Meanwhile, U.K. Operators Struggle With A Soft Economy, Snow, Tax Increases And Government Cutbacks

Our friend Peter Backman, principal at Horizons for Success, the London-based research firm, sent us his review of foodservice in the United Kingdom in 2010 and the outlook for 2011.

Last year wasn’t easy for foodservice operators in the U.K. either, though the market improved from a dreadful ’09. Backman mentioned the negative impact of big snow in both winters, the continuing drag of the housing crisis and other economic difficulties, and government spending cutbacks planned by the new government elected last summer, with school and healthcare foodservice most affected.

Backman estimates total meal-away-from-home numbers will be down another 1% in ’10, but sales rising about half a point, thanks to price increases He also notes “Suppliers of capital goods will have seen the dramatic sales decline that started in 2009 bottoming out at the end of 2010.”

He says sectors that are doing well include managed pubs (aggressively promoting food as beer sales decline), fast casual, “relaxed meeting places” (upscale coffee shops and bakery/cafés ), and operators in London, benefitting from the revival of the financial sector and foreign visitors.

Sectors suffering included tenanted and leased pubs, which are having trouble competing on the food side, and noncommercial operators, under pressure from government cost-cutting.

The new year started off with an increase in the value-added tax to 20%, which essentially meant a 2.1% price increase for commercial operators. U.K. operators face the same problems as their American cousins, with rising food and tax costs and weak demand that limit their ability to raise prices.

“There is little reason to expect the first half of 2011 to be better than the end of 2010, but the second half of the year might—with luck and a following wind—turn out to show measurable growth,” Backman concluded. Who says the Brits are chronic pessimists?