A fall in demand for uK takeaways as eating out returns & food prices rise

Will

UK households ordered 12% less takeaway food in January than a year before. In addition to this, the sector also faced more competition from restaurants and cafes after the lifting of pandemic restrictions. Whilst delivery and takeaway sales are double pre covid levels, they continue to drop year upon year since the pandemic. A main reason for this is due to the cost of living crisis, with the consumer price index (CPIH) currently estimating cost push inflation to be at 8.8 percent as of January 2023. The main contributors to this are food and non-alcoholic beverages. This would imply that one of the main reasons for the sectoral decline in demand is the inability for many to purchase takeaways, instead resorting to cheaper alternatives. Furthermore, with the costs of basic ingredients as well as increases in rent, many takeaway businesses are drastically struggling to maintain their healthy profit margins. This is leading to the inevitable closure of numerous household’s favourite businesses, resulting in a narrowed choice for consumers. Protecting already narrow profit margins will certainly be a challenge throughout the year commencing.

A further explanation as to why demand has shrunk for the previously booming takeaway industry is the lifting of pandemic restrictions. Since the government changes, many consumers have turned back to their pre-Covid-19 habits, replacing deliveries with the special experiences that only eating out can replicate. Hence, this has led to a significant decline in takeaway consumption, with consumers concentrating their spending in sit-in restaurants.

The pandemic has also brought the importance of health and wellness to the forefront of people’s minds, with consumers becoming more conscious of the negative externalities concerning certain foods that are commonly present on many British takeaway menus; They have started to opt against a takeaway and have selected healthier cook at home options. With takeaway menus consisting of items high in saturated fat and sodium, consumers have shifted away as they are aware of the health risks associated with the average takeaway. This is the individual response to obesity rising every year with 25.9 percent of adults estimated to be obese in the UK and high blood pressure rates always rising.

A final reason for the shrinking profit margins of takeaway businesses is the competition of the newly emerging meal kit system. Meal kit services such as HelloFresh and greenchef have become increasingly popular since the emerging of the pandemic, offering a more affordable and convenient alternative to takeaways, which under the cost of living crisis, strongly appeals to consumers.

To conclude, various factors have contributed to the fall in demand for takeaways in the UK, including the return of in-person dining, health concerns and emerging substitutes. However the main factor underpinning the empty pockets of takeaway businesses is that of the current cost of living crisis and high rates of inflation, causing consumers to be increasingly wary of their spending as real wage rates are constantly falling.