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But restaurants are fitter and better placed to survive the downturn than fifteen years ago

Eating out, takeaways and nights in the pub will be among the first consumer activities to be chopped in the wake of the downturn, research by PricewaterhouseCoopers LLP revealed today.

In a study that surveyed 1000 people, 27 per cent confirmed the first items they would cut back on would be restaurant meals, takeaways or fast food, and visits to the local, compared to 18 per cent who would cut back on holidays and weekend breaks.

When asked specifically about how they would cut back on eating out spend, 20 per cent said as opposed to reducing on restaurant visits they would stop going all together - in favour for cooking at home – whilst 46% said they would eat out less often.

David Trunkfield, director, PricewaterhouseCoopers LLP said, “wallets and waists are getting thinner as consumers tighten their belts and prioritise what they spend their dwindling disposable income on. Footfall will drop for restaurants across the UK but spend per head should be less affected.”

PwC’s research shows that, if forced to cut back on eating out spend, 46 per cent will eat out less often - the majority of which will cook at home as opposed to getting take-out - 13 per cent will spend less at the same restaurants, and 11 per cent will eat out in cheaper restaurant.

Socio-economic influences

Trunkfield says, “lower socio-demographic groups are more likely to stop eating out altogether (24% of C2Ds compared with 17% of ABCs) and families with high mortgage repayments will also be reluctant to eat out.”

The PwC report says consumers are getting more nervous with spending growth predicted to slow to just 0.5% in 2009. Nearly 60% of consumers surveyed this summer think their household will be worse off in the next 12 months.

This is a clear deterioration since PwCs April survey when 37% of consumers polled thought they would have less disposable income (money remaining after household bills and credit card payments) in the next year.

In the early 1990s, restaurants were hit long and hard by the recession but since then we have seen significant cultural changes, and with that certain categories of consumer spending have arguably shifted from being discretionary to essential, such as eating out.

The nation became wealthier during the boom and enjoyed high employment rates. As people now work longer hours and more women work, eating out has slipped into the essential as opposed to luxury bracket.

During the previous downturn one in five people ate out regularly, by 2008 that figure had trebled.

“There is a wider range of restaurants this time around and much wider choice of casual dining options for consumers. Eating out used to be a more formal, three course meal but is now a habit for many consumers enjoying affordable choice. The credit crunch will not change the course of this cultural behaviour,” Trunkfield added.

During the last recession, branded restaurant chains were both smaller and primarily based around traditional food or pizza offerings. Branded restaurant chains in the current market are both larger and more varied in offering.

Food for thought for restaurateurs

People will not compromise eating out altogether but they will be smarter about how they do it. They will still want to eat out but will be looking for a chance to spend less money or make the same amount go further.

Trunkfield says, "the good news is that the under 25s, who are not tied to a mortgage, are still spending and enjoying the hospitality scene. In addition the AB demographic will also keep the restaurant cash tills ringing as they downgrade and dip into the varied, casual dining scene, but continue to eat out."