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Rising cost of eating and drinking out starts to bite as customers visit less

Rising cost of eating and drinking out starts to bite as customers visit less

A study of UK consumers suggests that the rising cost of visiting pubs and restaurants means people are going out less.

A report released this week by Zolfo Cooper, the advisory and restructuring specialist, reveals that people are spending 7.3% more per visit at restaurants and 4.2% more at pubs: the average spend per visit was now £17.06 and £15.30 respectively.

While this could be interpreted as good news – with leisure operators successfully driving average spend per customer – the rise comes at the same time as consumers report a decrease in the number of visits, suggesting that rising cost of eating and drinking out, amid on-going duty rises and significant retail price inflation, is prompting people to go less often to restaurants and pubs.

Paul Hemming, partner, Corporate Advisory Services, said: “Many pub and bar operators are having the life squeezed out of them by a combination of cheap supermarket booze and escalating duties. The government will not want to become even more unpopular by increasing supermarket prices so the focus needs to be on getting a fairer deal on VAT and duties. It’s time everyone got behind the likes of Tim Martin and Jacques Borel or we will end up losing another 10,000 pubs.

“There is worse to come with further scheduled alcohol duty increases in March and well documented increases in food and drink input costs, so 2013 looks like being another challenging year for operators.”

Tim Martin, founder and chairman of JD Wetherspoon, said: “It seems clear to me from the figures contained in this report that the rising cost of going to the pub, from alcohol duty increases and January 2011’s VAT rise, is impacting how often people visit.”

Martin, who has contributed an article to the Leisure Wallet Report, said that his company paid more than £500m in taxes in 2012 – 43% of JD Wetherspoon’s annual turnover – and that pubs “can’t carry on taking these tax increases”.

Hemming said: “It is the increasing cost of going out that is driving the increased spend rather than an extra indulgence by the consumer. The reality is that over the five consumer studies we have undertaken since summer 2010, each wave has seen a further drop in overall leisure spend. This means the market continues to shrink, which will inevitably lead to more business failures.”

The nationally representative study of more than 2000 consumers also found:

  • 60% of respondents said supermarkets should not be prevented from discounting alcohol to drive footfall while 33% feel that they should
  • 59% were against the idea of a national minimum price per unit of alcohol; 32% were in favour
  • 73% of adults do not keep regular track of their consumption of units of alcohol
  • 65% of adults read nutritional information before making a food purchase in a shop
  • 54% do not keep a rough check on their daily calorie consumption but 10% do all the time
  • Almost 80% of people now book hotel rooms online, either directly with the hotel or through a third-party booking agent such as Expedia, versus 12% who prefer to use the phone
  • The internet is increasingly important as a research tool, with 68% of hotel guests using it to conduct research prior to making a reservation
  • There is almost a £20 price gap in what people spend on hotel rooms for business versus personal breaks: £73 per room per night against £56
  • We are a nation of online reviewers: on average respondents had written two online reviews of a hotel experience in the past six months
  • Only 14% of restaurant goers make purchasing decisions based on the availability of discount vouchers; only 2% do it all of the time
  • At £847, Londoners spend the most on eating out annually
  • 53% of the working population buy a sandwich from a shop at least once a week
  • 66% of the full-time workforce do not ever use, or have access to, a staff canteen
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