Slow growth in eating out

Restaurants will see little real growth in consumer spending over the next five years, warns a new report by Mintel.

Although consumers are forecast to increase the amount they spend in restaurants by 22%, from £4.58b in 1999 to £5.6b in 2004, this figure is equivalent to just 3% growth once inflation is taken into account.

British, European and US-style restaurants are forecast to do best, especially in the mid- to upper market, showing real growth of 7% from £2.9b in 1999 to £3.1b in 2004.

Ethnic restaurants will see a decline in spending in real terms by 5%, from £1.68b in 1994 to £1.59b in 2004. Indian restaurants will be particularly badly hit.

Exceptions include Japanese and fusion cooking, which Mintel believes show "considerable potential" for future growth, with sushi bars alone already accounting for £15m in turnover.

British cooking remains a national favourite, especially with the modern twist applied to native dishes by such celebrity chefs as Gary Rhodes. Italian, Spanish, modern European and specialist fish restaurants are also tipped for future expansion.

Market growth, says Mintel, has been dominated by smaller groups and chains, which can respond quickly to consumer demands. Successful operators include Belgo, Groupe Chez Gérard and Shimla Pinks, while some well-established firms, such as Whitbread, have had a tougher time.

Mintel warns that restaurants offering tired themes, poor-quality cuisine and overpriced menus will no longer be tolerated.

by Angela Frewin