Eating-out spend fears

Casual-dining operators are beginning to feel the squeeze as the combination of increasing interest rates, growing tax bills and rising utility prices has created "eating-out pessimism", according to analysts.

Analyst firm FMCG said the warning signs over consumer spending levels had been in the market since June last year, and warned that successive interest rate rises were placing pressures on disposable incomes, particularly among blue-collar workers and first-time house buyers who were traditional high consumers of casual dining.

Last week, All Bar One and Harvester owner Mitchells & Butlers (M&B) admitted that customer spending patterns had led to a lower like-for-like sales growth than last year, rising by just 3.6% for the 32 weeks ending 12 May 2007.

With prices on M&B menus rising by 3.4% during the same period, this left the company with just 0.2% sales growth, according to FMCG estimates.

David Humphreys, director at FMCG, said: "It takes the market leader to mark the way for everybody else. Things have been tough and it's been a difficult few months, but we're seeing things open up and people are prepared to spend a little more on quality. This is something menu developers should keep an eye on."

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By Kerstin Kühn

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