The picture of the eating & drinking out landscape is remarkably similar in Q2 2023 as it was a year before in Q2 2022. Both periods saw inflation exceeding 10% for the first time in decades, which stubbornly remained until April 2023, when it slowed to 8.7%. Arguably, these periods mark the height of the cost-of-living crisis, at least in terms of consumer confidence and inflation. The result is that despite a volatile period in between, when comparing data points of the two quarters, there are few notable changes.
This is unfortunately not to say we are out the other side. Despite falling to 7.3% in June 2023, inflation (in particular food and drink inflation) remains painfully high. Food, drink and other goods are continuing to get more expensive at faster than normal speeds, and the threat of unaffordable mortgage rates is very real for many. The proportion of consumers who identify as ‘very value led’ continues to grow, up +1.5ppts year-on-year meaning despite some improvements, value for money must remain at the forefront of strategy and communication.
Average weekly eating and drinking out penetration reached 60.4% in Q2 2023. This is a much-needed improvement of over +10ppts from when penetration fell to below 50% during some months of high inflation and low consumer confidence. However, compared to last year, penetration is up just a modest +1.7ppts.
At the same time, weekly frequency is identical year-on-year at 1.46 trips on average per week. Trip spend grew +6% to £11.55, behind inflation and average menu price increases +13% (Lumina Intelligence, Menu Tracker).
Small shifts in daypart shares has had a knock-on effect to trip spend growth. Dinner, the most expensive occasion, continues to lose share (-1ppts YoY), in part influenced by fewer delivered occasions. Instead, some of the lower cost, smaller occasions have crept back.
Drink has seen the largest shift, +0.9ppts and its retail that has benefitted, gaining +2.7ppts of drink occasions. Soft drinks including energy drinks and fizzy flavoured drinks have driven this, as consumers sought out cold instant refreshments during the warmest June on record.
Breakfast has also seen small improvements, +0.4ppts as consumers look to Wetherspoon for a low-cost affordable treat in the morning, aiding pubs & bars to gain +2.2ppts in occasion share at breakfast.
From a total market perspective, channel shares of occasions changed less than 0.5ppts each. Quick Service Restaurants had comparatively the most positive performance, gaining +0.4ppts year-on-year. In the grand scheme of things, a small change, yet this will be a welcome relief to the sector after several months of share loss. Consumers had been dropping delivered QSR occasions and so it’s interesting to see the channel’s share growth is driven by click and collect. Shoppers are seeking ‘delivered style’ occasions without having to pay high delivery fees. McDonald’s and Burger King’s loyalty apps are having a positive impact and resonating with value conscious consumers. Both players are gaining share and consumers are increasingly choosing an establishment due to vouchers and loyalty cards.
The past year has been tough for many, and individuals have made sacrifices to cope during strained times. Value consciousness has gained dominance and that certainly continues. A comparable picture to this time last year,and inflation falling to lower than expected in June gives hope that we are nearing the light at the end of the tunnel.
