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Impact of the Recession on Eating Out Habits - UK - October 2010

There is no doubt that the food service industry was heavily affected by the recession, but fears that consumers would cut out eating out altogether, due to it being an area of secondary expenditure failed to materialise. Eating out is no longer a luxury for the majority of the British population, but a firmly embedded habit driven by convenience and the growing variety of meals and venues that the industry now offers.

  • Operators should be moving away from profit-eating price-led promotions and instead focus on experience and innovation, after all, over half of diners haven’t changed their eating out habits in the last 12 months.
  • One in four diners rank ‘regular treat’ as the main reason they eat out, compared to one if five who prioritise ‘special occasion’ dining. This has been bolstered by the expansion of casual dining options such as the fast food and fast casual sectors. It has also stemmed from operators increasingly looking to tap into the all day dining market by expanding the breadth of meal occasions they cater to.
  • However, despite the relative resilient performance of the market during the recession, the eating out market has still contracted slightly with around a quarter of out-of-home diners that have either reduced their expenditure per head on eating out or reduced the frequency of their visits.
  • Re-establishing regular weekday eating out habits is a central concern for operators as around half of diners who have been cutting back on out-of-home dining say they have done so by eating out less during the week. However, promotions such as theme nights (eg curry clubs) are now so common that they lack the point of differentiation that they were originally designed to provide.
  • Price promotions are not the primary motivator of why consumers eat out. However, of the diners who have cut back on eating out in the last 12 months, a quarter state that they often use money-off vouchers, which illustrates that discounting does affect their venue and dish choices. The downside of discounting therefore is that it has promoted venue promiscuity amongst consumers, as they have been taught to buy on promotion.
  • Meal occasions such as breakfast and lunch often lack the ‘experience’/leisure factor associated with eating out that evening dining tends to embody. As such, around one in four consumers now say that they eat more home made sandwiches than they did a year go.

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Table of contents

  1. Issues in the Market

      • Key issues
        • Definition
          • Abbreviations
          • Future Opportunities

              • SShhhhh…
                • Carnivore, Herbivore, Locavore
                • Market in Brief

                  • Overview
                    • Operator trends
                      • Price-focused considerations
                        • Operating costs
                          • Sales and acquisitions
                            • Consumer habits and opinion
                            • Broader Market Environment

                              • Key points
                                • Consumer confidence remains fragile
                                  • Figure 1: GfK NOP Consumer Confidence Index, January 2007-August 2010
                                  • Figure 2: Trends in the impact of the economic downturn on consumers, January 2009-August 2010
                                  • Figure 3: Trends in consumer sentiment for the coming year, January 2009-August 2010
                                  • Figure 4: Trends in agreement with selected lifestyle statements, 2006-10
                                • Demographic factors
                                  • An aging population will be more demanding of quality, both in terms of food and service
                                    • Figure 5: Trends in the age structure of the UK population, 2005-15
                                    • Figure 6: Forecast adult population trends, by lifestage, 2005-15
                                  • Flexible dining is a trend in its own right but also taps into growing demographic trends
                                    • Figure 7: UK households, by size, 2005-15
                                • Competitive Context

                                  • Key points
                                    • Eating out remains the consumers’ top spending priority
                                      • Figure 8: Consumer spending priorities, November 2009-August 2010
                                    • Supermarkets pose marginal competition to restaurants
                                      • Figure 9: Changing grocery shopping habits, Jan 2009-July 2010
                                    • Instances where ready meals compete more directly with the eating out market
                                      • Family dining
                                        • Ethnic restaurants/takeaways
                                          • Restaurant retail products as an alternative revenue stream
                                            • Figure 10: Types of ready meals bought in the last six months, January 2010
                                        • Eating Out Market – Sector Overviews

                                          • Key points
                                            • Eating out market
                                              • Figure 11: Eating out market*, by sector, 2005-09
                                            • Sector reviews
                                              • Previously established strategies placed the fast food industry in good stead before the recession hit the UK
                                                • Brand differentiation and heavy discounting particular issues for pizza/pasta restaurants/takeaways
                                                  • Pub catering negatively affected by longer term market trends
                                                    • Sandwich shops benefit from the demand for convenience but lack the ‘experience’ dimension of other eating out sectors
                                                      • Figure 12: Eating homemade sandwiches more than a year ago, June 2009-July 2010
                                                      • Figure 13: Frequency of visiting sandwich bars, 2007-10
                                                    • Fast casual sector: An emerging sector and one to watch
                                                      • Financial results
                                                        • Figure 14: Sales growth year-on-year (%) across leading restaurant and pub groups, April 2009 to July 2010
                                                      • Strong sales performances
                                                        • On the fence
                                                          • Underperformers
                                                            • Expansion plans
                                                              • Reinventions
                                                                • Coffee Republic
                                                                  • FutureExpress
                                                                    • Wimpy
                                                                    • Structural Changes in the Market

