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.
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.”