Staying in becomes the new dining out as taxes rise and restaurant bills soar

Britons are increasingly choosing to eat in as tax increases loom and restaurant bills climb, marking a shift from dining out to cocooning at home. The stay-at-home trend is gaining momentum as cooler nights set in, with a growing appetite for ready meals pitched as gourmet-style options. The market for premium private-label ready meals is already estimated at £7.4 billion a year, a figure that reflects chefs’ techniques and restaurant-like flavors being reproduced for home consumption. Supermarket chains are racing to dominate this fast-growing segment, with M&S widely regarded as a leader in premium private label.

Marks & Spencer has even enlisted a Michelin-starred chef to guide its Gastropub range, underscoring the shift from restaurant dining to high-quality at-home meals. M&S managing director of food Alex Freudmann said: “At M&S we are obsessed by quality and continue to improve our recipes and ingredients all the time.” In practice, the range includes six new “restaurant quality” pasta meals at about £6 each aimed at single diners seeking an elevated experience in their kitchens. Sainsbury’s is also pushing premium interior dining at home with items such as the Taste The Finest chicken, leek and smoked ham hock pie for £7.

The momentum extends beyond M&S and Sainsbury’s. The German-owned discount chains are also leaning into premium private label. Aldi is promoting its Specially Selected range, while Lidl markets a Deluxe line, as shoppers look for affordable indulgence at home. Giles Hurley, UK head of Aldi, said: “While inflation is proving stubborn, we’re seeing more shoppers switching to our award-winning premium, own-label range. Shoppers are treating themselves at home rather than eating out.” Tesco, which remains a significant player in grocery pricing, also points to a robust premium segment. The retailer’s Clubcard members can buy a £15 meal from the Finest range that features dishes such as wild garlic chicken Kiev, dauphinoise potatoes and salted caramel profiteroles.

At Friday’s interim results, Tesco outlined progress toward its target of £3 billion in annual sales from the Finest range. In the first quarter, sales in the Finest line rose by about 18%, underscoring the momentum behind premium at-home dining even as households balance budgets. Overall margins in groceries remain slim, with Tesco posting around a 4.5% margin. By contrast, premium private-label lines tend to carry fatter margins of roughly 7%.

The trend is shaping retailer strategy beyond the grocery aisles. The push to recreate the restaurant experience at home is also altering consumer behavior in other areas, including home furnishings. Nick Wilkinson, outgoing chief executive of Dunelm, said that attention in the summer shifted to outdoor dining spaces, but the trend has since moved indoors as autumn deepens. During Dunelm’s full-year results, Wilkinson noted that taxes are a headwind but that the group has “learnt to navigate a volatile consumer market,” signaling that dining tables and related items will be promoted as part of the cocooning impulse.

Retailers are already reporting early festive demand tied to entertaining at home. Marks & Spencer launched its festive food ordering service on a recent Tuesday and immediately reported demand up about 8% versus last September. More than 56,000 orders were placed that day for items ranging from turkeys to puddings such as The Reindeer Dashing Through The Snow, a £22 caramel and chocolate mousse confection. Freudmann said: “In this challenging economic time, there is a greater desire to protect family events and celebrations. We keep close to our customers, speaking with them often, so that we know how they feel and what’s important to them. Right now, they are prioritising spending time with family and friends and protecting celebrations. Looking forward to and planning a special Christmas at home is more important than ever.”

The cocooning trend is also driving demand for home decorations and festive furnishings. M&S reports that Christmas décor and lighting are proving popular as households seek to “create joyful space at home.” Sales of decorations are up about 67% year-on-year at the retailer, which also features a popular £5 Percy Pig bauble. John Lewis has reported a surge in holiday decor too, with bauble sales up about 145% year-on-year, underscoring the appetite for at-home celebrations this season. The broader message from retailers is clear: consumers are prioritizing comfortable, high-quality experiences at home rather than escalating spend on what used to be a night out.

The shift toward at-home dining and entertaining comes as supermarkets push premium private-label ranges to maintain margins and capture market share. With taxes rising and restaurant bills rising, the economics of eating out are changing, and many households are choosing to invest in the at-home dining experience. The combination of culinary quality, convenient ready meals, and festive-at-home shopping is helping some retailers maintain momentum even as inflation persists.

As the Budget cycle looms in November, retailers expect the cocooning trend to persist into the holiday season and beyond, with the premium private-label segment continuing to anchor profits and drive growth in groceries and home goods alike.