As consumers continue to be squeezed by rising inflation and lack of wage growth, attracting customers to a restaurant has become less about swanky interiors and quality staff, and more about enticing discounts, price-cuts, and freebies.

With big chains such as ASK, Pizza Express, and Café Rouge already doing this, offering discounts to diners may seem like common sense. However, with the steeply rising cost of running an establishment, is the potentially increased volume of customers enough stay afloat?

 

Peter Backman, a consultant for the eating-out sector, has a tracker that gives an indication of how much restaurant owners are having to cut prices to attract diners. He believes that discounting has risen by 20 – 30% in the last year.

 

With the rise in food delivery (22% in the first six months of 2017, according to NPD’s Foodservice UK survey), and hikes in business rates and staff costs linked to the introduction of the National Living Wage, the restaurant sector has been hit hard in recent months. Not to mention the increased price of imported food and drinks with the fall of the Pound’s value against the Euro.  

 

According to Backman, there is “too much capacity in the eating-out market.” He warns that there may be “quite a number of store closures to come.” This appears to hold true, as Tasty, Richoux and Restaurant Group have all warned on trading, along with Franco Manca owner Fulham shore, who disappointed investors with an admission that profits may not hit expectations this month. This resulted in shares falling 22%. Popular burger chain Byron has also closed four sites.