Is eating out a luxury again?

Last week I picked up the bill for an average meal for two with a bottle of wine in a well-regarded but non-Michelin-starred restaurant in the West End. It was just over £400. A few weeks before that, I ordered a pie in a Mayfair restaurant that cost £95. I shared the meal with a slightly bemused German journalist. “It’s good,” he said, “but not £95 good.” In the end, a pie is just a pie. 

I couldn’t do the work I do if I didn’t believe that people with money have a right to spend it however they damn well want, but this was something different. In the year to March, food inflation in the UK ran at 19.2 per cent, against a headline figure of 10.1 per cent. This is anecdotal but, as a reviewer, comparing the bills I’m paying weekly, I’m seeing prices in mid-range restaurants rising much faster than that. As a restaurateur, I’m struggling as hard as I can to make price rises manageable. As a reasonably well-informed industry watcher, I’d say the economics of this are ill-understood. But as a punter? Well, just like you, I’m getting that weird vertigo that marketers refer to as “sticker shock”.

The cost of living crisis affects us all, but some of us more than others. Rich people are comparatively immune, while for the less well-off, it’s grindingly miserable. Something similar can be said of businesses. We know there’s suffering in all sectors but, once again, bigger, more established businesses are better able to weather the storm than smaller ones.

We’re also beginning to see that there’s something uniquely grim about the restaurant sector. Many of us were writing before the pandemic about things becoming unsustainable. We’d got to a stage where you couldn’t open a restaurant in London without big investors to cover colossal rents. Restaurants therefore had to be expensive and prestigious and business plans were based on 100 per cent utilisation; full rooms and waiting lists. Staff pay and conditions were less than adequate. The system was bloated and teetering back then, but now everyone is talking about restaurant prices. And while prices, in themselves, might be shocking, there’s an underlying weakness in our febrile food culture which might, ultimately, be even more destructive.

For years, most restaurants have worked to a single fag-packet equation: 30 per cent ingredients, 30 per cent wages, 30 per cent overheads, 10 per cent profit

Price inflation, to be sure, is affecting the restaurant sector all over the world. Judging by online chatter, Manhattan is currently appalled by the “$30 martini” and steep rises in the everyday takeaway items that make work possible in the city. But the customer response there seems to remain positive and there is less talk of closures. As one New Yorker put it to me: “Everyone’s complaining, but they’re still going out to eat.”

In Britain, things are significantly less upbeat. For years, most restaurants have worked to a greater or lesser extent on a single fag-packet equation: 30 per cent ingredient costs, 30 per cent wages, 30 per cent overheads and 10 per cent profit. It’s so ingrained in the industry that it’s a kind of Hospo-Catechism. In a recent interview, chef Michel Roux Jr admitted that they’ve removed a £100 lobster and caviar starter from the menu at the two-starred Le Gavroche in London because they “were making less than £10 on each one”. The formula is rough, but also helps to explain why simple ingredient costs, rising everywhere, are only part of the story. 

Just as critical are the higher fuel bills next quarter and staff wages rising. Many smaller restaurants haven’t negotiated properly with landlords for the rents they failed to pay during lockdown, nor with lenders over their lockdown recovery loans. We have regular strikes wiping out whole chunks of a night-time economy dependent on commuters and public transport, a work-from-home culture that means many people no longer need to buy lunch, and endless bank holidays — which, though they create a busy weekend, are followed by a crucifyingly flatline week.

What the lockdowns did make apparent is that there’s very little common ground across the hospitality industry. It’s practically impossible to speak for all of us. The restaurant sector I write about is different to the large chains that fund “industry representatives”. There are completely different problems for operations such as Byron or PizzaExpress going through their latest change of private equity ownership and, say, a well-regarded independent, run by a young chef dealing with spiralling costs and trying to stay afloat.

I asked Tom Kerridge, one of the first high-profile chefs in the UK to go very public about raising his prices in the summer of 2021, about his experience. For a couple of weeks back then the media was full of headlines about the “£87 steak and chips” at his “pub”, the Hand and Flowers in Marlow. (To be clear, the Hand and Flowers has a couple of Michelin stars.)

“I knew I would come under fire from certain people,” says Kerridge, “but with overheads, wages and rents all going up I didn’t have any other choice. I’m not afraid of increasing prices, I know the quality of ingredients we are using, the skill set my team all have and I will never undervalue that. On the whole, the public have been very supportive. You don’t have to buy a Bentley, but you understand the craftsmanship that goes into making one.” 

Pleasing consumers is only part of the battle, however. This was very clear when I spoke to the head of a small restaurant group, still doing well in the West End and the City, who didn’t want me to use his name in case any of his landlords noticed.

“The problem with the rent market is in most leases, the usual clause is an upward-only rent review, every five years. So that’s a challenge,” he said. “If you look at some locations — the units are predominantly empty and, because landlords want to continue achieving the same kind of high rents, they don’t want their rents to drop.” 

There’s an awful sense of “Scylla and Charybdis” about all this. Restaurants caught between fixed rents, rising overheads and squeezed customer budgets — and there might be an even more unpleasant challenge waiting behind the next rock.

Did you ever read Judith Kerr’s 1968 children’s book The Tiger Who Came to Tea? When father comes home to discover that a disturbingly anthropomorphic tiger has eaten all the food and drink in the house, he takes the family to a café for sausage and chips. What is clear in a very sweet way is that “eating out” at the café was an unusual and thrilling experience for a normal family, so Dad did something wonderful and quirky. If you wrote the same story today, he would just order Deliveroo. 

