Key spending trends to help pubs and restaurants plan their next move

The journey of the hospitality sector over the past four years has been turbulent, to say the least. The closure of pubs and restaurants was a defining moment in the UK’s descent into lockdown and, despite the gradual reopening over several years, it was out of the frying pan, into the fire as the Cost of Living crisis emerged in 2022. At the same time, according to the Lloyds Bank UK Sector Tracker (November 2023) the Beverages & Food sector has seen a record decline in output prices and an increase in output orders over the past year, which has helped to sustain growth in the industry. As a result, organisations in the sector are facing a future that has become increasingly difficult to predict.  

Using anonymised and aggregated data from its 26 million customers, Lloyds Bank Market Intelligence (LBMI) analyses spending across debit cards, credit cards, direct debits and other payment methods to understand consumer trends. As a result, we have a unique snapshot into the hospitality landscape and can assess both macro- and micro-level spending trends to help businesses in the sector plan their next move. So how have consumers been spending in pubs and restaurants over the past year – and what does that mean for the future? 

The pillar of the community 

From celebratory meals to quiet drinks, hospitality venues play a central role in consumers’ lives, catering to a wide variety of needs. As a result, the sector has remained remarkably resilient throughout what has been a tumultuous and unpredictable period. According to Lloyds Banking Group’s data, pubs and restaurants took £10 billion in the 12 months to October 2023; a value increase of 9% compared to the previous year. While it’s true that rising inflation would have accounted for much of this increase, the individual number of transactions also rose by 7% – from 595 million to 638 million during the year ending October 2023. This suggests that the sector has still managed to attract consumers amidst a backdrop of economic challenges and uncertainty. 

Restaurants were collectively responsible for the highest total sales volume, taking £6.7 billion via 400 million transactions during the period. The sales value was more than double that of pubs and represents a 7% increase compared to the previous year. Restaurants are also taking £3 more per transaction than pubs, with the average transaction in restaurants increasing by 4% throughout the year to £16.76. 

That said, pubs have also demonstrated remarkable resilience throughout the period, and in fact saw the highest increase in spending. Lloyds Banking Group’s data shows that customers spent a total of £3.2 billion in pubs in the 12 months to October 2023 – an increase of 14% compared to the previous year. Pubs have also conducted 14% more transactions compared to last year, reaching 240 million in total.  

The data shows that business performance can be perhaps surprising, and individual organisations should consider benchmarking themselves against competitors at national, regional and local levels to determine how their brands are performing compared to the rest of the market, as well as identifying new opportunities for growth. 

Festive feasts and January blues 

It is of course no surprise that Christmas is the key date in the hospitality calendar. Christmas Day 2021 represented the day with the highest average spend, with restaurants taking an average of £28.87 per transaction. Mothers’ Day (£26.70), Fathers’ Day (£23.28) and New Years’ Eve (£22.41) were also examples of celebratory occasions that made the top 10 that year in terms of highest average spend. 

But while the Christmas period is one of indulgence, by the time January comes many consumers have undertaken new habits and routines. Alongside factors such as bad weather and empty wallets following Christmas, one trend potentially affecting the hospitality sector is ‘Dry January’, or the commitment to curb alcohol throughout the first month in the hope of starting the New Year healthier and more restrained. 

In both of the past two years, January has been the month with the lowest spend for the hospitality sector, with both pubs and restaurants witnessing a similar decline in transactional activity. Looking at January 2023 specifically, the value of total spending by Lloyds Banking Group customers reached £665 million, representing a 25% decrease when compared to the previous month. This was predominantly caused by a 18% decline in the volume of transactions as consumers evidently preferred the comfort of their own home, rather than braving the elements outside. Per customer, this represented a 10% drop in the average number of transactions, from 5.9 per month in December to 5.3 in January. 

Interestingly, the detoxing effects of Dry January seem to appeal to men and women in equal measure. Pubs and restaurants saw an 18% drop in both male and female customers alike, with those aged between 25 and 50 being most likely to visit. However, there is a silver lining: while Wednesday and Thursday evenings saw the largest drops in activity, Mondays and Sundays in January – somewhat surprisingly – saw an increase. 

The data therefore points towards an opportunity for pubs and restaurants to appeal to customers’ needs throughout the month of January, whether that’s through the promotion of healthier menu options, non-alcoholic drinks, or events designed to encourage people to socialise despite the reduced focus on alcohol.  

Spring in their step 

"Our data implies that consumers are still motivated to spend more on social, family-focused occasions such as Mothers' Day and Christmas. Venues that are able to cater to customers' desire to spend time together could stand to gain the competitive edge."

Annabel Finlay, Managing Director, Head of Food, Drink & Leisure, Lloyds Bank

Pubs and restaurants that cater to consumers looking to enjoy the Bank Holidays taking place throughout the spring months may have stood to benefit. Across both pubs and restaurants in Great Britain, the single day that saw the largest amount of spending was Saturday 29th April 2023; perhaps a result of consumers’ drive to make the most of the first May Bank Holiday weekend.  

What’s more, this ‘Bank Holiday effect’ within the hospitality industry didn’t take place in isolation: on 27th May – the Saturday preceding the next Bank Holiday – restaurants saw their third largest day for spending, while it was the fourth largest for pubs. Similarly, the Saturday before the summer Bank Holiday – 26th August – placed 7th for restaurants, and in the top 25 for pubs. 

