Market Conditions to Toughen

By Carina Simon

- Last updated on GMT

Related tags: Food inflation, Food, Uk

Changing market conditions will affect the hospitality market

THE UK’s restaurants and particularly pubs will fall prey to changing market conditions.

These include food inflation, over-capacity in the eating out market and the downturn in consumer spending according to market analyst Horizons, which has just released its 2008 statistics on consumer spending across the UK’s £40bn eating out market.

Food inflation is set to rise at 6.5 per cent in the next six months, while restaurant selling prices are expected to increase by 3.25 per cent with the 3.25 per cent gap expected to put a strain on operator’s margins.

Horizons’ Peter Backman said, “Since the smoking ban many pubs have switched their focus from the sale of drink to food, meaning they are now competing with high street restaurants.

This has led to an over-capacity of outlets in the mid-spend sector. At the same time consumers are tightening their belts as food, energy and fuel prices rise, and the mortgage market looks increasingly vulnerable.

Because of this competition, the UK’s eating out sector – which consists of some 263,000 outlets – will have to rationalise by driving the less successful operators, whether it be restaurants, quick service outlets or pubs, out of business.”

The average spend on a UK restaurant meal is now £11.09 per head including drink, compared to £5.22 on a pub meal and £4.60 at a fast food restaurant.

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