The latest analysis of menu pricings by M&C Allegra has shown operators across the sector increasing prices at the premium end.
The latest research shows a clear trend towards operators increasing prices at entry (lowest price), typical and exit (highest price) levels.
However, it was exit prices that showed the sharpest rises in mains sides and desserts. It followed a period of exit prices being held back, indicating that operator confidence has emerged towards consumer propensity to trade up at the premium end.
Between October 2014 and 2015, operators increased entry and typical mains prices by 1.3% and 1.2% each to £7.39 and £10.23 respectively, compared with a 3.8% rise for exit mains to £16.23. This approach to price increases bucks the trend of previous years, where exit prices have been kept low or even targeted for decreases while entry prices were pushed up.
The increase in exit prices was driven by the casual dining sector where exit level mains increased by 4.5% to £18.34.The period under review saw a number of brands adding more premium mains dishes, including Belgo adding a whole lobster, pushing its exit mains prices up by 30% from £19.95 to £30. Entry and typical prices increased by a more modest 1.6% to £8.45 at entry level and by 1.7% to £11.49 at typical level, as operators keep prices competitive.
In the fast food sector mains entry prices fell. The trend was influenced by Domino’s adding a new low price entry level item and Barburrito decreasing the price of its tacos.
The report suggests the decrease in entry level mains prices reflects the price sensitivity of the fast food segment, in which strong value is crucial and the vast majority of brands have a £8 price ceiling for their mains. In accordance with the wider market trend, exit level prices increased by 2.6% to £7.74 between 2014 and 2015, driven by the addition of larger or more premium mains, including the lobster and avocado salad at Itsu.
Entry prices increased by 3.1% to £6.38 and exit level prices rose by 3.6% to £15.01 at pub restaurants. Exit price increases were driven by the addition of new steak dishes at Loungers, O’Neill’s and Chef & Brewer. Typical prices decreased slightly by 0.5% to £8.77, as operators need to keep their pub classics competitively priced.
The report concludes that with real average earnings continuing to rise in the UK operators can expect to see stronger trading up as we head into 2016.
This analysis is part of the Brands and Corporates service. Get access to this full report and over 150 indepth company profiles today. For more details please contact Hannah Fluker at Hannah.fluker@mcallegra-.fs.com.