Finally, some key dates in Spring have proven to be especially lucrative for pubs and restaurants. On Sunday 27th March 2022, – Mothers’ Day, for example, the average transaction value in pubs was £18.47. Not only was this the day with the 2nd highest average payment that year, but it is also a higher average than Christmas Day in both 2021 and 2022. A similar story can be told in restaurants, which saw their 4th best day in terms of average transaction value, with an average payment of £24.95. As a result, this means that hospitality businesses that cater to customers looking to celebrate Mothering Sunday with their family could reap the significant rewards. 

Tuesday is the new Friday 

When it comes to hospitality spending on a week-by-week basis throughout the year, the story is an interesting one. While traditional demand patterns remain generally consistent with expectations, there are some surprising exceptions. Weekends of course witness the highest proportion of hospitality spending, with Saturday representing the day with the largest sales value – £2.6 billion, or a 10% increase compared to last year.  

However, somewhat unexpectedly, the growth in sales volume and value has increased more on Tuesdays than on Fridays, Saturdays and Sundays – especially among pubs. On Tuesdays in particular, there was a 16% increase in the volume of transactions compared to last year, even more so between 4pm and 7pm, with after-work drinks being a potential contributing factor. However, the largest increase in pubs was across Monday lunchtime, potentially signifying an increase in the prominence of the pub lunch. The volume of transactions at lunchtime on Mondays has risen 25% across Great Britain, with Scotland (+36%) the North East (+31%) and Yorkshire & Humber (+30%) seeing an especially high increase in transactions. By contrast, the volume of transactions in restaurants at lunchtime on Mondays has risen by 7%.  

Looking at timings more widely, lunchtime is generally the time of day that has seen the biggest increase in both pub and restaurants. Total sales value between 12pm and 3pm has increased by 13% over the past year, with transactions also increasing by 9% to 190 million. As a result, hospitality venues – especially pubs – which offer a lunchtime menu, particularly at the start of the week, could stand to greatly benefit. 

Defining the diners and drinkers 

In the context of these trends, the question then turns to the profiles of the consumers behind them. According to our data, the largest segment of organisations’ revenue (£2.1 billion, or 21%) has come from people aged between 30 and 39. While the smallest segment of revenue came from people aged under 18, spending among this demographic has risen by 6%, implying that pubs and restaurants might be able to capitalise on a growing demand from younger people.  

Interestingly, hospitality venues have seen little-to-no growth in spending among 18- to 29-year-olds, implying that this age group tend to make fewer direct transactions in pubs and restaurants, only for them to begin spending themselves again after celebrating their 30th birthday. By contrast, venues have seen the largest growth from older customers; spending has risen among those aged over 60 by +19%, and among those over 70 by 22%. 

"Brand loyalty is built on the foundations of deep insight into customer demographics. Understanding who your brand appeals to and why, sits at the heart of successful customer retention, and Lloyds Bank Market Intelligence offers the key to this knowledge."

Ben Deverell, Relationship Director - Leisure, Lloyds Bank

LBMI data suggests that social events still play an important role in attracting consumers to pubs and restaurants. The hours between 4pm and 7pm still generate the largest segment of revenue for venues (£3.3 billion, up 12% by value and 10% by volume compared to the previous year), demonstrating the importance of after-work drinks, televised sporting events and – on Sundays – roast dinners to the hospitality sector.  

Finally, it’s important to note that pubs and restaurants in Great Britain tend to see different levels of spending depending on where they’re based. Based on the LBMI sample size, venues in Scotland saw the biggest increase in spend (+13% to £880 million), followed by Wales (+12% to £460 million), while the North East (£450 million) and the North West (£1.1 billion) both saw increases of 9% and 10% respectively. London (£1.3 billion) and the South East (£1.5 billion) both increased by 8%. 

It’s vital for hospitality operators to fundamentally understand who their customers are and how their behaviours are evolving over time. Brands that do this are often better placed to build loyalty and ensure that their venues remain attractive places to visit in the future. 

Going granular 

In the post-pandemic world, consumer behaviour has become increasingly difficult to anticipate with customers facing new and evolving financial pressures affecting where, when, and how much they spend. Although the hospitality industry has demonstrated resilience, the future is still very much uncertain.  

While these spending trends have been examined from a sectoral perspective, Lloyds Bank has the ability to pinpoint emerging consumer trends specific to your organisation – from the demographics of your customer base and your target audience through to your performance in the market compared to that of your competitors. We can provide the specific knowledge needed to understand your place within the sectoral landscape, adapt to new trends and successfully plan your next move. 

Introducing Lloyds Bank Market Intelligence (LBMI) 

Lloyds Bank Market Intelligence uses powerful insights to help the hospitality industry evaluate performance and enrich decision making at C-suite level. As a result, we can provide you with the confidence to make data-driven decisions using one of the largest, richest consumer datasets in the UK.  

The hospitality sector is facing an increasingly complex set of consumer demands over the next twelve months, a challenge reflected in the strategic decisions that organisations will have to make in order to remain relevant and attractive to consumers.  

Hospitality venues can maintain their space in the market by appealing to a wide variety of customer profiles, offering the space for evening drinks, morning coffee, and special occasions such as Mother’s Day and Christmas. At the same time, they can use the insights provided by Lloyds Bank Market Intelligence to create a compelling and successful proposition. 

To learn more about how hospitality insights can support decision-making in your organisation, speak to your Relationship Manager, or email us at marketintelligence@lloydsbanking.com . 

For the purposes of this article, hospitality venues have been defined using externally-recognised Merchant Category Codes, where ‘restaurants’ correspond to MCC 5812 Eating Places & Restaurants and ‘pubs’ correspond to MCC 5813 Bars, Taverns & Drinking Places.