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UK restaurant market to grow by 59% in 2022

The new Lumina Intelligence UK Restaurant Market Report 2021/2022 suggests that the UK restaurant market will grow by 59% in 2022. The report indicates that the UK restaurant market will recover 94% of its 2019 value in 2022 and will increase by £6.6bn to a total market value of £17.8bn.

COVID restrictions slows the growth of UK restaurant market in 2021

The report highlights that the UK restaurant market grew in 2021 by 25.9%. However, COVID restrictions implemented in the first half of 2021 had significant and negative effects on the hospitality industry, thus hindering UK restaurant market growth in 2021. Up until April 2021, every hospitality venue had to close its doors to those wanting to dine-in, leading many venues to offer a take-out service to stay afloat.

These restrictions were lifted in April, however, hospitality venues could only offer outdoor seating to their customers until late May 2021. Other restrictions that had an adverse affect on the growth of the UK restaurant market included the rule of 6 for indoor and outdoor dining and a 10pm curfew for hospitality venues.

UK restaurants struggling before the pandemic

It is clear that the pandemic had a significant and adverse impact on the hospitality industry. But, it must be noted that restaurants were faced with other problematic issues before COVID which saw the closures 8658 restaurants and pubs throughout 2018 and 2019. Hospitality venues faced rising costs and reduced consumer spending, which had a fatal impact on both independent and chain restaurants alike.

Impact of rising energy bills and cost of living on the UK restaurant market

The new Lumina Intelligence report gives little attention to the impact of the cost of living crisis on the growth or decline of the UK restaurant market and mentions how restaurants will respond to rising living costs.

Blonnie Whist, Insight Director at Lumina Intelligence comments that “operators will have to be savvy, with costs rising impacting both consumer and operator spend. Increases in NLW, utility costs, VAT, the end of the rent mortarium and the introduction of mandatory calorie labelling on menus will all increase expenses for suppliers and operators. Increases in bills and National Insurance are expected to see consumers tighten purse strings. Restaurants will be in direct competition with pubs, QSR, delivery and grocery channels for spend.”

With the recent energy price cap increase in early February, it is expected that many UK consumers will reduce non-essential spending where possible. Moreover, the current situation unravelling between Ukraine and Russia could lead to reduced oil supplies for the UK, thus driving up energy prices even further.

Return to pre-pandemic market value by 2025

Despite setbacks, the market is predicted to grow at a steady rate. The Luminia Intelligence UK Restaurant Market Report shows that the UK restaurant market is forecast to grow at a compound annual growth rate of 1% between 2022 and 2025, thus reaching a market value of £18.3bn by 2025.

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