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Eating out spend set to fall, says Horizons

The amount spent on a meal* in a restaurant** has risen by 20% over the past five years, with average spend jumping from £10.09 in 2004 to £11.98 in 2008, according to new figures from Horizons.

Meals in pub restaurants were 30% more expensive in 2008 than they were in 2004 as ingredient costs rose and customers increasingly chose to items that cost more from the menus. The average price paid for a pub restaurant meal rose from £10.61 to £13.76 in this period.

Spend in European-style restaurants, those with Italian, Spanish, British and French menus, rose 19%, with the average price paid rising from £17.20 in 2004 to £20.51 in 2008. Spend in Chinese and Indian restaurants rose 16%, with consumers paying an average of £12.66 for an ethnic meal.

“Spend has risen this much over the four-year period largely because customers have been willing to spend more and because restaurant operators have put up prices as a result of the hikes they have seen in food and overheads such as rent, staffing and fuel,” commented market analyst Peter Backman, managing director of Horizons. “But in this recession higher prices cannot be sustained so in order to maintain sales, restaurants need to reconsider their pricing strategies.”

The rise in food prices is now slowing, with the level of food inflation at 9.7% in April 2009, down from its peak last September at 13%.

“We are beginning to see menu prices falling,” added Backman, “particularly with the number of special deals and offers currently in the market. The cost of eating out is likely to continue falling, at least until the end of 2009. Indeed, restaurant bills could fall back to 2006 levels.

“Spend in restaurants and pub restaurants reached a high in 2008 when demand was at its peak and operators could afford to raise prices. The situation has now changed considerably with competition for customers extremely tough.”

* A ‘meal’ is defined as a transaction of at least two food items, at least one of which is unwrapped.
** A restaurant is defined as an outlet that has table service, and where the customer generally pays on departure.

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