Business Briefing: How is the cost of living impacting on On Premises spend?

According to a detailed report and insights shared by CGA and Molson Coors, consumer behaviours and intentions regarding On Premises spend may not be as negative as some may have thought.

Research shows that "on premise visits held fast despite consumer predictions and rising costs. Despite seeing rising household expenses, eating & drinking out spend has risen in September compared to August."

When asked to predict future visitation rates, "consumers are now painting a far more positive picture, albeit sill with a slight overall decline; a third predict more visits compared to nearly 4 in 10 predicting fewer. Despite inflationary pressures, the On Premise remains among the most important spending priorities for consumers."

"The rise in eating & drinking out spend is driven by the number of highly engaged On Premise visitors rising:

• 52% of consumers are visiting the On Premise at least weekly, +8%ppt vs last month
• Despite a net decrease in visit levels, the gap between those increasing (31%) and decreasing (36%) visits has narrowed
• Positively, those visiting the trade more often are a more lucrative group, with higher typical frequency and income.

The improved picture regarding On Premise visits & spend compared to last month is reflected in the latest sales data which shows September was +4% up compared to the same period in 2019. Moving forward, 31% of consumers now expect to increase their frequency in the rest of 2022, while 38% plan to reduce.

The nature of On Premise as an affordable luxury is reflected in consumers increasing frequency due to desire for consumers to treat themselves or trade up;

• 28% of consumers going out more than usual have been doing so for missed occasion (+2ppts vs August)
• 23% of consumers spending more than usual have been celebrating more special occasions (+3ppts vs August) Rising costs remain a concern
• The cost-of-living crisis is still a concern for consumers and driving some consumers to cut back, with 88% of those who’ve reduced visits doing so because of cost of living or inflationary concerns
• Once again consumers expect to make significant cuts in their spending on eating & drinking out in October, however we know from last month’s report that predicted cuts didn’t fully transpire

Many predicted sharp cuts in spend eating & drinking out in September which didn’t materialise. Seasonal factors and the rising energy price cap mean that consumers are likely to start to feel the pinch more and could be more likely to cut back.

Despite the positives, falling consumer satisfaction is a watch out. This applies particularly to ‘value for money’ where tight household budgets are combining with menu price rises."