Increased prices across the hospitality sector are driving year-on-year spend increases despite the number of visits taking a hit for many, as customers look to curb their spending according to the new State of Spend report from advertising platform, Cardlytics which gathers insights from the spending habits of over 20 million UK bank cards, and polling of 2,000 UK consumers.
The report shows an 8% rise in average transaction values buoyed year-on-year spend in Q1 – with total spend across the hospitality sector rising 3%, in spite of the number of trips falling 3% in the same period.
Despite this growth, high inflation threatens to further increase prices, weakening consumer purchasing power and leading to more cutbacks on non-essentials with two-thirds (66%) of consumers planning to cut back on non-essential luxuries like eating out.
According to the report, restaurants have seen a 7% uptick in spend when comparing Q1 2023 to the same period last year, driven by increases across quick service restaurants (8%) and more casual dining (4%). At the same time, the number of trips flatlined, indicating that consumers are still visiting restaurants, but the amount spent is increasing as prices increase in line with inflation.
But, month-on-month comparisons for this year show that consumer budgets have been tightening and impacting the restaurant sector, spend fell 15% between January and February and a further 4% from February to March of this year. Upscale restaurants are already seeing the impact of tighter budgets with year-on-year spending falling by 7% with visits down 12%.
Chris Harris, Head of Restaurants at Cardlytics, said, “For most brands, the key will be offering introductory discounts to entice new customers and longer-term rewards to keep them coming back. With 38% of consumers saying they’d be more likely to eat out if restaurants provided more rewards and offers, there’s a clear incentive for brands to develop the right programs for their customers.”
Spending in pubs saw a year-on-year increase of 5% between Q1 2023 and 2022, whilst bars witnessed a fall of 16% in the same period. With 46% of consumers saying they’ve visited pubs and bars less often in the past year to save money, it’s unsurprising to see that the number of trips fell 1% for pubs and 17% for bars.
Compared to pre-pandemic levels, spend overall is up 12% despite trips only increasing 4% in that time. This is likely due to inflation as average transaction values have risen 8% in that time from £13.55 to £14.64.
Picture credit: Michael Rys