Despite an increase in consumers' total food spend, the total amount spent by operators (ie retailers and caterers combined) has, to all intents and purposes, stayed the same. The reason for this is, of course, that the market has started to shift from a low margin model (where retail rules) to a high margin model (where foodservice operates).

But, in total, consumers are not spending much more than they were twenty years ago.

Something has had to give and that something is the foodservice operator's margin. The foodservice margin has been eroded and this erosion has already been through a number of phases

The first phase in this process was felt in the late 1970s with the emergence of high throughput/lower margin fast food operators as a significant force. The next phase, starting in the mid 1980s, was the growth in pub food. This operates on lower margins than were traditionally earned in the catering sector, as publicans are prepared to cross subsidise their food offer with margins earned on wet sales.

The next phase has been the growth of impulse sales of packaged snacks, cookies, cakes, confectionery and other retail-oriented products. In other words, foodservice operators are becoming retailers. Of course this does not apply to all sectors. We wouldn't argue that restaurants, for example, should become retailers. But quick service operators are moving in that direction as are contract caterers.

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