Global Recap 2024

Intensifying Competition: The market is saturated, forcing restaurants to differentiate themselves with unique experiences. 45% of restaurant operators report that industry competition is fiercer than ever.

Rising Costs and Consumer Behavior: Labor and food costs remain significant challenges, impacting profitability. Changing consumer preferences, budget constraints, and travel patterns influenced dining habits in 2024. Consumers are reporting less expendable income and therefore have been spending less money at restaurants. In a November 2024 poll, 81% of adults claimed they would eat out more if they could afford it.

Labor Costs: 2024 saw a major increase in labor costs. In fine dining specifically, demand for high skill led to hiring struggles. A McKinsey study revealed that 42% of restaurants in major cities reduced staff in 2024. To combat this, some restaurants implemented AI-powered reservation systems and automated their BOH operation.

Food Costs: According to a report by the National Restaurant Association, food costs rose by an average of 6.8% in 2024, a staggering 35% over February 2020. This specifically affected fine dining establishments that rely on high-quality ingredients. Supply chain issues and inflationary pressures also kept menu prices high across the US in 2024.

Technology: Restaurants are increasingly relying on technology to streamline operations (POS systems, inventory management), enhance customer experience (reservations, CRM), and improve efficiency (automation, AI).

Sustainability: Restaurants are focusing on reducing waste (nose-to-tail cooking, composting), sourcing locally, and offering plant-based options. By embracing sustainability, restaurants can lower their utilities, save money and draw in customers by adopting seasonal menus, and decrease their overall carbon footprint.

Growing Industry: Despite challenges like inflation, restaurant sales are expected to reach trillions, and employment is projected to increase. Restaurants are starting to prioritize customer experience through unique concepts and interactive experiences that help stand out from the competitive hospitality landscape.

Economists expect to see lower interest rates in 2025 which should free up more cash for consumers. They also predict that 2025 will be the first year of full financial recovery post-pandemic. Employment in the hospitality sector is expected to increase by 200,000 jobs, giving relief to the staffing strain felt in the industry for nearly half a decade.

Surge in transactions and investments, with deals totaling £3.08 billion, a 35% increase compared to 2023. Luxury hotels flourished, driven by high demand for high-end stays. The average cost for an ultra-luxury room in 2024 came in around £1,000 a night in major cities like London. On the other hand, budget hotels faced challenges due to softer demand and rising costs with some hotel chains reporting a 13% drop in profit in 2024.

The QSR sector experienced significant growth in 2024, fueled by rising demand for convenient and affordable dining options. Delivery platforms and mobile ordering apps played a crucial role in driving revenue, enabling businesses to cater to evolving consumer habits. However, the sector faced challenges, including labor shortages and rising costs due to increased wages. To address these issues, many QSR brands have implemented eco-friendly initiatives, such as biodegradable packaging, aligning with sustainability trends and potentially improving their image while managing costs. Additionally, the National Living Wage is expected to increase to £11 per hour. Economists predict that this will increase menu prices.

The UK fine dining sector thrived in 2024, with a surge in Michelin-starred establishments opening across the country. While the overall restaurant market experienced growth, the fine dining sector is valued at approximately £23 billion, with projections to reach £27 billion by 2029. European cuisine remained dominant, holding a 46.92% market share in 2024, while Latin American cuisine emerged as a rapidly growing segment with a projected CAGR of 7.91% from 2024 to 2029.

Policy impacts from the 2024 Autumn Budget, including the reduction in business rates relief from 75% to 40%. Many are concerned this could increase operational costs for many businesses. Additionally, the living wage will increase by 6.7% to $12/hour in April 2025.

Evolving consumer preferences shifted towards more expensive accommodations such as fine dining and luxury establishments. This put a strain on budget-focused businesses.

Industry stakeholders remain optimistic, with predictions of 1-5% growth in the hospitality industry for 2025. Executives conveyed the long-term potential of the UK hospitality market as one that is fueled by acquisition-driven growth.

Quick Service Restaurants (QSRs): Double-digit growth fueled by convenience, delivery services, digital innovation, and a focus on sustainability. QSR segments were strongly influenced by the increased arrival of tourists to the region. Areas with lots of malls and public transportation like Dubai and Abu Dhabi combined convenience with quality to skyrocket QSRs in urban areas. Additionally, online ordering, app-based dining, and sustainability led the pack for QSR trends in the Middle East.

Fine Dining: Rise in Michelin-starred restaurants, exclusive dining experiences, and innovative culinary concepts. Dubai and Abu Dhabi both separately drew in numerous Michelin-starred restaurants. Additionally, a rise in fusion and immersive dining concepts brought the region’s culinary cuisine to the forefront of the global hospitality market.

Hotels: Strong growth in occupancy and revenue, driven by increased tourism and new hotel openings. Dubai’s tourism market grew by 11.7% and represented 12% of the nation’s overall GDP in 2024. Driven by luxury hotel options, Dubai ranked 3rd in global tourism destinations in 2024. This exceptional growth, however, has led to some increased operational costs including real estate rents and housing costs for workers.

Overall: Significant economic contribution, increased franchising, and a growing emphasis on sustainability across all segments all lead to a stronger hospitality presence in the region’s GDP. In 2024, businesses prioritized eco-friendly practices to align with the UAE’s Net Zero 2025 strategy.