Trading conditions within the eating out market have seen some improvements compared with last year, with a +10 percentage points (pp) increase in the proportion of operators describing conditions as positive, according to Lumina Intelligence’s Top of Mind report.
Meanwhile, the report saw a -9pp decline in those who described conditions as challenging.
The net positive score still remains low, reflective of the continuation of low consumer confidence and personal finance issues.
According to the Lumina survey, 68% are finding trading ‘challenging’ while 15% are finding it ‘extremely challenging’.
Those expecting trading conditions to improve have increased +6pp year-on-year, as falling inflation burgeons consumer spending capabilities.
Some 40% of eating out market leaders predict that conditions within the market will remain the same over the next 12 months, a +15ppts increase year-on-year.
Rising interest rates were the most cited factor influencing wariness over the eating and drinking out market in.
Inflation lowering is expected to be slightly offset by mortgage rate increases, shrinking disposable income amongst homeowners.
Operators are still wary of consumer caution about spending and the effects of the cost-of-living pressures.
Rising food and ingredient costs are also a large concern among eating out market leaders, up +30pp from last year.
Inflation and supply disruptions has meant stock is more costly, and passing on these costs is the second highest ranked challenge faced by businesses, as they must navigate increasing prices without deterring customers.
Declining consumer spend and lack of consumer confidence are seen as ongoing issues, with the impact of easing inflation expected to be thwarted by increasing interest rates.
The new national living wage ranked considerably higher as a concern among leaders this year. In April 2023 the National Minimum wage increased by 9.7% to £10.42. Higher staff costs are seeing businesses explore new technologies to streamline processes.
The Lumina Intelligence Top of Mind Report – 2023 provides business leaders with valuable insight into key market developments and the most critical business challenges and issues currently facing the UK eating out market and grocery retail market, with the aim to help validate and benchmark internal perspectives.
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