Cafes and restaurants hit hardest by downturn, supermarkets benefit

Posted by Isobel Drake on 17th November 2008

Research identifying greater concerns for the restaurant industry, as a result of a downturn in consumer spending, compared to other food industry sectors, appears to be on the mark.

The latest retail trade statistics from the ABS highlight the strain any further consumer cost cutting could put on restaurants. Cafes, restaurants and takeaway food services represented the worst performed industry sector in the September quarter, with a 0.6% drop in the trend. Food retailing, meanwhile, had the largest increase in the trend estimate (1.2%), indicating that people are heading to supermarkets and other food retailers to purchase food they can cook at home instead of going out to their favourite eateries.

Recent Nielsen research in Australia established that, of the 22% of Australians already lowering their spending, two in five listed dining out as the biggest casualty. Similar findings were discovered in August by Freshlogic, with their research indicating a 6% drop in eating out at restaurants over the first half of 2008.

Consultancy firm Freshlogic noted in August that the eating-out food market could lose as much as $3b in annual consumer spending, part of which may transfer to the take-home food retailers, who include supermarkets and specialists.