Blog: Dean BestIt's official: recession eats into restaurant sector

Dean Best | 15 July 2009

Those UK food manufacturers focused on the retail channel - here's something, which though you may long have suspected, will nonetheless brighten your day: the amount of money spent in restaurants has fallen. It's official.

Or, so at least figures out today (15 July) from industry analysts Allegra Strategies claim. In Allegra's report - Eating Out in the UK, 2009 - it is claimed that the amount we spend eating out of the home has dropped for the first time in 40 years.

"The value of eating out is expected to be GBP40.3bn (US$66.3bn) in 2009 – a fall of 0.5% from last year. This is the first time there has been a decline since the ‘informal eating out market’ emerged in the 1960s," Allegra says.

Suppliers to UK retailers have long claimed that a decline in eating out would help them withstand the worst of any slump in consumer spending. Back in January 2008, Bernard Hoggarth, chief executive of UK group Cranswick's food division, predicted as much - and believed the sausage maker would benefit.

"When the nip and tuck comes, there'll be less bums on seats in restaurants generally speaking but the quality of food will continue to be purchased for home consumption. And that's where we are," Hoggarth told us, months before the recession hit.

In May, Cranswick reported a 9% jump in annual profits on the back of a 9% increase in sales. This week, it said turnover in the first quarter of its current fiscal year was up 11%.

However, all is not lost for the restaurant sector. There have been some notable success stories in recent months, despite the recession.

Earlier today, pub group JD Wetherspoon, which has invested heavily in its food offering, said its annual profits would come in ahead of forecast.

Moreover, Allegra says growth will return to the sector next year and predicts sales will reach GBP47.5bn by 2014. The analysts point to rising affluence, "more youthful" older consumers and a boost from the London Olympics in 2012.

And, Allegra argues, there are some emerging consumer trends that could help some in the restaurant sector stay ahead of the pack - notably in healthy eating and local sourcing.

“The industry will have to become more consumer-focused as customers won’t forget what they are learning in the recession," Allegra project director Steve Gotham argues.

"Eating out may have become an everyday experience, but when the economy picks up, people won’t go back to paying over the odds for a meal.”


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