RMS UK Managing Director Philipp Laqué recently shared insights on the UK’s restaurant recovery at the European Digital Foodservice Summit in a presentation titled: “Beyond Lockdown – How Europe’s Restaurant Industry is Dealing with the Restart Reality.” Read on for the highlights, or review the full presentation featuring where we were, what consumers are thinking now, and where the restaurant industry will go from here.
The UK’s 16 months of restaurant restrictions — starting with a near-complete shut down in March 2020 followed by two subsequent lockdowns in November 2020 and January 2021 — were officially lifted in July 2021.
In London, restaurants, pubs and clubs are all open — both inside and out. Masks are gone, as are the limits on how many people may gather at one table (previously, it had been capped at no more than six people). Speaking of tables, Laqué reports they are a cozier distance now that capacity is back to 100%.
Sadly, many couldn’t weather the storms. According to a report from Alix Partners, 8.1% of dining establishments closed permanently due to the pandemic. Laqué projects a more optimistic future, however, and refers to projections made by Lumina Intelligence that the UK will experience a complete recovery of the out-of-home (OOH) market by the end of 2022.
Consumers are ready for “hedonistic experiences,” says Laqué, “with good food and socializing being the main motivators to visit restaurants.”
RMS’s recent survey of more than 1200 consumers in two European markets and the UK inform his statement. “Socialising with friends” was the key motivator for those consumers who plan on eating out more or much more in the coming months, and respondents were ready to abandon cooking and dishes and get out of the house, particularly the younger generations.
This desire of consumers to dine out is a bonus for brands as is consumers’ willingness to spend. A significant 43% of survey respondents reported increasing restaurant spending by more than 15% in the past three months.
But it’s a double-edged sword, says Laqué. “People are falling in love with restaurants again but COVID and Brexit have created a perfect storm,” Laqué says. “Demand and expectations of food quality and service have gone up, while supply chains are unstable, and availability of hospitality workers is scarce.”
Operators do have some wiggle room for overcoming increasing costs. Consumers are willing to pay a little more — particularly for reasons such as minimum wage increases and better-quality ingredients.
And while consumers are ready to dine out again, traffic patterns may have permanently changed. People are still working from home —43% according to our survey — and are likely to stick to their new dining habits. In popular London commercial areas such as Canary Wharf, footfall remains nearly 80% less than pre-pandemic levels. As such, popular restaurant brands in the UK are changing their business models. Pret A Manger, which largely catered to office workers, is now diversifying their revenue streams with offerings like at-home coffee subscriptions and grocery items. Conversely, residential areas outside London are becoming more attractive for food-service providers. Popular fast-food brand Leon is expanding to the suburbs with plans to open its first drive-thru restaurants.
Meanwhile, major US brands are eyeing the UK for growth. Burger chain Wendy’s is back after having left in 2001 due to high prices and is planning to open hundreds of restaurants in the next several years. They’re not alone. Other brands like Popeye’s will also expand, with plans to open 350 restaurants in the UK over the next 10 years.
“The recovery is real and we are optimistic,” says Laqué, “but there is still a long way to go.”