The UK/US Food Landscape: Why Are Traditional Eateries Struggling?

[Twiggy]

Across the UK and USA, we're seeing a noticeable shift: traditional cafes and diners struggling, while fast-food outlets (chicken shops, kebab, patty shops, etc.) seem to be on the rise. What are the key factors driving this change in your opinion?

Is it purely economic pressures (rent, costs, inflation, eggs, coffee, dairy? ), or are changing consumer habits and the rise of delivery apps also major contributors?

What are your experiences and observations in your local area?

[merlyne2000]

Corporate America....I believe has better buying power and also with multiple locations allows them to offer better prices than small diners, cafes and mom and pops locations. This also affects the labor that is offered between them.

[ryanwanner]

100% THIS.

Corporations can take on astronomically high leases, and the landlords know it. There's no leeway given to the mom and pops anymore, and even if there is, most people are "used" to the corporate chains so they're not as willing to step outside their comfort zone to try something new.

[momas_cafe]

This especially. We have many great menu items but our ‘best seller’ is a measly breakfast platter that we pretty much have to offer or we get heavily criticized.

We operate in Orlando, FL so it’s especially worse out here,

[WoodCandleCo]

This. This. This.

[AnniesSeafood]

In our touristy city, you’ll find no shortage of licenced sit-down restaurants with full table service. But over the last two years, we’ve noticed a splash of casual counter-service spots popping up—similar to what you’re describing. Personally? When I dine out, I’m all about the vibe: a cold beer or glass of wine, a proper plate (none of that cardboard takeout box business), and servers who actually say, “How’s your meal?” 😉 I’ll gladly pay extra for linen napkins, real silverware, and that cozy “treat yourself” feeling. Independent spots are my jam—no comparing apples to oranges with budget-friendly joints or same ole chains you see everywhere!

That said, totally get why folks love quick, affordable bites (and familiarity)! To keep up, we’ve leaned into “takeout specials”—all in one curated boxes (no substitutions, because choices are hard, slow down the ordering process and lead to kitchen mistakes). They’re a hit!  We have also discontinued all delivery options and opted for better pricing with simple dishes.  (Come pick up your food 😉)

[Kurlykurtosh]

I think there is also something to be said about familiarity. When I go to a new area, I will look for a Cava or chipotle to avoid disappointment. You know what you are going to get and mom and pops really need to advertise and invest in marketing.  we believe  we don’t need to but as a friend said- if Amazon and pepsi are marketing aggressively - why would you think you don’t need to. 🤔.   We market strategically and it doesn’t cost us much if anything - for example strategic well thought out collab events,  tricky trays/fundraising events with paper vouchers instead of plastic gift cards, offers to all new IG followers, incentives for people to post and share about us on social media. You need to be thoughtful - these  don’t cost anything and they are highly effective if you are consistent. 

[fushipoke]

One thing I didn’t fully anticipate when opening a quick-serve restaurant was how much higher the relative costs would be compared to a full-service restaurant. To provide quality service, we have to pay higher wages since tip percentages are much lower than in traditional table service. Another major expense is disposables when every dish is served in to-go packaging, the cost of containers, utensils, and other supplies adds up quickly. Unlike corporate chains, we don’t purchase these items in large enough quantities to benefit from significant bulk discounts.

On top of that, rising costs of goods and insurance have made it increasingly difficult for small businesses like ours to compete with larger companies, especially in a tough economy. While big chains have the advantage of bulk purchasing power and well-established supply chains with contracted costs, independent restaurants like ours face the same rising expenses without the same financial cushion.

[WoodCandleCo]

In the suburbs of the States, I wonder if there's more consumer habits changing. Post COVID, consumers seem to prefer drive thru windows. It seems like if you don't have a drive thru, you're going to miss out on a lot of sales. It's also incredibly difficult to compete with the buying power of corporations and private equity.

Don't get me wrong, when it's 8 degrees fahrenheit, I don't want to get out of the car. But overall, I actually prefer to go into the shop.

[indianathomas]

I own ten restaurants and have faced challenges in our business as the industry continues to transform.  The restaurant industry in both the UK and the USA is undergoing significant transformations, with traditional cafes and diners facing considerable challenges, while fast-food outlets and quick-service establishments appear to be on the rise. This shift can be attributed to a combination of economic pressures, changing consumer habits, and technological advancements.  Below are reasons why I see this as in incredibly challenging time.

1. Economic Pressures
• Rising Operational Costs: Restaurants are grappling with increased expenses in various areas, including rent, utilities, and wages. Notably, labor costs have surged, with many establishments now allocating 40% to 45% of their gross sales to labor, up from the previous 30% to 35%. This escalation strains profit margins and challenges the sustainability of traditional dining models. 
• Inflation and Ingredient Costs: Essential ingredients such as eggs, coffee, and dairy products have risen sharply. For instance, over the past five years, prices at fast-casual restaurants in the United States have increased by an average of 42%, outpacing the national inflation rate of 22% during the same period. This trend has made dining out more expensive for consumers, leading to reduced patronage. 

