The latest quarterly report from Lumina Intelligence’s Operator Data Index notes that consumer confidence dropped to -22 in January, according to the GFK Index, its lowest level in a year, driven by concerns over rising government borrowing costs, job cut fears, and economic uncertainty.
As a result, Lumina says consumers are likely to reduce dining-out occasions or opt for lower-ticket options.
“A recovery in confidence will be essential to unlock latent spending power and revitalise the market,” the report says.
“Success will depend on balancing cost control with innovation, strategic pricing, and customer-centric offerings.”
According to Lumina’s data, restaurant market growth lagged inflation in 2024, at a rate of +1.2%.
Market growth remained behind the total eating out market (+3.0%) as strategic restaurant restructuring, weakened consumer confidence and rising business costs hampered further growth.
However, leading restaurant groups such as Dishoom, Wagamama, and The Ivy performed well during the year, benefitting from strong brand identities and quality offerings.
On the other end of the scale, legacy casual dining brands like Pizza Hut and TGI Fridays struggled to return to pre-Covid levels, prompting measures including debt refinancing, administration & brand refreshes.
Turnover for the year across the restaurant market was £18.9bn, while the number of outlets recorded stood at 26,561, a year-on-year decrease of 1.3%.
In the branded restaurant segment, both turnover and number of outlets rose by 2.9% and 0.9% respectively.
The fine dining segment too saw growth, with turnover rising 3.6% and outlet numbers increasing by 1.2%.
Lumina notes that fine dining is now 11.8% larger than its pre-Covid value, driven by growth in numbers of sites obtaining Michelin and AA rosette accolades and consumer interest in the segment.
Independent restaurants, which is the largest segment of the market, was the only one to see a decline in 2024 with turnover falling by 0.1% and number of outlets dropping by 1.8%.
Lumina adds that independent restaurants are ‘most exposed to the challenges of rising costs, leaving many unviable’.
Looking ahead, Lumina forecasts further consolidation across the sector, with companies optimising operations and scaling up through strategic restructuring and acquisitions to boost financial outcomes.
It also highlights successful brands looking overseas for growth, particularly the US due to its scale and premium casual dining opportunities, such as Dishoom and Pizza Express.
“Success depends on balancing brand authenticity with local adaptation in a competitive market,” it says.
“Dishoom’s decision to seek outside funding for the first time highlights the capital intensity of expansion, while PizzaExpress’ partnership with a U.S. franchise operator underscores the need for local expertise.”
It adds that Dishoom’s sold-out New York pop-up demonstrated strong consumer demand, boosting confidence in its US potential; while Pizza Express’s Florida debut marks ‘a bold step’ toward its goal of 1,000 global sites by 2030.
“With market saturation a key challenge, differentiation, operational agility, and strategic investment will be critical for long-term success,” the report states.
To find out more about Lumina Intelligence and its Operator Data Index, click here.