Consumers Show Less Interest in Dining Out and Rising Menu Prices
July 17, 2024
Delaney Sexton
Contributing Editor
Consumers Show Less Interest in Dining Out and Rising Menu Prices
Citizens Bank released their July 2024 Restaurant, Franchise & Multi-unit update, which highlights the headwinds restaurants are facing as consumers undergo pressure with spending. Coffee/snack (+4.6%), Burger (+0.4%), Mexican (+0.3%), and Fast Casual (+0.3%) restaurants have maintained sales growth under these conditions, but other restaurant types are seeing their sales fall behind.
While restaurants navigate current conditions, these are major themes in the industry:
Rising Menu Prices
As we have all seen firsthand, restaurant prices are increasing beyond many people’s comfort. From 2014 to 2024, average menu prices grew by anywhere from 39% to 100%, exceeding the 31% inflation during that same period. During the last year, inflation at grocery stores has risen by 1%, while inflation at restaurants has risen by 4%. In response, consumers are dining out less, going to less expensive restaurants, and ordering less.
Fewer Consumers Dining Out
Since fewer consumers are dining out, restaurants will be redirecting their focus to guest acquisition strategies. Citizens expects that a key strategy will be to increase promotions and coupons. Restaurants may also try to improve foot traffic through operational improvements, menu innovations, loyalty programs, and marketing initiatives.