants and pop-up eateries were emerging, and were offering customers a better choice of food when dining out, which has left the big chain restaurants struggling. Business Matters also identified a major customer concern was the quality of the food. There is also the view that the quality of Independent restaurants is superior to chain restaurants. Quality is often a concern at chain restaurants because of how the restaurant makes their food, and the ingredients they use. Large chains often use cheaper ingredients, which can also affect the quality and taste. Jamie Oliver’s restaurant was also found to be using the same steak supplier as Wetherspoons, yet charging twice as much as the pub chain for the meal. Premier Line’s findings also provided insight about how changing consumer has impacted similar industries and how new entrants have flourished. Since 2011, the number of branded coffee shops has doubled, but numbers of independent coffee shops saw a 41% increase in 2017 alone. One of the reasons for this is because high quality independent cafes have the ability to stand out in a crowded market. The same goes for independent restaurants, which can make an impact in their community. Young entrepreneurs also noticed a lack of authenticity when visiting chain coffee shops which they used to their advantage by using authentic ingredients and styles in their own businesses. By business intelligence team Premier Line