Following the news that UK inflation has hit a 40-year high;

Ramsey Baghdadi, Consumer Analyst at GlobalData, a leading data and analytics company, offers his view:

“In response to the rising inflation, many people are being forced to tighten their purses, with GlobalData’s latest survey find that close to two thirds* of UK consumers are worried about their financial situation. Restaurant operators are going to suffer more losses unless they introduce regular promotions and discounts or even introduce a range of lower-priced items as these discounts will be necessary for businesses’ long-term survival.

“Value positioned businesses, such as Greggs and McDonald’s, will suffer losses if they raise their prices dramatically as living wages take a toll on consumer expenditure. These operators are at a higher risk of backlash from patrons than, say, a premium positioned restaurant due to three main factors: consumer expectations, dining occasions and overall dining experience. Full-service restaurants have a leg up in this regard as their customers are often willing to pay more for a premium experience and special occasions – something that a chain that relies on affordability and convenience when targeting the daily lunchtime rush simply can’t match.

“Given the rate of inflation, fast-food operators may lose customers to homemade lunches and retail meal deals if they can’t meet consumer expectations, which will put many businesses between a rock and a hard place.”

* GlobalData’s 2022 Q2 UK Consumer Survey, June 2022, Sample Size 553 Respondents, 62% of respondents are ‘extremely’ or ‘quite’ concerned about their financial situation