New data released today from Cardlytics, based on the spending insights of 3 million UK bank customers, reveals that consumers are spending less money on eating out in favour of dining in with delivery services.

Spending on eating out grew by only 3% year-on-year in Q1 2018, compared to 9% growth in Q1 2017. Meanwhile spend on delivery services was up by 17% year-on-year in Q1 2018. This continues the dramatic growth trajectory for the category, which comprises the likes of Just Eat, Deliveroo and Hungryhouse.

While overall it is not all doom and gloom for restaurants, many of which benefit from the uptick in use of delivery services, the data paints a stark picture of the challenges facing physical eateries, which have led to the well-publicised closure of many restaurants and deep discounting.

Casual dining no longer reigns in the restaurant sector as delivery services gain a bigger slice
Growth in restaurant spending has been slowing over the last couple of years, increasing 6% year-on-year in Q1 2018, compared to 10% in Q1 2017 and 17% in Q1 2016. Growth this year was propped up by delivery services and quick-service restaurants.

Casual dining has been among the worst hit in the restaurant category. Spending in Q1 2018 fell by 1% year-on-year, compared to the solid growth seen in previous years (5% in 2017 and 10% in 2016).

Casual dining used to account for almost half of people’s restaurant spend only two years ago, while it now makes up just over 40% of the wallet, followed by quick-service-restaurants at 39% and delivery services at 16%.

Delivery services are gaining share, with spending in the first quarter of 2018 up by 17% annually.

The average transaction value in delivery services in Q1 2018 increased by 10% year-on-year. In contrast, the average transaction value for the whole restaurant category has dropped by 6% since 2015.

A meat feast in the industry, despite some fowl play
On a cuisine level, steak restaurants saw the highest growth in Q1 2018, growing by 12% year-on-year. This was followed by coffee shops (+9%), quick-service lunch restaurants (+9%) and burger joints (+8%).

The average transaction value at steak restaurants increased by 17% year-on-year in the last quarter, while the value of an average transaction at a pub has dropped by 10% since 2015.

Burger restaurants remain the most popular cuisine, accounting for (23%) of consumers’ restaurant spending, followed by pub dining (20%) and pizza (10%).

Despite the popularity of meat-centric restaurants, chicken shops saw an unprecedented dip in spending in the last quarter, falling by 7% compared to the same time last year. This was the first time the category, which includes speciality chicken restaurants like KFC and Nando’s, had seen a dip since 2016. This fall may have been driven by the nationwide chicken shortages reported by KFC in March 2018.

Duncan Smith, Commercial Director at Cardlytics UK, said, “Our data shows the restaurant landscape is continuing to shift, with casual and high end casual dining suffering from a challenging winter period. The cold weather has clearly supported delivery services, but with the seasons changing, there is an opportunity for physical restaurants to entice customers back with new partnerships, and diversification of their rewards and offers.

“With profitability set to be one of the biggest issues for the industry in 2018, restaurant owners across the board will need to take a long and hard look at their physical high street presence and examine whether their strategy is still sufficiently different to foster loyalty amongst increasingly discerning customers.”

(source: Cardlytics, image: pexels)