According to Restaurants 2015, a new Market Update from market intelligence provider Key Note, the UK restaurants market grew by 2.1% in 2014. This represented the most substantial rate of growth since before the onset of the financial crisis in 2008/2009, suggesting that the market is gradually recovering from this extended period of reduced consumer spending power.
Nevertheless the market is still yet to reach its pre-recession size in terms of both value and volume.
Robustness of the market
The enduring popularity of eating out ensures the robustness of the UK restaurants market, but the financial crisis represented a significant sales setback nonetheless. Even now, inflation and the cost of living continue to exceed growth in household disposable income; the gradual nature of the economic recovery is restricting the speed of the UK restaurant market’s recovery.
While consumers are willing to pay for quality food, many Britons still simply cannot afford to eat out on a regular basis; yet, there is evidence to suggest that consumers are increasingly restricting expenditure elsewhere to make eating out more affordable. This has been a key factor behind market growth in 2014. The increased affordability of eating out is fuelling the demand for ‘gourmet junk food’ at restaurant chains such as Gourmet Burger Kitchen (GBK), exacerbating the competition between more affordable brands such as McDonald’s.
Adventurous eating habits
Another important trend is the increasingly adventurous eating habits of the UK consumer base, and the younger demographic in particular. While the existence of such a trend is perhaps counterintuitive considering persistent low levels of consumer trust and satisfaction in areas of this marketplace, it is contributing to the growing popularity of spicy ethnic foods.
This is being driven by the developing economic recovery and the increasing affordability of opening new restaurants, as exemplified by emerging Mexican brands, such as Taco Bell, Chipotle and Tortilla.
Trading conditions remain challenging
Despite witnessing growth of 2.1% in 2014, however, it is important to note that trade conditions remain challenging in the UK restaurants market, especially for small- and medium-sized enterprises (SMEs). Leading brands have exacerbated this by engaging in promotional activity as a means of driving volume sales. Key Note therefore expects the UK restaurant market’s recovery to be a gradual process — in correlation with the developing economic recovery — and, as such, forecasts growth of 5.7% between 2015 and 2019.
The 2015 Restaurants Market Update is available to purchase for £575.
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