                                                                      • Key points
                                                                        • Liquidations
                                                                          • Administrations
                                                                            • Acquisitions
                                                                              • Bay Restaurant Group (BRG)
                                                                                • Burger King
                                                                                  • Capricorn Ventures
                                                                                    • Carluccio’s
                                                                                      • Living Ventures Restaurants Ltd
                                                                                        • Mitchells & Butlers (M&B)
                                                                                          • Orchid Group
                                                                                            • Paramount Restaurants
                                                                                              • Prezzo plc
                                                                                                • Wagamama
                                                                                                • Operating Costs

                                                                                                  • Key points
                                                                                                    • Food inflation
                                                                                                      • Menu engineering
                                                                                                        • Menu flavour trend issues
                                                                                                          • Menu psychology
                                                                                                            • Non-food cost saving areas
                                                                                                            • Price-led Trends

                                                                                                              • Key points
                                                                                                                • Discounting
                                                                                                                  • Have the operators trained consumers to buy on promotion?
                                                                                                                    • Vouchers
                                                                                                                      • Value ranges
                                                                                                                      • Other Factors Affecting the Market

                                                                                                                        • Key points
                                                                                                                          • Healthy eating trends
                                                                                                                            • Fast food not junk food
                                                                                                                              • Figure 15: Trends in agreement with selected lifestyle statements, 2006-10
                                                                                                                            • Calorie counting
                                                                                                                              • Legislation and industry bodies
                                                                                                                                • Consumer opinion – calories versus ‘fresh’
                                                                                                                                  • Figure 16: Trends in agreement with selected lifestyle statements, 2006-10
                                                                                                                                  • Figure 17: Attitudes towards nutritional labelling, April 2009
                                                                                                                                  • Figure 18: Demand for calorie labels on restaurant menus, June 2010-July 2010
                                                                                                                                  • Figure 19: Important ingredient attributes of a “healthy” meal, February 2010
                                                                                                                                • Ethical catering
                                                                                                                                  • In-home food purchasers fail to see the benefit of buying organic
                                                                                                                                    • Figure 20: Statements on buying organic food and drink, August 2010
                                                                                                                                  • Ethical stance in restaurants still an effective marketing strategy
                                                                                                                                    • Other factors affecting the market
                                                                                                                                      • The weather, sporting events and unforeseen occurrences
                                                                                                                                      • Brand Communication and Promotion

                                                                                                                                        • Key points
                                                                                                                                          • Comparative advertising
                                                                                                                                            • Not an easy option
                                                                                                                                              • Quality over price
                                                                                                                                                • Investing in web presence
                                                                                                                                                  • Mobile phone technology
                                                                                                                                                    • Social media
                                                                                                                                                      • Loyalty/prepaid/smart cards and phone applications
                                                                                                                                                        • Mobile food vans
                                                                                                                                                        • Venues Visited

                                                                                                                                                          • Key points
                                                                                                                                                            • Pubs remain consumers favourite eating out venue
                                                                                                                                                              • Figure 21: Venues visited, August 2010
                                                                                                                                                            • Demographic profiles
                                                                                                                                                            • Frequency of Eating Out

                                                                                                                                                              • Key points
                                                                                                                                                                • From special occasion dining to eating out as a regular treat
                                                                                                                                                                  • Figure 22: Frequency of eating out, August 2010
                                                                                                                                                                • Demographic profiles
                                                                                                                                                                • Reasons for Eating Out

                                                                                                                                                                  • Key points
                                                                                                                                                                    • ‘Regular treat’ trumps eating out for special occasions
                                                                                                                                                                      • Figure 23: Reasons for eating out, August 2010
                                                                                                                                                                    • Demographic profiles
                                                                                                                                                                    • How Have Eating Out Habits Changed?

                                                                                                                                                                      • Key points
                                                                                                                                                                        • Over half of diners haven’t changed their eating out habits
                                                                                                                                                                          • Figure 24: Eating out behaviour, August 2010
                                                                                                                                                                        • Education and training
                                                                                                                                                                          • Demographic profiles
                                                                                                                                                                          • Areas Where Spending Has Increased

