The AFH market in 2025: A tough year that sets the stage for a divergent 2026

2025 was a challenging year for the UK’s Away From Home (AFH) market, defined by cautious consumers, rising costs, and a hospitality sector under intense pressure. While some bright spots emerged, particularly in tourism‑supported regions and faster growing sub‑sectors, the year ultimately underperformed expectations, setting up a 2026 landscape where resilience and focus will matter more than ever.

A market that fell short of forecasts

Growth reached 1.6% in 2025, below the expected 2.5% forecast, as operators struggled to deliver the level of price inflation assumed in earlier forecasts. Persistent cost increases in labour, energy and raw materials created mounting pressure, but many businesses opted to absorb these rather than risk denting already‑fragile footfall.

Restaurants and pubs felt the strain most acutely, with closures increasing and downtrading accelerating across the mid-market.

Despite this, certain sectors held up better:

• Workplace catering benefited from further normalisation of hybrid working

• Leisure and events saw uplift from a fuller event calendar

• Contract catering continued to outperform the wider market

Consumer confidence: polarised and pressured

Consumer finances remained stretched throughout the year. Disposable incomes barely shifted, ending December at roughly the same level as January, with the majority of households feeling no better off.

Only the highest income groups felt financially secure, widening the divide in eating out behaviour. For most households, caution persisted, with fewer visits, fewer spontaneous meals out, and tighter budgets altogether.

This backdrop is critical heading into 2026: a market with pockets of opportunity, but also deep, sustained caution among mainstream consumers.

Frequency falls, footfall follows

After a relatively stable first half, the second half of 2025 saw a decline in visit frequency across all key hospitality sectors. Barclaycard data showed clear year‑on‑year drops, especially in casual dining and fast food.

Footfall patterns reinforced this picture, with 2025 marking a third consecutive decline in UK retail footfall, which in turn affected co-located restaurants and pubs. Weekend travel also softened, particularly into London.

One area of resilience: food to go, where regular routines held firm, although growth differed significantly by age cohort.

Tourism softens the blow, but not evenly

Inbound tourism provided welcome momentum, boosting activity in cities and attractions. London, in particular, saw strong support from international visitors, helping to stabilise occupancy and dining demand even as domestic trips fell.

Scotland remained a stand‑out performer, with rising domestic and international tourism helping to boost hotel occupancy levels and providing a halo effect across other hospitality venues.

2026: A year of two markets

Looking ahead, IGD anticipates further polarisation:

Growth areas include:

• Leisure‑driven occasions

• Workplace catering

• Tourism‑heavy regions such as Scotland and London

• Premium and experiential operators targeting higher‑income consumers

Ongoing headwinds will persist for:

• Mid‑market casual dining

• Operators dependent on discretionary spend from squeezed middle‑income households

• Businesses unable to offset operating costs through efficiency or innovation

The AFH market enters 2026 with lessons learned and strategic choices ahead. Operators who can adapt through sharper value propositions, operational excellence, and differentiated experiences will be best placed to unlock pockets of growth that exist.

Want to find out more?

For non-subscribers wanting to understand the nuances behind these trends.  IGD’s AFH platform has a full range of AFH insights that dig deeper into the data driving market behaviour, sector‑specific forecasts, and commercial opportunities ahead.  Contact us here to find out more.

AFH subscribers can read the full 2025 market review report