Industry News | February 12, 2007

Yum! Brands Inc. Announces Buy Back

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Consumers spent £13.25bn on sit-down meals in restaurants in 2005, a market growth of 19% since 2001. Although this figure excludes any spending on alcoholic drinks to accompany meals, it represents around a third of the total consumer catering market (which also includes takeaway food and canteens).

Choice is characteristically broad in the UK, owing to the willingness of the British to adapt to new styles of eating and drinking from all over the world. Portuguese chicken, Japanese sushi and Spanish tapas have joined the more traditional curry houses and French or Italian restaurants found in most British towns. However, the most traditional British venue--the local pub or hotel--still has the highest sector share of formal, sit-down restaurant meals (excluding fast food such as burgers and fried chicken), while other distinct concepts include pizza, curry and roadside restaurants.

Ownership of most restaurants is still fragmented across individuals and families, and there is growing consumer distaste for the more obvious chains. However, the market does boast some successful multiples, led by the US-based fast-food giants (McDonald's, Burger King and Yum! Brands - owner of Pizza Hut and KFC), and some outstanding UK groups, including Whitbread Group (Brewers Fayre pub-restaurants), The Restaurant Group (Frankie & Benny's), Gondola Group (Pizza Express) and Nando's. Private equity has been heavily invested in restaurant groups in this decade.

The latest consumer research for Key Note shows that Pizza Hut is the most widely used non-fast-food restaurant chain (by 32% of adults), but most of the branded chains have been losing customers. In July 2006, the international owner of Pizza Hut, Yum! Brands Inc, announced it is buying back the 50% share in the UK business held by Whitbread.

The market will continue to grow even if the economy slows down later in the decade. This is because eating out has become a major element in the lifestyles of younger generations, and the older baby boomer generation has been brought up with an expectation of eating out regularly. Problems and challenges for restaurants in the future will include the demand for healthier eating, labour shortages and a torrent of red tape from both UK and EU governments.

News and information presented in this release has not been corroborated by QSR, Food News Media, or Journalistic, Inc.