From the age of five to around the age of 16, I went to a restaurant roughly once a year. It was always the same place — a Berni Inn. We always ate the same prawn cocktail, steak and chips, Black Forest gateau. Today, nearly half a century on, aside from my day job, I might eat out more than once a week. I expect lunch to be bought and eaten on the go. I expect drinks after work. And if I’m too tired to cook I expect to be able to pick up a phone and have dinner brought to me by a kid with a moped, an insulated bag and a look of haunted desperation for less than the effort and cost of making it myself. I am, of course, aware of the immense privilege implicit in those statements, but it’s a total reversal of norms that I sometimes find quite difficult to get my head around.

Britain’s current culture of food enthusiasm began in earnest around 2000, when there was a sea change in media interest. You could argue that this was when the country finally woke up to something that had been beaten out of it by two world wars and decades of austerity — suddenly blossoming into the same overpowering love of the table as our cousins the French, the Italians and the Spanish. Or you could argue that celebrity chefs were a driver, not a response, changing public opinion, birthing a generation of British “foodies” supporting hospitality businesses worth billions. Like most things, the truth is probably a little bit of both. But whatever you believe, there is an implicit acceptance that this is a one-way movement, that there will be constant growth in interest. Onward, upward and ever more lucrative. 

But this particular national food enthusiasm isn’t really mirrored in other cultures. There’s nothing that says what we’ve seen grow in the past two decades is necessarily our natural cultural state. We’ve installed an ontology of eating out and it’s entirely insecure. 

Now it does seem to be on the wane. There have been no really significant new food celebrities in maybe five years. Gordon, Jamie, Nigella, Hugh and Rick still roam the swamp and few quicker, younger creatures have emerged. Apart from shows such as MasterChef — which has been there from the beginning — there is less and less food TV. On Instagram and TikTok, where one might expect food culture to have migrated, “recipes” are reduced to 10-second “food hacks” that are little more than serving suggestions. Meanwhile, we have a generation of new-build and first-time buyers’ flats in our big cities, not necessarily equipped with anything but rudimentary kitchens — nothing more complicated than what you need to open the Deliveroo bag. The waters are muddied but we seem confused: obsessed with food at one level yet on another, beginning to lose interest.

We don’t pay enough for food or service. The British spend less of their income as a percentage on food than comparable nations. On the one hand, we have seen an unprecedented “democratisation” of dining out, but, viewed from another angle, there’s been a change in expectation. It’s now widely regarded as OK to be eating out every day; we feel we should be able to afford it. But we have been educated, by a warped system, to believe that food is cheap as of right. That is why many of us are now suffering sticker shock when we eat out.

We know some things for sure. Staff in restaurants should be paid more and treated better. Food producers should get an equitable price for their product. We’d like restaurants to absorb these increases but, as Kerridge puts it: “We’re having to be incredibly careful with budgets, the increased costs are crippling for so many businesses . . . It is inevitable that pubs, restaurants, bars and cafés will continue to close without more action and support. It’s devastating for the industry.” 

Restaurants are already doing everything in their power. Many are changing their opening hours, partly to treat staff better, partly to match changes in demand. (According to bookings company ResDiary, 31 per cent of restaurants are now open on fewer days each week to cut down on costs.) I’m seeing some incredibly creative menu work using markedly cheaper ingredients. There’s also a noticeable slip in service quality as restaurateurs struggle to attract and retain good staff. 

There are various numbers floating around concerning the number of businesses closing but the one that’s currently tattooed on everyone’s mind, from the trade magazine Restaurant, is that in the year to March 2023, 12 licensed premises closed per day. That doesn’t sound like a sector awash with cash. 

Where’s the wriggle room? Charging the customer more seems like the only place left to move.

Here’s something we all need to consider. Knowing what a meal in a mid-range place costs and knowing what restaurant staff get paid, it’s a racing certainty that the person who cooked your meal or brought it to your table couldn’t afford to eat it themselves. Restaurant staff hate putting the prices up and they hate having to explain increases to customers when they complain, because fundamentally they agree with you that £95 is an obscene amount for any pie. The owners, on the other hand, have the small business person’s superstition that, if they do put prices up by a penny, then the customers will decamp to competitors.

But when restaurants can’t absorb the increased costs anymore, they will have no choice but to pass them on. The only other way out is if costs go back down — a return to pre-Brexit, pre-pandemic ingredient and power prices, staff availability, wage costs and consumer confidence. And for that we need a little more than fiddling with prices, menus, with business models or even tax regimes — we need time travel. And quick.

Are restaurant prices going through the roof? Hell yes. Should they? Maybe we all need to remember that food is something we buy as raw material and prepare for ourselves, and that paying someone to cook for us or bring it to us should never be anything other than a luxury. Maybe restaurants should raise prices until customer numbers drop and, if that means there need to be fewer restaurants as a result — that might just be inevitable. 

Put most simply, all of us — restaurants and customers — are re-evaluating eating out, recognising it as the luxury it’s always been. Rocketing restaurant bills are not the cause of this, they are a symptom.

Tim Hayward is the FT’s food critic and a restaurateur

Have you also been feeling the pinch? Are you eating out as much as you used to? Let us know in the comments below