HoReCa market and inflation – how do consumers react?
Inflation presents another challenge, after the pandemic, that the HoReCa market in Poland has had to face. Consumers are starting to limit their expenses, and as our research shows, one of the first decisions is to give up gastronomic services.
The HoReCa market in Poland has been facing challenges for several years. First, in 2020, the COVID-19 pandemic turned the lives of entrepreneurs in the gastronomy and hotel industry upside down – they had to adapt their businesses overnight to operate under restrictions and reduced demand.
The relative stability of the sector was then interrupted at the beginning of 2022 by the war in Ukraine. And while the conflict itself does not have a direct and significant impact on the industry’s functioning (as was the case with the pandemic), the accompanying macroeconomic effects do. One of them is growing inflation, and as a result, a stronger influence of economic factors on consumer purchasing decisions.
The future is not very optimistic for the HoReCa market
The coming years will not be easy for the HoReCa market. Projected economic slowdown, persistently high inflation, projected unemployment growth (although symbolic since it will remain at a low level), hampered consumption, and the increase in interest rates will limit the purchasing power of a portion of society. This will have a negative impact on the market of gastronomic and hotel services.
Consumers are becoming increasingly price-sensitive
The results of a study conducted by PMR in May 2022 show that due to rising prices, at that time, 2/3 of Poles declared limiting visits to gastronomic establishments, ordering meals for delivery/takeout, or canceling travel reservations. Economically sensitive consumers pay more attention to the words “spend” or “save.” Eating at a gastronomic establishment is associated with the former, while cooking at home is associated with the latter.
Explanation: n=939
Respondents expressed their opinion on a scale from 1 (Strongly disagree) to 5 (Strongly agree). The table presents the average value of responses for each statement, as well as the combined percentage for “Strongly disagree” and “Somewhat disagree” responses, and “Strongly agree” and “Somewhat agree” responses. The higher the average value, the greater the agreement with the statement.
Source: PMR, 2022
From home kitchen to urban "foodies"
Consumers in the HoReCa market are not a homogeneous group in terms of behavior and economic sensitivity. Based on a study conducted for the “HoReCa Market in Poland 2022” report, PMR identified four basic consumer segments.
Estimated segment size (%)
Explanation: n=939
Source: PMR, 2022
Over 1/3 of consumers belong to the "Known and Cheap" segment
- These are consumers who are more likely to order food for delivery than eat out. They generally do not use gastronomic services very often: once a month or less. If they do, they prefer pizzerias and fast-food bars.
- Regardless of the place of consumption, they most often choose fast-food classics: pizza, kebab, hamburgers, fries, pasta, dumplings, or meat/fish with sides. They order carbonated drinks, beer, mineral water to drink. If they go to a café, it’s for ice cream and coffee.
- When choosing a restaurant, they are primarily guided by prices, opinions about the place, and their own experiences. They prefer to go to a known and trusted place. It’s important for the establishment to have air conditioning or an outdoor garden, and to offer meat dishes on the menu.
- They rarely use hotel services. They usually go on vacation once a year, maybe twice. On those occasions, they choose private accommodations or apartments without services, or campsites.
- They definitely do not use individual catering services (meal-delivery diets) and have no intention of doing so.
- This segment consists of people with lower rather than higher education levels and lower income levels (below PLN 3,000 net per capita in the household). They do not have a specific place of residence – they can be found both in rural areas and small towns as well as in large cities.
The "Best at Home" segment accounts for just over 1/4 of consumers
- As the segment name suggests, these are consumers who prioritize home cooking above all else. And quite literally: they prefer not to eat outside the home or order food for delivery. Eating out is an exception for them. If they go somewhere (which usually happens once or twice a year), they may stop at places with catering services (hotels, guesthouses) just as often as at other locations (e.g. private accommodations, holiday homes, or campsites).
- If they eat out or order food for delivery, they choose what they know best – safe options: classic Polish cuisine, meat/fish with sides, zapiekanki (Polish-style pizza baguettes), fries, pizza. They will have ice cream for dessert. For drinks, they would order beer, carbonated drinks, mineral water, or coffee.
- When choosing a restaurant, attractive prices, good access or convenient location, and availability of tables right away are important to them. They are more influenced by the opinions of friends than what they read online.
- They definitely do not use individual catering services and have no intention of doing so.
- This segment is the oldest in terms of age (average age around 50). These individuals have lower incomes (below PLN 3,000 net per capita in the household) and predominantly reside in villages and small towns, often quite far from major urban centers. Even if they live near a large city (with over 100,000 inhabitants), they rarely visit there.
Close to 1/4 of consumers belong to the "Culinary Explorer" segment
- These are consumers who enjoy exploring new culinary lands. They often eat out or order food for delivery at least two to three times a month, or even more frequently.
- They make an effort to eat something different from what they have at home and eagerly try new dishes. They are not limited to classics such as Polish, Italian, or American cuisine, but also enjoy Oriental cuisine like Thai, Chinese, Vietnamese, and Middle Eastern dishes. They order pizza, burritos, wraps, tortillas, bowls, pasta, dumplings, and also enjoy salads and soups. For drinks, they order juice, smoothies, beer, carbonated beverages, or water. For dessert, they will have cake, cookies, ice cream, and coffee.
- They don’t necessarily need to be familiar with the restaurant they choose, but opinions and recommendations are important to them, both from friends and online sources. Consumers in this segment are definitely attracted to popular places with diverse menus that offer vegan, vegetarian, and breakfast options.
