Cafe sector trends

(last updated July 2019)

What has been happening in the catering sector

In recent years the popularity of eating out has grown enormously. As a result there are now thousands of eating places in Britain offering a wide range of different types of food at prices to suit all pockets. People have become much more adventurous and knowledgeable, and cuisine from many different countries is widely available.

A trend towards healthy eating has led many restaurants to add healthy options, such as low fat and low salt dishes, to their menus. There's growing pressure from the government to do this too. Allergy information regulations introduced at the end of 2014 mean that caterers like cafes and restaurants must by law provide their customers with information about any of 14 specified food allergens if these are used as ingredients. You could do this by including the information on your menus, or you could provide the information verbally. New legislation will cover foods that are pre-packed for direct sale on the premises - these will have to list all the ingredients.

Concerns about the origin of foods and the impact of carbon emissions caused by 'food miles' have led more and more people to consider how their food purchases effect the environment. This has generally increased demand for locally sourced, sustainable and organic foods, and led to a rise in the popularity of traditional British dishes. The trend amongst consumers for fresh and local produce from identified sources has continued strongly in 2018. It is expected that Brexit will influence this trend as the future of importing and exporting becomes less certain.

The biggest influences in the immediate future are expected to be:

  • the continuing increase in demand for healthy eating, including vegetarian and vegan options and healthy menu options for children. By 2018, the number of vegans in the UK had increased by 350%, with half of these between the ages of 15 and 34
  • the continuing and growing need to offer gluten free and dairy-free menu options
  • the use of more spices, such as coriander, cumin and fennel
  • the increasing importance of breakfasts, particularly take-away breakfasts
  • the trend amongst younger people to give up alcohol, making it important to be able to offer a range of alcohol-free drinks
  • the increase in photo-sharing social media accounts driving a requirement for striking and interesting looking dishes, often including unusual colours

The industry is very competitive as barriers to entry are relatively low. When demand is strong, many new cafes and restaurants open up. Recent years have seen the huge expansion of restaurant chains (such as pizza and pasta outlets) and these have intensified competition for the independent restaurant. Competition has also increased as a result of the enormous range of ready meals and 'dine out in your own home' deals now offered by the major supermarkets. Pubs too have got in on the act, improving their food operations and targeting the growing market for family and casual dining.

During the late 2000s food prices started going up sharply while at the same time the economy weakened. Many cafes and restaurants found it very hard to increase their menu prices, but needed to do something to safeguard their profit margins. Some were forced to cut their portion sizes, while others sought out less expensive ingredients. The economy remained weak during the early 2010s, making it difficult for businesses like restaurants that rely on people having enough money to spend on non-essentials.

As the economy started to improve from 2013 onwards, wages increased and people felt more secure in their jobs. This led to an increase in spending on entertainment, including eating out. By January 2016 the average spend per person was higher than at any time in the previous three years and over 70% reported that they had eaten out in the previous two weeks.

Spending on eating out held up well during 2016, despite the vote in June to leave the EU, but the amount actually spent in 2017 fell below the forecast amount as the market became more competitive, consumers cut back their spending in the face of economic uncertainty, rising inflation and continuing low real-term wage increases. The low value of sterling following the Brexit vote increased costs that have had to be largely absorbed.

Fierce competition during 2018 and 2019 has led to several major chains experiencing financial difficulties and many have had to close outlets.

In spite of this, eating out remains very popular and demand is likely to stay positive for the hospitality sector.

To improve profitability some restaurants have introduced menu items which use more vegetables and less meat. To cut down on waste some restaurants have moved away from a la carte, instead offering set menus with more limited choice. Other challenges to the profitability in the sector include:

  • increased wages costs due to the minimum and the living wage
  • the high cost of rents and rates
  • lower footfall on the high street

Some restaurants have struggled to find good and experienced staff despite a rise in unemployment during the downturn. The government and industry have made efforts in recent years to improve skills training in the catering trade and attract high quality workers. There are fears that the restriction on immigrants from the EU will further reduce the number of good staff in the service industry.

In 2009 the government introduced laws to make it illegal to use tips and service charges to make up staff wages to the level of the National Minimum Wage. The Department for Business, Energy and Industrial Strategy (BEIS) has produced a code of best practice on tips for the catering industry. You can download this from the Gov.uk website. In June 2016 the government announced a consultation on changing the law on tipping in restaurants to make tipping fairer and to clamp down on unfair practices. The consultation closed in 2017 and at the end of 2018 the government promised to introduce legislation to ban restaurants from making any deductions from staff tips.

During the 2000s the Food Standards Agency introduced the food hygiene rating scheme for food businesses like restaurants. Food businesses are given a hygiene rating from zero to five stars when they're inspected by a participating local authority. Under the scheme, businesses are encouraged to display the results of their latest food hygiene inspection at their premises (and in Wales and Northern Ireland it's a legal requirement for food businesses to display them). You can find out more on the Food Standards Agency website.

Technology and the web are becoming more and more important within the catering industry. Many people now choose where to eat based on reviews left on websites like TripAdvisor, while others use smartphone apps to help them locate a suitable eating place. A good feedback profile and rating on TripAdvisor is now more or less essential for cafe and restaurant businesses. Restaurateurs themselves use social media like Facebook and Twitter to publicise their businesses and stay in touch with customers, as well as using 'daily deal' websites like Groupon to market special promotions.

Technology has also led to the launch of a number of online ordering services, such as Just Eat and Deliveroo, which enable people to choose and order take-aways through the internet for local collection or delivery. Participating businesses receive order details and payments though the online service provider. Although the business pays commission for this service, they have generally increased sales significantly. It is estimated that online orders now account for about 40% of food delivery orders in the UK. Buying take-aways is one of the most popular ways to eat out and the biggest selling food category is pizzas. Web-based table booking systems are growing in popularity too.

Keeping up to date with developments

Joining a trade association is an excellent way of staying up to date with developments in your sector.

The catering industry is well represented by different associations, including the British Hospitality Association (BHA). You can contact the BHA through their website.

The Institute of Hospitality is another trade association representing businesses in the catering industry - visit their website to find out more about the services and support they provide to their members.

Subscribing to a trade journal is another good way to keep in touch with the latest developments. The weekly journal The Caterer contains a wealth of articles and features of interest to those working in the restaurant and food industry.

Trade shows

You can get a lot of useful information by visiting a trade show or exhibition for the catering industry. Visit the Exhibitions website for details of trade shows that may be of interest to you.

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