UK restaurants feeling the heat

By Jo Gilbert

Published: 20 April, 2018

Wine is struggling for attention in a UK restaurant sector experiencing a “perfect storm” of adverse trading conditions, according to a new report.

UK On-trade Trends data from Wine Intelligence, shows that UK restaurants are having to reassess their business model due to poor commercial conditions, partly driven by increased tax burdens and wage legislation.

The uncertainty of Brexit and its effect on planning and recruiting staff were also noted as causing issues.

At the same time, competition is growing from food-only ‘kitchen and delivery’ services like Deliveroo, which are drawing investment capital away from more conventional restaurant concepts and eating into wet-leds sales.

Meal-at-home kits also offer another alternative to eating out that is often a cheaper, more convenient way for consumers to expand their eating repertoire with the added satisfaction of having made it themselves.

Richard Halstead, COO of Wine Intelligence, said: “It’s hard to find a good news story in the UK on-trade at the moment, and wine is not immune from the cold winds sweeping through the sector. The message from this report seems to be that lazy or out-dated wine offers are going to be punished, and rewards will accrue to those who are using the wine list as an opportunity to bring new knowledge and understanding to consumers.”

Data from market-research firm NPD Group echoes the findings of the Wine Intelligence report.

It found that the pub and restaurant market was flat in 2017, while the home-delivery market grew by 11%.

High-overheads, a rising living wage, and the impact of restaurant aggregators like Deliveroo on wet-led sales have contributed to the woes of chains like Casual Dining Group, owner of Café Rouge and Bella Italia, which recently announced a £60m downturn in sales for the year to May 2017.

Research shows that on-demand services are not only enabling consumers to have a slice of the on-trade experience in the comfort of their own homes, they are also able to watch their spend without the pressure to order expensive extras like starters, sides, or the main profit-leader, alcohol.

Wine Intelligence also notes that some restaurateurs are reporting that wine is receiving less attention as gin, cocktails and craft beer are attracting more consumers.

Although wine remains the backbone of the alcohol on offer in most food-led outlets, these other drinks are more talked about and have grown in repertoire over the past year while wine perception has remained the same.

The report notes however, there is a growing interest in alternative wines (from a low base) as organic and vegan products are increasing their exposure.

This exposure could be due to increased trade awareness of natural wines, with several UK events now devoted to them.

It could also stem from restaurateurs responding to the mainstreaming of veganism with vegan offers (including vegan wine), meaning alternative wines are more easily available.

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