Spending on eating out falls for first time in 40 years

15th July 2009, 8:53am

The amount consumers spend on eating out of the home has fallen for the first time in 40 years according to a new report from fast-food chain McDonald's.

The findings come in the most extensive ever piece of research into the size of the 'informal eating out' market, which employs one in 25 of the UK workforce in the UK and includes pubs, fast food restaurants and coffee shops.

Eating Out in the UK, 2009, produced by industry analysts, Allegra Strategies, and sponsored by McDonald's, tracks the eating habits of thousands of people. It finds a major shift towards healthier eating, quality food and a demand for better service and value.

The report concludes that the 'recession legacy' will be long-lasting and only businesses which can meet these new consumer demands will prosper in the future. Most industry leaders predict growth returning within 12-18 months.

Key findings include:

The scale and size of the 'informal eating out' market is revealed for the first time:

• On average UK consumers spend £12.75 a week on eating out
• 7.7 billion informal meals are eaten out a year in the UK, or 128 meals for every person in the UK
• There are now 250,500 informal eating out establishments across the UK, of which an estimated 108,400 are independent – 43% of the total number of outlets
• Eating out now accounts for 22% of what we spend on food and drink compared to just 14% in 1969
• The informal eating out sector is now a top ten industry and employs 1.13 million people in the UK

The impact of the recession:

• The value of eating out is expected to be £40.3billion 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
• 15,000 jobs were lost in the sector last year
• In 2009, we are eating 1 in 9 meals away from home, down from 1 in 8 in 2008
• 35% of people ate out less in the last 12 months, 20% plan to eat out less in the next year
• Growth is expected to return in 2010 with the market growing again to £47.5 billion by 2014 thanks to rising trends in affluence, mobility, more youthful older customers and an Olympics boost in 2012
• This will help reinvigorate the High Street post recession and create up to 57,000 new jobs

Steve Easterbrook, chief executive of McDonald's UK (pictured), said: "For the first time in 40 years, the recession is taking a bite out of a market which is traditionally resilient to downturns. The British public is becoming ever more discerning about the way they spend their money, and this is starting to affect the performance of the sector.

"Encouragingly, all the signs are that the sector will bounce back - helping drive the UK economy out of recession by creating more jobs and playing a role in revitalising the British High Street. But only businesses which can deliver value and a great experience will prosper in the future."

Steve Gotham, Project Director, Allegra Strategies, said: "There is a myth that, with relatively low transaction sizes, the informal eating out sector is recession proof, but this report shows that, while some companies continue to do well, many are suffering.

"The industry will have to become more consumer-focused as customers won't forget what they are learning in the recession. 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."

The report predicts that customers will expect and demand: excellent service, innovation, healthier choices, and, where possible, high quality food sourced in the UK. These expectations will also increase the importance of building customer loyalty and, taking a leaf out the book of food retailers, loyalty schemes will become more widespread. 

Buying British is another trend that will continue to be popular with consumers. More than half (58%) of people prefer to eat food which is sourced from the UK and operators will need to respond to this by sourcing locally where possible.

Related Articles:

• 29 Jul 2010 - Challenging times for eating out market
• 29 Jul 2009 - US tourists waste money when eating out in the UK
• 23 Jul 2009 - Canny diners find ways to eat out for less
• 15 Jul 2009 - Eating out in the UK

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