How much you need to earn to eat out in London

 

London is an expensive city. It is also a very exciting one, with eating out a jewel in its crown. Drawing from multicultural influences, almost every cuisine is readily available.

The challenge facing most people is deciding how much to spend at a time when high inflation is gripping the nation. If you’re in this position, then fear not! In the next few minutes, we break this challenge down to hopefully help you to live a more fulfilling life.

Four restaurant segments

Eating out varies significantly in price. So to understand the question with greater specificity, we first must define four segments for eating out. We can then allocate approximate costs for each category.

  • LOW: Fast food chains (£7.50 a meal)

Fast food chains such as Itsu, McDonald’s, Burger King, KFC, Domino’s, Pizza Hut and Subway are widely available across the UK. However, London is also the testing ground for many global chains that aren’t always widely available elsewhere. Examples include German Doner Kebab, Taco Bell and more recently Wing Wing and Popeyes.

A typical meal in this category will cost around £7.50 for a main, a side, and a drink.

  • MEDIUM: Chain/ local restaurant or market stall (£15 a meal)

The next step-up in price provides a more typical restaurant experience. This segment therefore includes a very broad variety of cuisines, all vying for the same attention. And unlike fast-food options, quality of food is more highly prized, which makes it very difficult for chain restaurants to dominate the market.

For this reason, people are likely to compare prominent chains such as Nando’s, Franco Manca, Zizzi’s and Honest Burger with local unbranded restaurants. Unlike chains, these are usually selected on a basis of their atmosphere, popularity and local reviews. Popular cuisines that fit into this bracket include Chinese and Thai, as well as a much broader selection available at street food markets.

In most instances, a main meal will typically cost either just less than £10 or just above. Adding a drink and a delivery fee or tip will then take the overall cost close to £15. Bargains can be found that may, at a push, bring this closer to £10, but these are increasingly more the exception in light of high inflation rates.

  • HIGH Serviced restaurant (£25 a meal)

This segment contains serviced restaurants that offer a high-quality dining experience, excellent service and an element of specialism that differentiates them from the commoditised offerings in the segment below.

Restaurants that sit within this category include specialist steak restaurants and Indian restaurants, which are typically not run as chains. They also include Mediterranean restaurants with set 2-3 course menus, as well as gastro pubs. Most notably, these pubs offer Sunday Roasts, which are usually priced at more than £15 for a main.

These meals are then often accompanied by an alcoholic beverage and perhaps a starter, taking the total cost to around £25 per person.

  • EXCLUSIVE Fine dining (£50 a meal)

The final segment covers unique dining experiences that for most people are likely to be a one-off or special occasion. That said, for others, especially city workers, they may be a perfect place for business meetings or networking.

What distinguishes this category is the attention to detail in the preparation of the food, often accompanied by an exceptional setting. For example, The Shard’s many restaurants would all fit in this category. This makes cuisine less important to these other factors.

For most of these dining experiences, paying £50 or less would be rare. Instead, meals could easily stretch into the hundreds of pounds as menus are carefully constructed with vast variances in them.

Three levels of consumption

The next step of the process is to define three levels of consumption.

LOW: £100 a month

  • 3-4 takeaways a week

  • OR 1-2 restaurant/market stall meals a week

  • OR 1 serviced restaurant meal a week

  • OR 0-1 fine dining meal every week

MEDIUM: £200 a month

  • 6-8 takeaways a week

  • OR 2-4 restaurant/market stall meals a week

  • OR 2 serviced restaurant meals a week

  • OR 1 fine dining meal every week

HIGH: £300 a month

  • 9-12 takeaways a week

  • OR 3-5 restaurant/market stall meals a week

  • OR 3 serviced restaurant meals a week

  • OR 1-2 fine dining meal every week

Salary implications

Hopefully, you can see how, by viewing this information above, a picture starts to form in terms of the lifestyles that each grouping would afford.

As we’ve covered previously, disposable income can vary significantly even within the same earning bracket. This is because London is expensive to live in, and living costs vary dramatically depending on the type of ownership, the size of home, as well as the date at which a person took out a Mortgage.

For this reason, we can analyse the implications for four earnings brackets based on our article about spending habits in London.

  • Essential living standards – 21-32k

    Covering basic costs in London is much higher than the rest of the country. They are also going up rapidly. For this reason, anyone earning in this bracket is unlikely to be able to afford even £100 a month on eating out. Instead, they are likely to need to be very frugal with their shopping and perhaps allow themselves to a fast-food takeaway once to twice a month.

  • Comfortable – 32-48k

    Anyone earning in this bracket will have greater freedom to spend due to the presence of discretionary income. However, they certainly wouldn’t have much money to spare, making them likely to be low to medium spenders if they enjoy eating out regularly.

  • Affluent – 55k-80k

    This group has greater freedom and typically fit within the older age bracket that can afford, and cherish, serviced dining experiences. For them, a Medium to High spending may be typical.

  • Luxury – £92k upwards

    Earning this sort of income in London is not easy and therefore most closely aligned with Senior Management Teams or city roles, e.g. Lawyers and Bankers. These individuals have little time and high discretionary income, making them most likely to treasure unique restaurant experiences. Consequently, they can easily afford £300 or more eating out each month. However, as we’ve seen, the costs of fine dining experiences are much higher than the other categories, which means that the majority would have to keep checks on the levels of excess.

We hope you enjoyed following an illustrative example of behavioural economics. We also hope that it helps you to better understand your spending habits without agonising about the cost of every meal.

You may be interested in reading the articles linked throughout. Alternatively, for anything else, please don’t hesitate to get in touch below.

Until next time.

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Alex Moorhouse

Founder of Posito. More than 15 years’ experience in marketing communications.

https://posito.co.uk/
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