                                                                                                                                                                            • Key points
                                                                                                                                                                              • The number of meal occasions that restaurants cater to are gradually developing
                                                                                                                                                                                • Figure 25: Increased spending on eating out, August 2010
                                                                                                                                                                                • Figure 26: Main meal on weekdays, 2006-10
                                                                                                                                                                              • Breakfast
                                                                                                                                                                                • Examples of new entrants to the breakfast market
                                                                                                                                                                                  • Not all breakfast launches are successful
                                                                                                                                                                                    • Lunch
                                                                                                                                                                                      • Balancing low cost with value for money
                                                                                                                                                                                        • Examples of new entrants
                                                                                                                                                                                          • Coffee/tea break
                                                                                                                                                                                            • Snacks
                                                                                                                                                                                              • Demographic profiles
                                                                                                                                                                                              • Areas Where Spending On Eating Out Has Decreased

                                                                                                                                                                                                • Key points
                                                                                                                                                                                                  • Leisure experience trumps refuelling exercise
                                                                                                                                                                                                    • Figure 27: Decreased spending on eating out, August 2010
                                                                                                                                                                                                  • Demographic profiles
                                                                                                                                                                                                  • How Consumers Have Cut Back On Eating Out

                                                                                                                                                                                                    • Key points
                                                                                                                                                                                                      • Few consumers buy in-home deals instead of eating out
                                                                                                                                                                                                          • Figure 28: Methods of cutting back at restaurants, August 2010
                                                                                                                                                                                                        • Price promotions don’t drive visits but can change purchasing behaviour
                                                                                                                                                                                                          • Demographic profiles
                                                                                                                                                                                                          • Eating Out Targeting Opportunities

                                                                                                                                                                                                            • Key points
                                                                                                                                                                                                              • Demographics largely determine the impact of the recession on diners’ eating out habits
                                                                                                                                                                                                                • Figure 29: Nets on eating out behaviour, August 2010
                                                                                                                                                                                                              • Increased both spend and number of visits
                                                                                                                                                                                                                • Increased spend only
                                                                                                                                                                                                                  • Increased number of visits only
                                                                                                                                                                                                                    • Both spend and number of visits has stayed about the same
                                                                                                                                                                                                                      • Decreased spend and number of visits
                                                                                                                                                                                                                        • Decreased spend only
                                                                                                                                                                                                                          • Decreased number of visits only
                                                                                                                                                                                                                          • Appendix – Broader Market Environment

                                                                                                                                                                                                                              • Figure 30: Trends in the impact of the economic downturn on consumers, by detailed demographics, August 2010
                                                                                                                                                                                                                              • Figure 31: Trends in consumer sentiment for the coming year, by detailed demographics, August 2010
                                                                                                                                                                                                                              • Figure 32: Employment and unemployment, by gender, 2005-15
                                                                                                                                                                                                                          • Appendix – Competitive Context

                                                                                                                                                                                                                              • Figure 33: Consumer spending priorities, by detailed demographics, August 2010
                                                                                                                                                                                                                              • Figure 34: Changing grocery shopping habits, by detaled demographics, July 2010
                                                                                                                                                                                                                          • Appendix – Eating Out Market – Sector Reviews

                                                                                                                                                                                                                              • Figure 35: Home-made sandwich habits, by detailed demographics, July 2010
                                                                                                                                                                                                                          • Appendix – Structural Changes in the Market

                                                                                                                                                                                                                              • Figure 36: Compulsory liquidations in the restaurants and bars industry, 2007-10
                                                                                                                                                                                                                              • Figure 37: Creditors’ voluntary liquidations in the restaurants and bars industry, 2007-10
                                                                                                                                                                                                                          • Appendix – Other Factors Affecting the Market

                                                                                                                                                                                                                              • Figure 38: Demand for calorie content on menus, by detailed demographics, July 2010
                                                                                                                                                                                                                          • Appendix – Venues Visited

                                                                                                                                                                                                                              • Figure 39: Most popular venues visited, by demographics, August 2010
                                                                                                                                                                                                                              • Figure 40: Next most popular venues visited, by demographics, August 2010
                                                                                                                                                                                                                              • Figure 41: Other venues visited, by demographics, August 2010
                                                                                                                                                                                                                              • Figure 42: Venues visited, by most popular venues visited, August 2010
                                                                                                                                                                                                                              • Figure 43: Venues visited, by next most popular venues visited, August 2010
                                                                                                                                                                                                                              • Figure 44: Venues visited, by other venues visited, August 2010
                                                                                                                                                                                                                          • Appendix – Frequency of Eating Out

                                                                                                                                                                                                                              • Figure 45: Frequency of eating out, by demographics, August 2010
                                                                                                                                                                                                                              • Figure 46: Venues visited, by frequency of eating out, August 2010
                                                                                                                                                                                                                              • Figure 47: Frequency of eating out, by most popular venues visited, August 2010
                                                                                                                                                                                                                              • Figure 48: Frequency of eating out, by next most popular venues visited, August 2010
                                                                                                                                                                                                                              • Figure 49: Frequency of eating out, by most popular venues visited, August 2010
                                                                                                                                                                                                                          • Appendix – Reasons for Eating Out

