It very nearly ‘tis the season to be jolly, but with the UK economy predicted to fall into a recession this winter, alongside a less than upbeat Autumn Statement, there is an undercurrent of apprehension across the eating and drinking out market.

Ahead of the festivities, it is worth reflecting on current behaviour in the market, and what a recession might mean for the sector.

There was a disappointing -3ppt drop in market participation across the month of October, despite the period containing half-term.

Frequency and spend were flat or in slight decline, and while restaurants enjoyed a slight boost in the share of occasions, this was largely prompted by promotional offers.

Operators including Bill’s and YO! announced ‘kids eat free’ deals during half-term, and it did encourage visits, but with spend taking a hit.

Businesses have the difficult balancing act between encouraging footfall and drawing out spend. It seems in the current climate, bums on seats at a discounted rate is better than no bums on seats at all.

According to EY Item Club’s latest report, the economic climate is hanging in the balance and there is a lot depending on luck, including how mild or cold the winter may turn out to be.

What is already clear from Lumina Intelligence’s consumer psychometrics – these are core consumer attitudes and are expected to be steady over time – is that core attitudes towards value and quality are shifting.

In 2022, the economic landscape and decline in consumer spending power has led to a surge in value-led attitudes, with 78% of consumers very value-led, up +7 percentage points year-on-year.

The growth in value-led consumers aligns with a decline in consumers being quality-led, which has suffered decline this year to 75%.

Value price-led concepts offering high quality and differentiated products are expected to expand across the market and align with consumers facing tighter budgets.

A rise in low-priced options across the restaurant market is underpinned by operators tapping into cuisines including Italian and Indian, where cheaper yet simple and high-quality ingredients are utilised.

For example, operators including Franco Manca, Pizza Pilgrims and Mowgli have expanded rapidly throughout the UK, offering diners informality yet high quality dishes at prices on the lower end of the scale.

The decrease in consumers aligning with a quality-led attitude can be a positive for operators, with ‘skimpflation’ and ‘shrinkflation’ starting to crop up more frequently in cost-mitigation conversations.

Whether this be camouflaged as trend-led innovation including healthier vegetable-dominated dishes, less red meats, and smaller portions – it will be an essential cost control tactic moving forward.

On the value side of the coin, big brands including Greggs have been focusing on value-credentials throughout their marketing all year, pushing messages around rewards and loyalty schemes as well as savings through meal deals.

In periods of economic downturn, big name brands normally prevail. Consumers opt to spend their money with familiar brands that are known and trusted.

While the sector has been anticipating, although not yet feeling, the full force of the economic impact, consumer patterns are already pointing to a positive outcome for big name brands.

In the quarter to October, Costa, Greggs, and Wetherspoon all increased share of occasions year-on-year – early signs that these operators are winning with consumers.

It has been pointed out by EY Item Club that damage to consumer spending from lower real incomes may be partially offset by households drawing on unplanned savings built up during the pandemic.

And there is a suggestion that not all consumers will feel the pinch with the same force, and for some, eating and drinking out will remain the affordable luxury that is retained.

For the higher spend channels, namely restaurants and pubs and bars, spending time with friends and family or a treat are the leading reasons for eating and drinking out of home, and, for many, they are worth spending more on.

In recent months it has been hard to turn a blind eye to the number of upmarket food and drink destination venues opening, especially in the capital. Caviar boasting Miro in Mayfair and competitive socialising venue F1 Arcade, to name just two, are a reflection that for pockets of the market, there is a lucrative audience to be fought over.

This polarisation between simplicity and opulence reflects where the market is expected to be heading, with further space between convenience-led visits and occasion-led treats.