Over the past few years, Quick Service Restaurant (QSR) operators have generally been outperforming the casual dining sector with consumers opting for a lower price, grab and go, quick, F&B offering as opposed to the more traditional sit-down option. Whilst this still tends to be true, the past six months have seen a drop in like-for-likes across QSR operators.
We recently sat down with a handful of QSR operators to get their view of the current market and trends impacting QSR, and this is what we found:
Delivery
The use of delivery platforms remains necessary for many but are becoming increasingly challenging to navigate. Negotiations around commission rates continue to be difficult, with many finding there is little scope for movement. We discussed the option of bringing delivery in-house, drawing on models used by certain pizza brands. This approach not only restores control over quality and brings service back in-house, but can also be used as a form of self-marketing. However, for many operators, this option isn’t feasible, and managing relationships with delivery platforms remains an ongoing challenge.
Promotions through delivery platforms were also highlighted as a complex area. Frequent discounts and offers risk conditioning customers to expect reduced prices, making them less willing to pay full price. This leads to reduced customer loyalty as customers search for the best deal, rather than the best product.
Competition
The UK QSR market has seen increased competition over recent months, driven by a number of factors. Established UK operators are continuing to expand aggressively, capturing greater market share, but putting pressure on like-for likes in existing stores.
Additionally, we are seeing many US QSR operators opening in the UK, with Dave’s Hot Chicken having a successful transition in 2024. This appears to be a trend that is continuing, with Chick-fil-A entering the UK market earlier this year.
With the casual dining sector suffering over recent years, we are also seeing traditional casual dining brands looking to diversify into a more QSR / grab and go offering. PizzaExpress, for example, has recently announced a new QSR offering that will launch later in the year. Again, this is a trend that is expected to continue as operators seek more resilient and flexible formats to navigate a difficult economic environment.
Technology
The use of technology – particularly kiosks – was another key topic of discussion. While kiosks are effective in reducing queue times and are often associated with higher average transaction values, they present challenges in maintaining the “service” element of the QSR experience. With customers increasingly interacting with screens rather than staff, delivering the warm, personal hospitality, that many consumers value, becomes more difficult
Generally, the consensus was that kiosks are a necessary part of the operating model. However, their adoption places greater importance on the reduced human interaction time that remain, particularly at collection points. This presents an opportunity for operators to enhance these touchpoints, ensuring that service quality and brand experience are not diminished despite reduced face-to-face engagement.
Weight loss trend
The GLP-1 / weight loss trend is on the rise and is likely to become a key talking point for the sector over the next 12-18 months. The anticipated introduction of pill-based formats is likely to heighten this trend even further, particularly as these are often favoured over injectable alternatives – a trend already evidenced by the data from the US.
The group noted that such a change in demand isn’t new, drawing comparisons to the increased popularity in veganism seen by the sector, in recent years. The consensus was that operators do not need to fundamentally overhaul their entire offering. Instead, the focus should be on ensuring there are suitable options available to accommodate these consumers. This approach helps to avoid being excluded during group decision-making, where even one unmet dietary preference can lead to a lost visit.
Looking to navigate the evolving QSR landscape with confidence?
With increasing cost pressures and evolving consumer behaviour, having the right financial and strategic support in place is more important than ever. Our specialist Hospitality team works closely with QSR operators to navigate these challenges – get in touch with Nicky Dockree, Hospitality Director, to see how we can help.
