Pub meal prices could drop to 2006 levels

The cost of a pub meal could drop back to 2006 levels as competition for customers increases, according to one market analyst.

Peter Backman of Horizons said that a meal in a pub restaurant was 30% more expensive at its peak in 2008 than in 2004 as ingredient costs rose and customers increasingly chose costlier items from the menus. The average price of a pub meal rose from £10.61 to £13.76.

In the same period, the price of a restaurant meal rose 20% to £11.98.

"Spend has risen this much over the four-year period largely because customers have been willing to spend more and because restaurant operators have put up prices as a result of the hikes they have seen in food and overheads such as rent, staffing and fuel," said Backman.

"But in this recession higher prices cannot be sustained so in order to maintain sales restaurants need to reconsider their pricing strategies."

The rise in food prices is now slowing, with the level of food inflation at 9.7% in April 2009 from its peak last September at 13%.

"We are beginning to see menu prices falling particularly with the number of special deals and offers currently in the market. The cost of eating out is likely to continue falling, at least until the end of 2009. Indeed, restaurant bills could fall back to 2006 levels.

"Spend in restaurants and pub restaurants reached a high in 2008 when demand was at its peak and operators could afford to raise prices. The situation has now changed considerably with competition for customers extremely tough."