The festive season is shaping up to be a turning point for the UK hospitality industry, demonstrating a significant recovery after several challenging years. However, despite the rise in visitor numbers, the outlook for revenue growth remains uncertain as consumer spending intentions remain cautious.
Restaurant visits to rebound this Christmas, but consumer spending remains low amid rising costs
New data from our recent research indicates this festive season is set to be its busiest since 2019 with restaurants and bars expecting 3% more visits this December compared to 2023. This increase follows a -1% drop in footfall in December 2022. However, while footfall shows promise, sales growth may lag behind as consumer spending remains cautious.
Despite 85% of respondents intending to spend money on Food and Beverages Out-of-Home during the Christmas period, 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.
Can London’s optimism fuel a festive spending boom?
In London confidence is higher, where 92% plan visiting restaurants and pubs in festive season. Almost half of them mentioned that they managed to save some money or that their financial situation improved. This indicator is 20% higher than the country average.
Consumers brace for a costly Christmas
80% of respondents said they plan to spend the same or less than last year, but it will be difficult to achieve given prices went up. Up to October 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, according to Meaningful Vision’s data. In some cases, restaurants provided ‘value-add’ initiatives, such as complimentary drinks, to maintain the appeal and entice consumers.
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 continues, we know that hospitality businesses are banking on this uplift in traffic and strategic pricing, together with special offers, to close the year on a high note and get them through the typically less busy following months. However, with the UK government’s recent budget announcement, inflation could once again become a pressing issue, as food service labour costs are set to rise significantly which will likely be passed directly on to the consumer through further price hikes.”
*The survey was conducted by RWB on behalf of Meaningful Vision in November 2024, sampling over 2,000 UK respondents