2. Changing Consumer Habits
• Preference for Convenience: Modern consumers increasingly favor quick, affordable, and convenient dining options. This shift has benefited fast-food outlets that offer speedy service and value pricing, aligning with the busy lifestyles of many individuals.
• Health and Dietary Trends: There is a growing awareness of health and dietary preferences, prompting consumers to seek diverse and customizable meal options. Fast-casual restaurants that provide healthier choices or cater to specific diets have gained popularity, often at the expense of traditional diners with fixed menus.

3. Rise of Delivery Apps and Technological Integration
• Proliferation of Delivery Services: The advent of delivery platforms like Uber Eats and Deliveroo has revolutionized the dining landscape. Consumers can now enjoy a wide variety of cuisines from the comfort of their homes, reducing the need to visit traditional cafes and diners. This convenience has particularly favored establishments that can efficiently handle high delivery volumes, such as fast-food outlets.
• Digital Ordering and Automation: Restaurants integrating technology into their operations, such as digital ordering systems and automated kitchen processes, have streamlined services and reduced labor costs. Fast-food chains often lead in adopting these technologies, enhancing their competitiveness in a challenging market.

To exasperate the above issues, there are five additional reasons why a typical restaurant will struggle under normal conditions.
1. Labor Shortages: Post-pandemic, the restaurant industry faces significant labor shortages, with many workers leaving the sector for other opportunities. Despite attempts to attract talent by offering higher wages and increased benefits, staffing shortages persist, leading to operational challenges. 
2. High Competition: The market is saturated with dining options, from food trucks to upscale eateries, intensifying competition. Traditional cafes and diners often struggle to differentiate themselves and attract a steady customer base.
3. Location Issues: Establishments in areas with declining foot traffic or unfavorable demographics face challenges in maintaining profitability. The success of a restaurant is often closely tied to its location, and shifts in urban development can impact patronage.
4. Poor Financial Management: Some restaurants suffer from inadequate financial planning, leading to cash flow problems and unsustainable debt levels. Effective financial management is crucial for navigating the industry’s inherent volatility. 
5. Adaptation to Changing Consumer Preferences: Failure to adapt to evolving consumer tastes, such as the demand for healthier options or environmentally sustainable practices, can lead to a decline in relevance and customer loyalty.

The challenges faced by traditional cafes and diners in the UK and USA are multifaceted, encompassing economic, social, and technological factors. To thrive in this evolving landscape, establishments must adapt by embracing innovation, understanding consumer preferences, and implementing efficient operational strategies.

[DinaLRosenberg]

As a diner in restaurants I'll chime in with my own experience- I've noticed quality go down with prices going up. I get that things are more expensive for everyone. But don't charge me prime prices for middle of the road.  When I go out to eat it better be good- if I wanted mediocre I'd cook it myself (haha).

With the quick service "chain" restaurants you sorta know what you're getting... Where I live my go-to is our local pizza place. In NY pizza places serve everything - pizzas, salads, soups, classic Italian dishes and pastas. For $20 I get a salad, bread and enough eggplant parm and ziti for dinner and lunch the next day... and it's delicious. 

[JTPets]

I’m not in the food business myself, but I've spent the last five years operating a small business inside a year-round indoor farmers' market. During that time, I served as both a board member and president of the vendor association, so I've seen a lot of what works and what doesn’t in the small business world.

One of the biggest challenges I see right now is that many small business owners don’t negotiate proper lease terms. You might sign a short 1- or 2-year lease, finally become profitable, and then get hit with a massive rent increase when it’s time to renew—sometimes as much as 100%—because of changing economic factors or landlord decisions.

Another issue is not understanding the location dynamics. If you’re running a sit-down diner in a low foot-traffic area with no parking and no anchor tenants nearby, it’s going to be a struggle.

Then there's the problem of relying too heavily on third-party delivery services. Too often, business owners treat delivery apps as a profit driver instead of an advertising tool with a built-in ROI. This leads to inflated menu prices, which can alienate local customers who might otherwise become regulars.

Lastly, there’s the mindset issue: not listening to customers. Some businesses take an “I’m doing what I want, who cares what they say” approach, rather than having an open-minded, growth-oriented mindset. Successful small businesses are those that adapt to customer feedback and stay flexible.

Would love to hear your thoughts on these points!

[Kurlykurtosh]

Your observations are spot on!!! 

And yes, Third party delivery services should be viewed as marketing tools and you need to figure out how to transition them to your site for ordering. 

[JTPets]

We sell pet food and supplies on 3rd party, they get a coupon for 15% off my website & free local delivery in every order