The UK restaurant market is set to recover to 94% of its 2019 value this year, according to the latest report from Lumina Intelligence. The study indicates that the UK restaurant market grew 25.9% or £2.3bn in 2021 to a total value of £11.2bn. Coronavirus restrictions in the first half of the year, including no dine-in trade until early April and outdoor only trade until late May, hampered recovery in the first six months of the year. Outlet decline continued in the market in 2021, at a rate of -2.8%, seeing a net loss of -817 sites. In 2022, the report predicts year-on-year growth of +59.4% or £6.6bn to a value of £17.8bn. Outlet decline in the market is expected to ease to -2.1% in 2022, impacted by continued decline in the independent segment. In contrast to the entire restaurant market, the top 10 branded restaurants by turnover are expected achieve sales of £3 billion in 2022, exceeding 2019 turnover. Leading branded restaurants are also forecast to add a net +56 sites in 2022, a +1.5% increase. Restaurant penetration was +69% higher in December 2021 than in December 2020, peaking in September with one in ten consumers having a restaurant occasion each week. Restaurant penetration fell towards the end of 2021 with the spread of Omicron impacting consumer risk aversion. Delivery share of occasions peaked at 56% yet the channel continues to account for almost one in three branded restaurant occasions. Consumers eat out in independent restaurants less frequently than branded restaurants, but when they do, they spend more. Average spend per person per visit for independent restaurants is £25.14, versus £21.59 for branded restaurants. Operators use customisable dishes to maintain consumer choice, whilst maintaining reduced menu sizes. Chain restaurant menus had an average of 64 dishes in 2021, a decline of -20% compared to 2019. This is the steepest decline in the market (vs. pubs and fast food). Operators are retaining simplified and reduced menus to mitigate challenges around staff shortages and supply chain disruption. The proportion of items tagged as customisable increased by +46% on chain restaurant menus, with over a quarter of dishes (26%) now customisable. Greater customisation allows operators to continue to offer personalisation and wide choice, despite running reduced menus. UK restaurant market to be worth £18.3bn in 2025 The UK restaurant market is forecast to see a compound annual growth rate (CAGR) of +1.0% from 2022F-25F, to see the market recover to £18.3bn. Restaurant outlet decline is expected to slow from 2022F-25F to a CAGR of -1.5%, up from -4.0% in 2019-22F. Blonnie Whist, Insight Director at Lumina Intelligence, said, “Unrestricted trading throughout 2022 is forecast to underpin recovery in turnover across the market. Falling case numbers will boost virus conscious consumer confidence in socialising out of home. 'However, despite most wanting to move on from pandemic, it is the pandemic-led trends that will continue to provide the biggest growth opportunities.' Whist went on, 'Demand for delivery shows no sign of waning, menus are set to remain streamlined to manage rising costs, digital ordering and payment solutions will increase speed and satisfactions and outdoor dining will be a key development opportunity.” “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.' Whist ended, '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.” (source: https://www.lumina-intelligence.com/, images: pexels)