Hospitality reopening: The importance of good value
05th June 2020
The foodservice sector has been given the green light to reopen their bricks and mortar sites from 4th July. However, operators will have to jump through numerous hoops before opening their doors to visitors. Whilst most public discussions currently feature the two-metre rule, protective staff clothing and strict queuing systems; operators will face sleepless nights trying to budget their costs, some of which may inevitably land on consumers’ shoulders with increased menu prices.
The latest Hospitality Leaders Poll from HIM MCA on behalf of MCA News, Restaurant Magazine/Big Hospitality and Morning Advertiser, reveals that over a quarter of operators plan to increase the price of drinks and 22% are looking to raise food prices too. Although the majority say that prices will stay the same - to the reassurance of UK consumers - price increases will have to be one of many recovery strategies following three months of no trade.
But how would consumers react to higher prices? In a recent HIM MCA Channel Pulse survey, we questioned consumers’ attitudes towards spending in eating out outlets over the next six months and nearly half of respondents said that it will be important or very important for them to be spending less on eating out. UK population presents two sides to the pandemic story, with many households facing a reduced income versus those who have managed to save up more over the last few months due to fewer spending opportunities as a result of cancelled holidays and an absence of events or social gatherings. The good news for the foodservice industry is that the general sentiment towards eating out of home is optimistic, as nearly a third of UK consumers say that it will be important or very important to them to eat out in restaurants in the next half year.
With a large proportion of consumers closely monitoring their spending, it is important to remember that increasing prices could cost businesses dearly if it alienates customers. ‘Good value’ is mentioned as one of the three key consumer needs when eating out of home by more than a quarter of consumers according to HIM MCA Eating Out Panel, with this metric currently at its highest level since Q1 2018. Cheap/low prices are key to a fifth of consumers and although there has been a downward trend in the importance of low prices over the years, it is still one of the most important eating out needs. Value-led brands may have less room for manoeuvre due to already lower dish costs, but recessionary finances will benefit channels such as fast food by appealing to consumers on lower budgets.
UK Recovery Report 2020
Understand the true impact of the coronavirus pandemic on the UK food and drink industry. Develop a post-pandemic strategy using robust forecasts and scenarios based on the attitudes and behaviours of UK shoppers and consumers.