We may not be eating out so much now but that hasn’t stopped our appetite for takeaways. Today Domino’s Pizza reported strong sales growth in its core UK and Ireland markets of 4.5% and 7.5%, saying it expected to see continued growth in the UK and Ireland, while investment in its international operations would “have an impact on overall profitability in the short term.”
The company’s operations in Norway have hurt revenues as it seeks to integrate the Dolly Dimple stores it bought in 2017. Meanwhile, on this side of the North Sea, on Saturday 15 December, as the nation was glued to the Strictly Come Dancing Final, Domino’s broke a new online record for pizza orders - up 25% compared to the same day the prior year.
Rising costs and squeezed incomes haven’t slowed down our spending. In fact UK consumer spending is now the highest it has been since 2005. According to the latest figures from the Office for National Statistics (ONS), average weekly spending - adjusted for inflation - rose from £568.70 to £572.60 in the financial year ending March 2018.
Drilling down into the data further, the under-30s spent the most on takeaways, on average £7.80 per week. Under-30s also had the lowest percentage spend on restaurant and café meals.
While this will not be welcome news for the mid-market restaurant chains struggling on our high streets, it’s good news for the likes of Domino’s and of course Deliveroo, Uber Eats and Just Eat who are cashing in on a new generation of time-poor customers, who enjoy the convenience of ordering their meals on their smartphones.
Despite Brexit uncertainties casting a shadow over consumer confidence, a strengthening labour market has supported spending with UK unemployment now at 4% - its lowest point since 1975. While this is behind the US, Germany and the Netherlands, it compares well against France at 9.1%, Italy at 10.5% and Spain at 14.6%.
Wage growth is also showing signs of improvement with the ONS reporting average weekly earnings growth up by 3.4% in the three months to November - the biggest rise since July 2008 and well ahead of inflation at 2.3%.
However, while our consumer-led economy needs Britons spending, the downside is we’re not saving. The ONS UK households saving ratio fell to 3.8% in the latest quarter, the lowest since records began in 1963. It’s been as high as 14% in the early 1990s. This means households have been relying on loans and credit cards to cover basic everyday living expenses, encouraged by record low interest rates since the financial crisis ten years ago. Saving is either not possible or not seen as a priority.
Small steps can make a real difference
It’s easy to think you can’t make a difference to your financial situation but with a few easy steps you can get into the savings habit. A good starting place is to take a look at your debt and focus on the loans or credit cards with the highest interest rate and work on paying those off first. Even just small extra payments each month can help get your finances back under control.
How many times do you really use that gym membership? Can you cut down on some of the takeaways? Is it time to pay a visit to Aldi or Lidl? Maybe a few small changes could free up some spare cash that could be built up over time into some rainy day savings.
Once in the habit of making extra payments towards paying off debt, once it’s cleared maybe that money could be re-directed towards investing in an ISA? You can start by saving as little as £50 a month with the Fidelity ISA.
ISAs aren’t the only tax-efficient way to save. With a Fidelity SIPP you can start to look after your financial future with a modest sum yet still reap all the tax rewards. Pay just £80 into a pension every month and this will be automatically topped up to £100 because of the tax relief that pension contributions get.
Of course an ISA or a SIPP is just a wrapper around an investment. Choosing the fund or funds to go within the wrapper is hugely important. That’s where our guidance tools can help - check out our website for more information on our PathFinder funds for those looking for a ready-made option based on a risk preference, or for fund recommendations check out our Select 50 list or Tom Stevenson’s ISA fund picks for 2019.
The value of investments and the income from them can go down as well as up, so you may not get back what you invest. This information does not constitute investment advice and should not be used as the basis for any investment decision nor should it be treated as a recommendation for any investment. Reference to specific securities should not be construed as a recommendation to buy or sell these securities and is included for the purposes of illustration only. Select 50 is not a personal recommendation to buy or sell a fund. Eligibility to invest into an ISA or a SIPP and the value of tax savings depends on personal circumstances and all tax rules may change. Withdrawals from a pension product will not normally be possible until you reach age 55. Fidelity Personal Investing does not give personal recommendations. If you are unsure about the suitability of an investment, you should speak to an authorised financial adviser.