Even as consumers strain under inflation, they continue to spring for luxuries, to restaurants’ benefit.
By the Numbers
Consumers without a financial safety net are splurging on things they do not strictly need, according to data from the latest edition of PYMNTS’ New Reality Check study, “New Reality Check: The Paycheck-to-Paycheck Report – The Generational Deep Dive Edition,” created in collaboration with LendingClub.
The report, which drew from a survey of more than 3,300 U.S. consumers, revealed that 58% of consumers who live paycheck to paycheck reported having spent $100 or more on a nonessential item or service in the last three months. Across financial lifestyles, 63% of consumers said the same.
The Data in Context
One such service that many consumers continue to spring for (even as others pull back) is restaurant dining.
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Spending at restaurants “continues to be a bright spot with growth accelerating to 28% on an FX-adjusted basis year over year,” American Express CEO Steve Squeri observed on the financial services giant’s recent earnings call. “In fact, March was a record month for reservations booked through our Resy platform.”
Indeed, restaurants are noticing the same. For instance, fast-casual giant Chipotle noted on its latest earnings call that higher-income consumers have actually been visiting with slightly greater frequency than usual and that lower-income consumers are coming back.
“We did see some … recovery in the lower income consumer,” CEO Brian Niccol said. “Still not all the way back to where it was … a year ago, but an improvement from where it was over the last six months.”
Similarly, Outback Steakhouse parent company Bloomin’ Brands noted on its earnings call that higher-income consumers’ behavior has not changed much, while lower-income consumers are also generally maintaining their frequency, although they are making changes to what they buy.
“We’re seeing our higher-end customers come in with similar frequency using our restaurants, and we’re especially seeing it around special occasions,” CEO David Deno said. “On the lower-end consumer, we are seeing continued frequency but maybe a little bit of management on the guest check side as they come into our restaurants.”
