Dining trends: Consumers reluctant to 'trade up' to more expensive dishes

By M&C Allegra Foodservice

- Last updated on GMT

Restaurants are having to reduce the prices of their most expensive items
Restaurants are having to reduce the prices of their most expensive items

Related tags: Restaurant, Price

An ongoing reluctance by consumers to trade up to more expensive menu items is squeezing restaurant profits, according to exclusive research.

New restaurant pricing analysis by BigHospitality's sister publication M&C Allegra Foodservice​ shows that casual restaurants are having to decrease the menu prices of their most expensive main courses while prices for low and mid-priced mains are rising.

Top-end restaurants, meanwhile, are charging more for low and mid-priced dishes yet the price of their more premium main courses have only increased modestly.

The figures suggest that restaurant operators have seen a drop in sales of more costly items and have had to reduce prices to increase take-up.

The pub trade is bucking this trend, however, with the sector having raised the price of its more premium dishes by an average of seven per cent in the year to May 2015.

M&C Allegra puts this increase down to the major menu redesigns throughout the pub industry.

The data is drawn from the menus of 120 leading restaurant and pub brands from May 2014 to May 2015.

Boost for cheaper and mid-range dishes

Prices of cheaper menu items showed most growth – 2.7 per cent across all operators compared to a 1.7 per cent hike last year – while mid-price items rose by 1.4 per cent, compared with a rise of 0.6 per cent the previous year.

However, the research shows that a number of operators have added more expensive mid-range options, including Pizza Express. The Italian chain added new pasta and risotto dishes, creating a 6.5 per cent price increase from £9.95 to £10.60 in its typical price point.

“During the past few years, operators have increased the prices of their most expensive menu items to make up for the lower margins they are getting from cheaper items,” says Steve Gotham, director of insight for M&C Allegra.

“Prices of premium items are now being kept virtually flat or are even being lowered in some businesses.”

While Gotham expects a cautionary approach to trading up to continue, he believes confidence will likely grow next year.

“We expect price increases to accelerate in the second half of 2015, as a number of factors push up operating costs. During 2016, strengthening disposable income will emerge and operators need to time price increases correctly to avoid missing profit potential.”

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