The UK restaurant market faces challenges amidst outlet decline and inflationary pressures, ultimately reflected in projected growth of +5.2% to £18.7bn in 2023, remaining behind its pre-pandemic value. Branded restaurants are leading the charge in reshaping market dynamics, they also reflect the industry’s latest trends. Join us as we embark on a journey through market dynamics shaping the future of dining in the UK.
Market Overview
The UK restaurant market stands at the nexus of recovery and transformation. Despite setbacks, including a -2.6% lag behind its pre-pandemic value, the industry forges on. Challenges loom ahead, with outlet decline and inflationary pressures impeding the sector’s full potential.
5 things to know about the UK restaurant market:
- The UK restaurant market is being largely driven by inflation
- Branded restaurants are driving the recovery of the restaurant market with improved performances and adaptations
- Menu engineering continues to help operators to navigate challenging conditions
- The restaurant market continues its journey towards recovery and pre 2019 value
- Value has increased as a need for restaurant consumers, though quality remains the most prominent need
Market Size
The UK restaurant market was forecasted to reach 98% of its 2019 value in 2023, with high inflation and recovering volumes driving market recovery. Food price inflation, staffing challenges and operational costs are continuing to impact the market to a greater extent than more to-go eating out market channels.
The dimensions of the UK restaurant market are poised for expansion, albeit at a moderated pace. Projections hint at a growth trajectory, yet the prevision of outlet decline casts a shadow over the industry’s path to recovery. With over 4,500 sites forecasted to vanish by 2026, operators grapple with escalating costs and economic uncertainties.
Market Growth
Branded restaurant and independent restaurant average weekly sales have accelerated in growth driven by high inflation and a general improvement in the calibre of sites following continued underperforming site closures.
Anticipated to outstrip wider market turnover and outlet expansion, brands such as Fat Hippo, Pizza Pilgrims, and Honest Burger chart a course of resilience through strategic mergers and menu diversification, resonating with consumer demand.
Market Share
As the market evolves, so too do the dynamics of market share, with branded restaurants wielding increasing influence and market penetration. Through mergers, acquisitions, and culinary ingenuity, brands carve a larger slice of the pie, redefining the culinary landscape and consumer preferences. Moreover, menu management strategies pivot towards cost-effective solutions, balancing innovation with profitability amidst shifting market demands.
In terms of cuisine, Asian brands are expected to lead growth, fuelled by a growing interest in global cuisines and more regional dishes. Chicken cuisine is also ahead, while Italian cuisine brand share has seen steep declines over the past four years, reflecting the challenges faced by mid-market casual dining chains including Prezzo, Pizza Hut and Bella Italia. Chicken is in fact becoming one of the most popular cuisines in the UK with the rise of chicken shops and premium chicken-focused restaurants including Slim Chickens and Thunderbird Fried Chicken driving share growth.
Conclusion
Currently, the UK restaurant market stands as a crucible of growth, resilience, and adaptation, where challenges intertwine with opportunities to sculpt the future of dining. With a forecasted market value of £19.5bn in 2026, driven by economic recovery and the ascendancy of branded establishments, the industry embarks on a journey of transformation.
Embracing change, leveraging innovation, and prioritising consumer-centricity will be pivotal for restaurants seeking to thrive amidst dynamic market forces, steering them towards a future defined by growth, prosperity, and culinary excellence.