Consumer confidence setback puts restaurants in ‘stop-start mode’

By Luke Nicholls

- Last updated on GMT

Related tags: Consumer confidence, Inflation

Confidence boost? Horizons expects consumer confidence to return in line with economic growth
Confidence boost? Horizons expects consumer confidence to return in line with economic growth
With latest figures showing that consumer confidence suffered an unexpected dip in the final quarter of 2013, foodservice consultancy Horizons believes the eating-out sector will remain in ‘stop-start mode’ until the economy has fully recovered. 

According to the Deloitte Consumer Tracker, released today (31 January), the net balance of ‘sentiment’ fell deeper into negative territory at the end of last year; to -11 per cent, compared with -8 per cent a year earlier. This is the first time consumer confidence has fallen in over a year.

“We think the dip in consumer confidence is a setback rather than a longer-term, underlying decline,” said Graham Pickett, head of travel, hospitality and leisure at Deloitte. “Consumer sentiment is higher than it was a year ago and an accelerating economy and lower inflation should bolster consumer incomes in 2014.

“Consumers are being selective, trading down in some categories, in order to be able to trade up in others, such as their holidays and eating out. Despite the emergence of signs of a recovery in the consumer economy, the job of selling to them will continue to be challenging as the ‘considered’ buying behaviours developed during the recession are here to stay.”

As highlighted in numerous hospitality reports of late, the economy does appear to have turned a corner of some sort. And, although confidence remains fragile, consumers are beginning to demonstrate a willingness to spend where there is a promise of a known eating out experience that won’t disappoint.

Stop-start mode

The latest Quarterly Briefing Report from Horizons says exactly that. "Consumer confidence is rising," it says, "but consumers are still concerned over some factors that might appear irrational in the light of the improving economy."

Horizons

“Until consumers regain their confidence and start spending on treats once again, the eating-out sector will be in stop-start mode,” reads the report. “However, the good news is that the stops and the starts are becoming fewer and their size is less, meaning that we are already beginning to see some growth in the eating-out market.

“We would anticipate confidence returning when prices rise more slowly than household income – and the falling rate of inflation is hastening that time.

“When confidence returns in full, we should see the eating market growing at a reasonable pace because the quality of choice, and the range of offers available to the consumer, has increased immeasurably over the course of the recession (why that should be is a subject for another discussion) and the consumer will want to take full advantage of this quality and choice.

“We expect the next couple of quarters to build on the growth in Q4 of 2013.”

The Deloitte Consumer Tracker is a quarterly survey of 3,000 adults in the UK. The Horizons Quarterly Briefing Report looks at the various issues affecting the eating out market market and consumers such as inflation, unemployment and earnings, alongside market data on sales by sector. For more information, visit www.hrzns.com​.  

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