Retail-restaurant partnerships that see restaurants situated in retail or grocery stores are not a new thing but could increase in popularity as the foodservice sector looks for new ways to survive the UK energy bills crisis, according to GlobalData, a leading data and analytics company. In a sign of things to come, the Boparan Restaurant Group plans to launch its restaurant and takeaway brand ‘The Restaurant Hub’ in 30 Sainsbury’s stores later this year.

Consumer survey shows demand for retail-restaurant partnerships

According to GlobalData’s latest Foodservice Insights and Trends report, ‘Restaurant Experiences Post-COVID-19’, a significant proportion of global consumers frequent venues such as supermarket restaurants or cafes on at least a weekly basis. The company’s latest Q3 2022 consumer survey also reveals that a quarter (25%) of Brits who state that they visit a supermarket café or restaurant once a week confirm that they are making more frequent shopping trips but spending less each time as a result of the cost-of-living crisis.

Hannah Cleland, Foodservice Analyst at GlobalData, comments: “There is clearly shopper demand for cafés and restaurants to be part of the shopping experience and the sharing of rent, utility bills, and associated overheads can help both businesses in a retail-restaurant partnership control costs better than they would be able to operating on their own. Partnering with retailers may provide some foodservice operators the respite they need from soaring energy bills and for retailers it will encourage more shoppers to opt for a quick bite to eat after the weekly shop in store rather than heading elsewhere.”

Older generations are prime consumers for supermarket restaurants

What makes this an interesting proposition in the midst of the cost-of-living crisis are the different approaches consumers are taking to cutting back. GlobalData’s research suggests that older generations are more likely to make more frequent but smaller shops as they are typically less willing to deviate from their usual routine and have more free time.

Cleland continues: “It will be interesting to see how well retailers will be able to balance the quality and pricing of a branded restaurant offer with the ability of their cash strapped consumers to dine on a regular basis. People on a strict budget are least likely to dine on a regular basis whereas older generations remain prime consumers for supermarket restaurants.”

Full service UK dining formats will struggle to survive

GlobalData’s market analyzer highlights that full-service dining formats are struggling under the current economic climate compared to quick service (fast-food). In the UK casual and fine dining had sluggish value compound annual growth rates (CAGRs) from 2019 to 2022 of just 0.6% and -0.7% respectively, while quick service managed to grow by 1.9%.

Cleland adds: “Fast food style restaurants operating in retailers are likely to fare better than those with more pricier menus and if they can transfer overhead savings into menu prices, a stores high footfall will provide plenty of eager dinners. Boparan’s deal shrewdly places its full-service brands such as Carluccio’s and Gourmet Burger Kitchen in a mid-priced supermarket like Sainsbury’s who follow a competitive pricing strategy rather than a price cutting policy. Generally speaking with a higher disposable income Boparan’s offer will appeal to a Sainsbury’s shopper who may well decide to eat in store rather than forego dining out altogether.”