New research released today forecasts challenging times ahead for the hospitality industry, as rising costs and economic uncertainty are set to dampen Christmas spending.
New data from market intelligence company Meaningful Vision, indicates this festive season is set to be its busiest since 2019 with restaurants and bars expecting 1.5 million more visits this December compared to 2023. This marks a 3% increase in December 2023 and follows a -1% drop in footfall in December 2022. However, while footfall shows promise, sales growth may lag behind as consumer spending remains cautious.
According to Meaningful Vision’s latest consumer study 80% of consumers indicated that they plan to spend the same or less compared to last year. The study also reveals that 52% of consumers feel that economic uncertainty and their worsening financial situations have led them to be more careful with their spending. This consumer consciousness may push the average restaurant bill down as people may order less or cheaper dishes to keep the cost low.
This spells a challenging time for the hospitality industry as inflation has continued to push up prices. Up to October of this year, overall price increase in the industry was at 3%, according to Meaningful Vision data, a notable drop from last year’s 10%; yet consumers remain price-sensitive. However, to combat rising costs, many restaurants are increasing prices with the average three-course set menu up by 10% to an average of £32.10. Many businesses are needing to resort to ‘value-add’ initiatives such as complimentary drinks to maintain their appeal.
Maria Vanifatova, CEO at Meaningful Vision, says:
“While it’s encouraging to see the uplift in footfall this year, the challenge for the hospitality industry lies in navigating the rising operational costs with cautious consumer spending. As the festive season approaches, we know that hospitality businesses are banking on this uplift in traffic and strategic pricing and special offers to close the year on a high note and get them through the typically less busy months following.”
Maria continues: “However, with the UK government’s recent budget announcement the situation will only worsen come 2025 as food service labour costs are set to rise significantly which will likely be passed directly onto the consumer through further price hikes.”