Is Dining Out on the Decline?

The rising cost of dining out is significantly impacting UK consumers, with many, like James Deegan, feeling the pinch as restaurant prices soar. Once affordable meals are becoming a luxury, forcing individuals and families to reconsider their dining habits amidst a cost of living crisis. The hospitality industry is also struggling, facing increased business costs and a drop in customer spending, leading to closures and fewer dining options.

Last updated: 01 October 2023 (BST)

What’s happening now

As the cost of living crisis continues to affect households across the UK, the hospitality industry is experiencing a significant downturn. Diners are cutting back on eating out, with many citing rising prices as their primary concern. Restaurants, in turn, are raising prices to cope with increased operational costs, but this has led to a decline in customer frequency, resulting in a challenging environment for many eateries. The closure of restaurants has become commonplace, with a notable drop in the number of establishments available to consumers.

Key takeaways

• Dining out has become increasingly expensive, with many meals seeing substantial price increases.
• Consumers are dining out less frequently, with 38% of respondents to a recent survey citing cost as the main reason.
• Restaurants are facing rising operational costs, leading to increased prices and some closures.

Timeline: how we got here

The evolution of the dining landscape in the UK has been influenced by several key events:

• December 2019: The number of restaurants in the UK peaks at 43,000 just before the Covid pandemic begins.
• March 2020: The pandemic leads to widespread restaurant closures and a shift in consumer behaviour.
• December 2021: The number of restaurants drops to 40,000 as the industry struggles to recover.
• December 2025: The total falls to approximately 35,500, representing almost a fifth of closures since the pandemic.

What’s new vs what’s known

New today/this week

Recent surveys highlight that the majority of diners are now choosing cheaper dining options or skipping meals altogether to save money. This shift is attributed to both the rising cost of living and increased restaurant prices.

What was already established

The hospitality sector has been facing challenges for years, including rising operational costs such as taxes, food prices, and wages. Many establishments have struggled to remain profitable, leading to closures and reduced consumer choice.

Impact for the UK

Consumers and households

The ongoing cost of living crisis has led to a reduction in disposable incomes for many families. As a result, dining out is often seen as a luxury that is becoming harder to justify financially. In particular, those on lower incomes, like James Deegan, find themselves having to budget carefully for even modest meals out.

Businesses and jobs

Restaurants are grappling with rising costs and falling customer numbers. With many venues closing, the job market within the hospitality sector is also shrinking. This has particularly affected roles within restaurants, which have historically provided flexible employment opportunities for young people and students.

Policy and regulation

The government has announced a support package for pubs but has not extended similar support to restaurants, highlighting a disparity in how different sectors are treated. There are calls from industry leaders for a reassessment of business rates to ensure a level playing field.

Numbers that matter

• 38% of diners report eating out less frequently than a year ago due to rising costs.
• The number of restaurants in the UK has decreased from 43,000 in December 2019 to approximately 35,500 by December 2025.
• 63% of those dining out less frequently cite price increases as a primary reason.

Definitions and jargon buster

• Cost of Living Crisis: A situation where rising prices of goods and services lead to decreased purchasing power for consumers.
• Disposable Income: The amount of money that households have available for spending and saving after taxes have been accounted for.

How to think about the next steps

Near term (0–4 weeks)

Consumers should monitor local restaurant promotions and discounts that may help alleviate some financial strain. Additionally, diners might consider exploring less expensive eateries or takeout options to manage costs.

Medium term (1–6 months)

As the economic environment continues to evolve, both consumers and restaurant owners should be prepared for ongoing adjustments in pricing and dining habits. Establishments may need to innovate with menu offerings or pricing strategies to attract diners.

Signals to watch

• Changes in government policy regarding business rates or support for the hospitality sector.
• Trends in consumer spending habits as reported by market research firms.
• Local restaurant closures or openings, which may indicate shifting trends in the dining landscape.

Practical guidance

Do

• Research restaurants offering special deals or promotions before dining out.
• Consider dining during off-peak times when prices may be lower.

Don’t

• Overlook the impact of additional costs like drinks and starters when budgeting for a meal.
• Assume that all dining experiences will provide the same value for money.

Checklist

• Determine your budget for dining out.
• Identify local restaurants and their pricing structures.
• Evaluate the menu options for value before visiting.

Risks, caveats, and uncertainties

With the ongoing fluctuations in the economy, the restaurant industry faces many uncertainties. Consumer preferences may continue to evolve, and dining habits could shift further as prices rise. Additionally, the government’s approach to supporting various sectors remains unclear, which could impact the viability of many restaurants.

Bottom line

The rising costs in the UK dining landscape are a reflection of broader economic challenges. For consumers, dining out has become a luxury requiring careful financial planning. For restaurant owners, the situation demands innovation and adaptation to survive in a highly competitive and changing environment.

FAQs

Why are restaurant prices increasing in the UK?

Restaurant prices are rising due to a combination of increased operational costs, including taxes, wages, and food prices, alongside reduced consumer spending power.

How often are people dining out in the UK now compared to previous years?

Many people are dining out less frequently, with a recent survey indicating that 38% of respondents are eating out less than they did a year ago, mainly due to rising costs.

What support is available for restaurants facing financial difficulties?

Currently, support has been announced for pubs, but restaurants have not received similar assistance, leading to calls for a reassessment of business support measures across the sector.