As a leading food and drink agency we make it our business to keep up to date with the latest eating out market trends. The hugely informative Lumina Foodservice Strategy Forum last week provided a wealth of data and insight on our favourite topic…the out of home foodservice market.

This session looked at the current status of the market and predictions up until 2026 with a focus on the shift in consumer behaviour throughout the recent period of economic flux.

Below is a snapshot of some of the latest market dynamics and trends affecting consumers, operators and brands:

The Outlook

  • With forecasted GDP growth next year facing a notable downgrade, interest rates are expected to negatively impact middle classes, shifting the cost-of-living crisis into a cost of borrowing crisis.
  • Eating out is expected to continue to be viewed as an affordable luxury (replacing more expensive purchases and holidays). However, the eating out market is still forecast to total £102.4 billion in 2026, (CAGR) of +2.5% from 2023F-2026F.
  • Quick service channels will lead market growth, with operators able to progress with outlet growth, capitalising on opportunities for more accessibly priced rents on sites in city centres as well as diversifying into other sites such as drive throughs and retail partnerships.

Consumer Behaviour

  • The proportion of consumers surveyed who have had eating or drinking out occasions in the past 7 days has grown year-on-year, suggesting slight improvements in consumer finances.
  • The average number of eating out visits per consumer remains the same year-on-year as financial difficulties persist despite slight improvements.
  • However, spend is behind CPI, (avg spend growth of 6% y-o-y, June inflation 8%). This, combined with growing penetration suggests consumers are choosing more affordable options and day parts which is seeing a decline in dinner occasions in favour of cheaper day parts.

Value takes priority

  • The importance of value has seen growth year-on-year, and this appears to be at the expense of other factors, with notable shifts away from consumers being quality, sustainability, and brand led.
  • Changes in channel share reinforce that drive for value, with restaurant occasions showing decline, whilst QSR and Retail occasions saw growth. The top 5 brands in the OOH market are McDonald’s, Costa, Greggs, Wetherspoon’s and KFC, which reflects the importance of value.
  • A shift toward necessity-based missions, as well as the need for value explains the year-on-year decline in dinner occasions, which are the most expensive day part.
  • Also noted were drops in routine and cooking fatigue missions, as consumers can no longer justify eating out for these reasons. Instead eating or drinking out is being increasingly viewed as a treat, as for many it is a small indulgence.

Operator response to market changes

  • Restaurant operators are feeling vulnerable due to consumers cutting back on routine visits, and many are switching things up to tap into these treat missions.
  • Indulgent fish and pasta dishes are seeing considerable year on year growth, while more everyday mains such as pizzas are in decline.
  • There is an emergence of more premium ingredients in main dishes to communicate quality and boost value for money perceptions around treat occasions. With operators using premium ingredients including truffle, saffron, smoked salmon and king prawns to boost value perceptions and elevate experiences as consumers feel more justified spending on premium products, therefore driving spend per head.

The debrief was followed by a fabulous food tour which you can read all about on our MD’s latest blog here.
Thanks again and well done to all the team at Lumina for such an insightful and well-presented session.