Staying in becomes mainstream as taxes rise and restaurant bills climb

British households are increasingly choosing meals at home as taxes rise and restaurant bills climb, signaling a shift in consumer spending ahead of November's Budget. With autumn nights drawing in, many people are cocooning and treating ready meals as restaurant-caliber alternatives to dining out. The squeeze is driven in part by higher employer National Insurance Contributions and other tax changes introduced in last year’s Budget, narrowing the cost gap between cooking at home and eating out.

Supermarkets are racing to capture this demand for premium in-home dining. The market for ready meals is estimated at £7.4 billion a year, with recipes evolving to mimic Michelin-starred fare. Marks & Spencer remains the leader in premium private-label dining, and it has enlisted Michelin-starred chef Tom Kerridge to guide its Gastropub range. Sainsbury's offers a £7 Taste The Finest chicken, leek and smoked ham hock pie, while M&S has launched six restaurant-quality pasta meals at about £6 each. German-owned discount chains are also pushing premium private label, with Aldi’s Specially Selected and Lidl’s Deluxe ranges cited as growth engines.

Profit margins across groceries remain slim, but premium ranges fetch higher returns. General grocery margins are around 4.5%, while premium private-label lines run closer to 7%. Tesco, which has long emphasized its Finest line, is hoping to maintain momentum after reporting strong early performance. A Tesco Clubcard promotion offers meals such as wild garlic chicken Kiev with dauphinoise potatoes and salted caramel profiteroles for about £15. At its upcoming interim results, the retailer is expected to outline progress toward a £3 billion annual target for Finest sales. In the first quarter, Finest sales rose by 18% as shoppers leaned into higher-end offerings.

Beyond groceries, the cocooning trend is shaping home and dining-room purchases. Dunelm chief executive Nick Wilkinson said attention in the summer focused on outdoor dining, but the retailer expects dining-table sets and related furnishings to feature prominently this Christmas as households seek to recreate restaurant experiences at home. Demand for festive food and decorations is rising across retailers as people prepare to entertain without venturing out.

Marks & Spencer reported an early surge in festive orders, with demand for Christmas offerings up 8% year over year on a day when more than 56,000 orders were placed for turkeys and puddings including The Reindeer Dashing Through The Snow. Freudmann, M&S managing director of food, said there is a heightened focus on protecting family events and celebrations, with many families planning a special Christmas at home. John Lewis noted a similar pull toward home entertaining, reporting a 145% year-on-year increase in bauble sales, while decoration sales at Marks & Spencer are up 67% year over year as shoppers chase nostalgic, joyful spaces.

Overall, the trend signals a broader shift in consumer behavior as households seek to replicate restaurant experiences at home while managing costs. The premium private-label segment is reshaping competition and margins across the grocery sector, and the cocooning impulse is feeding demand in home furnishings and festive décor as retailers prepare for a busy holiday season.