Keeping the restaurant revival afloat during cost of living crisis

The past year has seen consumers making up for lost time when it comes to eating out, with the industry experiencing a boom as pubs and restaurants reopened. 

Cardlytics spend data across 24 million UK bank accounts showed that overall spend across the dining sector increased 22% between 2021 and 2022 as people looked to make the most of socialising post-covid. Pubs and bars saw the largest spend increase of 12031% followed by casual dining restaurants (748%), coffee shops (63%) and quick service restaurants (40%).

Despite this general uptick in eating out over the past year, total spend across the sector is still down when compared to pre-pandemic levels. 

In comparison to 2020, Cardlytics data shows that spend in 2022 is still down across casual dining (-15%), pubs and bars (-7%), coffee shops (-5%) and quick service restaurants (-2%). 

As the cost-of-living reaches a crunch point and disposable income shrinks, hospitality is often the first in the firing line. Consumers will be making difficult choices to cut back their spending, meaning brands may face further hurdles in returning to pre-pandemic spend levels. 

Competition for customers is reaching a peak, and as consumers look to prioritise essentials like grocery shopping and energy bills over a meal or drink out, how can dining brands hold their market share? 

Invest in delivery options

Between 2020 and 2021, lockdowns drove an astronomic rise in spend across delivery platforms as customers had to experience their favourite foods from the comfort of home. Cardlytics spend data shows that delivery platforms saw a 110% rise in spend between 2020 and 2021. 

However, as restrictions lifted and customers sought to eat out rather than order in, these brands struggled to live up to their lockdown success leading to a spending decline of 5% between 2021 and 2022.

But the tide is changing. With increasing numbers of customers looking to cut back spending on more ‘expensive’ meals out but still wanting to treat themselves to a ‘cheaper’ takeaway at home. 

Casual dining is already starting to see the impact of the cost-of-living and tighter budgets with Cardlytics spend data showing that total spend fell 2% in the past 6 months compared to the previous 6 months. 

Investing in delivery options will stand dining brands in good stead to capitalise on this shift, as prices creep up and consumers cut back on trips out.

Diversify your offer with cheaper, smaller items

During times of financial difficulty, consumers still want ways to treat themselves but with smaller, less extravagant items. This means people are more likely to turn to coffees and snacks rather than a full three-course meal. 

Brands should look to diversify their offer with smaller items or options, whether that be a lunchtime deal, a discounted menu or takeaway options at reduced prices. This will help to keep customers returning in the short term and show that the brand understands and can meet their new needs. 

Invest in loyalty 

As the cost of living continues to rise, we’re likely to see people shop and spend in savvier ways. Our recent consumer poll of 2000 UK adults shows that 73% of consumers are planning to shop around more for the best deals. We’re already seeing the tangible impact of this at Cardlytics with the number of dining offers activated through banking app reward programmes having grown by a staggering 784% between 2021 and 2022. 

If dining brands want to retain customers in this difficult time, they need to tap into the deal-savvy customer base by offering tailored cashback and discounts to customers to engender more loyalty and spending. 

By utilising banking channels, brands can target customers by frequency and segment and firmly establish themselves as a favourite and the go to option for a treat during these difficult times.