It’s no secret that the cost-of-living crisis has had a devastating effect on the hospitality sector, as lower disposable income for consumers has meant a decline in footfall. What’s more, the rising cost of energy and electricity bills is a big challenge for restaurants as they try to continue running whilst balancing profits.
With this in mind, it may come as a surprise that a new wave of ‘hyper-luxurious’ restaurants are popping up around London – according to the latest release of Harden’s London Restaurants guide, more than double the amount have emerged in the last 12 months.
These hyper-luxurious restaurants charge over £150-a-head for a meal, and restaurants charging £200-a-head have also seen pronounced growth. Numbers have increased by 59% in London and 46% nationally, despite remaining a relatively small sector of the market with 27 in the capital and 19 outside London. For context, in 2016 there was only one restaurant in the capital and five across the UK charging more than £150!
In a survey conducted by AlixPartners in December last year, 74% of respondents said they planned to reduce dining out, but only 39% said they would choose less expensive restaurants. Way back in January 2009, just 12% of respondents said they would eliminate or reduce visits to cut back on their restaurant spending. So, what can we take from this data? Well, it shows us that if people are dining out, they’re really dining out – consumers aren’t just going out for impromptu visits, they’re dining less frequently and when they do, they’re making it worth their while.
The growth of hyper-luxurious restaurants, despite the cost-of-living crisis, can be because of a few factors. One possibility is that the rise of social media has created a new type of consumer who is more interested in experiences than material possessions. These consumers are willing to pay a premium for a unique and memorable dining experience, and hyper-luxurious restaurants provide just that.
Another is that the wealthy are not as affected by the cost-of-living crisis as lower-income individuals, and therefore still have the disposable income to spend on high-end dining. Additionally, the rise of international tourism to London may also be contributing to the growth of hyper-luxurious restaurants, as wealthy tourists are often willing to pay a premium for a unique dining experience in a foreign city.
Despite a reduction in dining out, it’s clear that people are opting for unique and memorable dining experiences and restaurateurs need to keep up with changing consumer behaviour to thrive in this competitive market.
Are you a restaurant owner planning to implement a fine dining offer for those seeking luxury? If so, we’d love to hear from you!