The latest report from Lumina Intelligence reveals a projected 5.2% growth in the UK restaurant market, reaching a total value of £18.7 billion in 2023. This places the sector 2.6% below its pre-pandemic level, with restaurateurs facing increased vulnerability to the effects of reduced consumer spending, rising staff costs, and inflation in the food and drink sector.

Despite efforts by operators to enhance volumes, market penetration has remained stagnant year-on-year. Consequently, restaurants are experiencing a decline in their share of the overall eating out market, trailing behind the growth seen in pubs and fast-food outlets.

Lumina Intelligence highlights a persistent downturn in outlet numbers as a hindrance to the ongoing recovery of the restaurant market. Projections indicate an anticipated closure rate of an average of eight sites per week throughout this year. The closures are predominantly attributed to independent establishments, whereas branded restaurants demonstrate a more resilient navigation of the challenging market conditions. In fact, this sector is expected to achieve a noteworthy 9% growth in value during 2023, coupled with a modest yet significant increase of 1.1% in the number of outlets.

Brands are proactively adapting to these circumstances by intensifying their recovery efforts through increased mergers and acquisitions activities, implementing operational efficiencies, and aligning themselves with prevailing consumer trends in both products and overall experience, as reported by Lumina.

The management of restaurant menus is undergoing a transformation, striking a balance between meeting consumer demands and controlling costs as operators grapple with price increases while aiming not to discourage customers. Key menu strategies in 2023 encompass menu price inflation, an increase in meat-free options, and the incorporation of lower-calorie additional courses. Leading trends on menus include the use of premium ingredients, embracing 'kitchen tourism' to cater to the appetite for international cuisine, and the addition of more 'veggie-centric' dishes.

As the economy continues its recovery, the future appears promising for the market, with a forecasted value of £19.5 billion in 2026. This optimism is reinforced by the sustained robust performance of branded restaurants. Over the next three years, anticipated reductions in interest rates and average earnings outpacing inflation are expected to enhance consumer spending power.

However, the growth forecast for the restaurant market stands at 1.4%, trailing behind the overall growth of the eating-out market at 2.6%. Lumina emphasizes that market trends, such as digital innovation, strategic partnerships, and sustainability initiatives, are poised to play a central role in operators' growth strategies in the coming years.