- They frequently use hotel services, traveling two to four times a year, and are just as likely to stay in places with catering services (hotels, guesthouses) as in other types of accommodations (private rentals, holiday homes). They tend to avoid campgrounds.
- About half of this segment has experienced individual catering (meal plans) and are likely to use such services in the future.
- Consumers in this segment are usually well educated and have a higher rather than lower income level (above 3,000 PLN net per capita in a household). They mostly live in large cities (over 100,000 inhabitants) or small suburban towns (although they often frequent larger cities).
Around 14% of consumers fall into the "Food and The City" segment
- This segment consists of “foodies” who love diverse food and are not afraid to experiment with their culinary choices. They frequently order food for delivery (at least once a week or more often) or eat out.
- It’s hard to say that they have a favorite type of cuisine or meal because they enjoy dishes from all corners of the world: American, Oriental, Indian, Middle Eastern, and Georgian cuisine, among others. Interestingly, due to their tendency to seek culinary novelties, they are the segment that least often chooses classics like Polish or Italian cuisine. They also do not have specific preferences when it comes to desserts (from cakes and ice cream to croissants) or beverages (from beer and wine to juice and smoothies).
- When choosing a place to eat, opinions about the establishment matter a lot to them. They are willing to go to an unknown place simply because it was highly praised online or because it is a new spot on the culinary map of the city. They pay attention to everything, from the decor and aesthetics of the place to its accessibility for different consumer groups (people with disabilities, families with children, allergy sufferers, those on specific diets, vegans, and vegetarians). They frequently use hotel services, traveling several times a year. They most often choose hotels or agrotourism farms. Perhaps choosing agrotourism represents a form of nostalgia (seeking ecological, healthy food, farm-to-table), while high-standard places (agro glamping) are chosen for the actual stay.
- This segment is the one that most often has experience with individual catering (nearly three-quarters of the segment have such experiences) and they definitely want to continue using it or try this way of organizing their meals.
- These are mainly individuals with higher education, who are generally well-off (with an income above 3,000 PLN net per capita in a household). They live in the outskirts of large cities but their lives primarily revolve around the urban lifestyle.
Find comprehensive information about the current state of the Polish HoReCa market in the PMR report:
Fast-food delivery loses to homemade cooking
Among all the presented market segments, the most price-sensitive and economically driven consumers are those from the “Known and Cheap” segment. They perceive eating out or ordering food for delivery as a more expensive alternative to homemade cooking. They also often declare that an increase in food service prices would lead them to reduce consumption. Interestingly, the “Home is Best” segment proved to be slightly less price-sensitive – perhaps because since they rarely order food for delivery or eat out, they don’t have much to give up.
From the two remaining and better-off economic segments, the “Food and The City” segment is more willing to limit consumption, especially in terms of delivery orders rather than meals consumed in restaurants. This segment also strongly expressed that lower prices for individual catering services would encourage them to use them.
The least price-sensitive segment is the “Culinary Explorers”. Not only do they not see a strong need to limit consumption due to price increases, but they also do not perceive cooking at home as a significantly cheaper alternative to ordering food for delivery or dining in restaurants.
Consumer budget cuts - the gastronomy sector is hit first
To better assess the impact of inflation on the HoReCa sector, it is worth looking at the opinions of consumers from non-gastronomic segments of the retail market. For several months now, PMR has been systematically and thoroughly monitoring the impact of inflation on consumer decisions. We are interested in whether the observed price increase causes consumers to limit their purchases and which categories of products and services are being restricted (in general and as a first priority).
| Clothing and footwear* | E-Commerce** | Sport*** | |
|---|---|---|---|
| The price increase (inflation) causes me to limit my purchases | 80% | 79% | 82% |
| The price increase (inflation) does not affect the size of my purchases | 20% | 21% | 18% |
* data from the report “Retail trade in clothing and footwear in Poland 2022”, August 2022 (n = 1,066)
** data from the report “Online commerce in Poland 2022”, September 2022 (n = 1,235)
*** data from the report “Retail trade in sports articles in Poland 2022”, October 2022 (n = 800)
Source: PMR, 2022
The data shows that regardless of the analyzed market segment, approximately one in five consumers limits their purchases of products and services due to rising prices.
Most often (about 60% of responses in each study), ordering food for delivery, eating out, and going out “into the city” are subject to restrictions. Along with alcohol and tobacco, this is also the category from which about half of consumers primarily abstain in the face of rising prices. Importantly, there are no significant differences among consumers based on gender, age, place of residence, education level, and income. The decision-making pattern in this regard is the same in each group. The consistency in respondents’ declarations and the widespread nature of this strategy provide grounds to believe that real declines in disposable incomes of Poles will constitute a negative risk factor for the HoReCa market in the first place.
Methodological note regarding the report "HoReCa Market in Poland 2022"
For the purposes of the report, PMR conducted a survey on a representative sample of 956 adult Poles using HoReCa services, a survey among 560 companies operating on the market, and also conducted an in-depth analysis of the operations and financial results of over 400 companies operating in the sector.
The segmentation of consumers and the HoReCa market was carried out based on questions about the frequency of using various HoReCa services (e.g., consuming meals outside the home, ordering meals for delivery, using catering services, using hotel services) and attitudes towards 13 statements describing various aspects of consumer behavior in the HoReCa market (e.g., financial basis of consumer decisions, inclination to eat out, inclination to try new cuisines). Reliability analysis, factor analysis (dimension reduction), and clustering analysis (iterative extraction of segments using the k-means method) were used for segmentation.
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Senior Analyst