                                                                                                                                                                                                                              • Figure 50: Most popular reasons for eating out, by demographics, August 2010
                                                                                                                                                                                                                              • Figure 51: Venues visited, by most popular reasons for eating out, August 2010
                                                                                                                                                                                                                              • Figure 52: Reasons for eating out, by most popular venues visited, August 2010
                                                                                                                                                                                                                              • Figure 53: Reasons for eating out, by next most popular venues visited, August 2010
                                                                                                                                                                                                                              • Figure 54: Reasons for eating out, by other venues visited, August 2010
                                                                                                                                                                                                                              • Figure 55: Reasons for eating out, by frequency of eating out, August 2010
                                                                                                                                                                                                                          • Appendix – How Have Eating Out Habits Changed?

                                                                                                                                                                                                                              • Figure 56: Eating out behaviour, by detailed demographics, August 2010
                                                                                                                                                                                                                              • Figure 57: Eating out behaviour, by demographics, August 2010
                                                                                                                                                                                                                              • Figure 58: Venues visited, by eating out behaviour, August 2010
                                                                                                                                                                                                                              • Figure 59: Venues visited, by eating out behaviour, August 2010
                                                                                                                                                                                                                              • Figure 60: Reasons for eating out, by eating out behaviour, August 2010
                                                                                                                                                                                                                              • Figure 61: Reasons for eating out, by eating out behaviour, August 2010
                                                                                                                                                                                                                              • Figure 62: Reasons for eating out, by eating out behaviour, August 2010
                                                                                                                                                                                                                          • Appendix – Areas Where Spending Has Increased

                                                                                                                                                                                                                              • Figure 63: Increased spending on eating out, by demographics, August 2010
                                                                                                                                                                                                                          • Appendix – Areas Where Spending Has Decreased

                                                                                                                                                                                                                              • Figure 64: Decreased spending on eating out, by demographics, August 2010
                                                                                                                                                                                                                          • Appendix – How Consumers Have Cut Back on Eating Out

                                                                                                                                                                                                                              • Figure 65: Most popular methods of cutting back at restaurants, by demographics, August 2010
                                                                                                                                                                                                                              • Figure 66: Next most popular methods of cutting back at restaurants, by demographics, August 2010
                                                                                                                                                                                                                              • Figure 67: Venues visited, by most popular methods of cutting back at restaurants, August 2010
                                                                                                                                                                                                                              • Figure 68: Venues visited, by next most popular methods of cutting back at restaurants, August 2010
                                                                                                                                                                                                                              • Figure 69: Methods of cutting back at restaurants, by frequency of eating out, August 2010
                                                                                                                                                                                                                              • Figure 70: Reasons for eating out, by most popular methods of cutting back at restaurants, August 2010
                                                                                                                                                                                                                              • Figure 71: Reasons for eating out, by next most popular methods of cutting back at restaurants, August 2010
                                                                                                                                                                                                                              • Figure 72: Methods of cutting back at restaurants, by most popular reasons for eating out, August 2010
                                                                                                                                                                                                                              • Figure 73: Decreased spending on eating out, by most popular methods of cutting back at restaurants, August 2010
                                                                                                                                                                                                                              • Figure 74: Decreased spending on eating out, by next most popular methods of cutting back at restaurants, August 2010
                                                                                                                                                                                                                              • Figure 75: Methods of cutting back at restaurants, by decreased spending on eating out, August 2010
                                                                                                                                                                                                                          • Appendix – Eating Out Targeting Opportunities

                                                                                                                                                                                                                              • Figure 76: Nets on eating out behaviour, by demographics, August 2010
                                                                                                                                                                                                                              • Figure 77: Venues visited, by nets on eating out behaviour, August 2010
                                                                                                                                                                                                                              • Figure 78: Frequency of eating out, by nets on eating out behaviour, August 2010
                                                                                                                                                                                                                              • Figure 79: Reasons for eating out, by nets on eating out behaviour, August 2010
                                                                                                                                                                                                                              • Figure 80: Eating out behaviour, by nets on eating out behaviour, August 2010
                                                                                                                                                                                                                              • Figure 81: Increased spending on eating out, by nets on eating out behaviour, August 2010
                                                                                                                                                                                                                              • Figure 82: Decreased spending on eating out, by nets on eating out behaviour, August 2010
                                                                                                                                                                                                                              • Figure 83: Methods of cutting back at restaurants, by nets on eating out behaviour, August 2010

                                                                                                                                                                                                                          Impact of the Recession on Eating Out Habits - UK - October 2010

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