Increased prices are driving year-on-year spend increases, despite the number of visits across the hospitality sector falling.
New research from digital advertising platform Cardlytics shows an 8% rise in average transaction values buoyed year-on-year spend in Q1. Total spend across the sector rose 3%, in spite of the number of trips falling 3% in the same period.
Despite this growth, high inflation threatens to further increase prices, weakening consumer purchasing power and leading to more cutbacks on non-essentials. Two-thirds (66%) of consumers are planning to cut back on non-essential luxuries like eating out, the research shows.
The State of Spend report gains insights from the consumer habits of over 20m UK bank cards, and polling of 2,000 UK consumers.
For restaurants, data showed consumers’ changing habits drove a 7% spending boost. This uptick in spend when comparing Q1 2023 to the same period last year, was driven by increases across quick service restaurants (8%) and more casual dining (4%).
At the same time, average transaction values rose 7% whilst the number of trips flatlined. This indicates that consumers are still visiting restaurants but spend is increasing as prices increase in line with inflation.
In Q1, tighter budgets took their toll on the restaurant sector - as month-on-month spend fell 15% between January and February and a further 4% from February to March of this year.
Upscale restaurants are already seeing the impact of tighter budgets with year-on-year declines as spend fell 7% and visits were down 12%.
In pubs, spending saw a year-on-year increase of 5% between Q1 2023 and 2022. Although, bars witnessed a fall of 16% in the same period.
Some 46% of consumers said they’ve visited pubs and bars less often in the past year to save money, with the number of trips falling 1% for pubs and 17% for bars.
Compared to pre-pandemic levels, spend overall is up 12% despite trips only increasing 4% in that time. This is likely due to inflation as average transaction values have risen 8% in that time from £13.55 to £14.64.
Takeaways have seen their pandemic success dwindle as door-to-door delivery also taking a hit. The pandemic drove a boom for takeaways and delivery, meaning spend on food delivery apps in 2023 is up 104% compared to 2019.
However, this level of success will be hard to sustain as restaurants have to put their prices up across these apps. Between 2022 and 2023, spend has declined 2% for food delivery apps and transactions have fallen 11%.
Cafés have seen continued upticks in spend with a 7% rise year-on-year and 17% growth compared to pre-pandemic spend in 2019.
Whilst overall spend is on the up, the number of trips made by consumers has flatlined. This coupled with a 7% increase in ATV to £6.72 in 2023 indicates that loyal customers are still visiting cafés and coffee shops and are happy to pay slightly more as prices continue to increase.
