'Meal deals' pushing down pub menu prices

Managed pubs are struggling to pass on the full effect of food inflation as deals continue to drive the market, according to new data.

Industry analyst Horizons says average menu prices could fall back to 2006 levels as pub groups drive trade with 'two-for-a-tenner' style meal deals.

Horizons' latest analysis shows that the average spend on a pub meal increased by 30 per cent between 2004 and 2008, up from £10.61 to £13.76.

This increase was ahead of other sectors, with spend in European-style restaurants up 19 per cent, and in Chinese and Indian restaurants up 16 per cent.

"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 Horizons managing director Peter Backman.

"We are beginning to see menu prices falling," he added, "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."

Although food inflation has fallen from a peak of 13 per cent last September to 9.7 per cent in April 2009, price increases are still being absorbed by pubs in order to drive customer traffic through promotions.