Eating out could soon become cheaper as input costs for restaurants fall at a record pace

The painful rise in bills at London restaurants over the past few years may finally be easing after a key indicator of hospitality cost inflation today showed its biggest month-on-month fall on record.

Restaurant customers have been hit hard by huge increases in the cost of eating out, due to rising wages caused by the shortage of chefs, waiters and bar staff since Brexit and the pandemic, as well as soaring energy and food prices and other pressures such as higher rents and taxes.

But the CGA Prestige Foodservice Index (FPI) today recorded a record decline of 1.4 percent in March compared to February, bringing the annual rate below 10 percent for the first time in two years.

Although this is still a much faster pace than the overall inflation rate of 3.4% during the month, further declines are expected. Today's data showed that prices for a range of staples fell in March: bread and cereals fell 2%, coffee, tea and cocoa fell 1.7%, milk, cheese and eggs fell 1.8% and vegetables fell 2%.

The cost of eating out has skyrocketed over the past decade, leading to the perception that dining out is increasingly becoming an occasional luxury rather than an everyday lifestyle choice.

The latest figures from Harden's restaurant guides show that prices have risen by an average of 10.7% in London over the past year and 14.7% outside the capital. Last year, 54 restaurants in London charged an average of more than £150 per person, a 45% increase on 2022. Main courses in many restaurants in the capital now cost an average of around £30, and diners say it is becoming increasingly difficult to eat out for two for less than £100.

Jason Atherton, one of London's most respected Michelin-starred chefs, has slashed menu prices at his flagship restaurant Pollen Street Social in Mayfair over the past year to make dining in the West End more affordable.

He said customers felt “alienated” by skyrocketing restaurant prices, especially when they had to cut back on other spending areas.

James Ashurst, client director at CGA by NIQ, which specialises in data for the hospitality sector, said: “After two years of relentlessly high inflation, a drop to single digits in March brings welcome relief. Combined with signs of increased consumer demand, this gives us cautious optimism for businesses as we move further into 2024.

“However, high prices in the food sector and elsewhere have caused significant damage, and it may take some time before we achieve sustained low inflation and real sales growth.”

Shaun Allen, CEO of hospitality supply chain consultancy Prestige Purchasing, said: “While the continued decline in inflation rates is undoubtedly positive news, it is vital for hospitality businesses to be extremely careful about their purchasing strategies during this time.”

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There have also been warnings that the almost 10 percent increase in the national living wage in April and the introduction of new food controls at the borders after Brexit could increase costs for the hospitality industry in the short term.

Meanwhile, research by Deloitte found that Britons are spending less money in pubs and bars than at any time since the end of the Covid lockdowns.