Retail

Dining Out On The Decline Due To Economic Pressures

Americans are brown baggin' it these days, if recent data is to be believed.

The last three months have seen restaurant visits go completely flat, reported The Wall Street Journal, indicating that consumers are feeling a bit jittery over the economy and less likely to spend on dining out.

The trend is unusual, as fast-food restaurants had been on an upward climb since September of last year, on average increasing by about 2 percent per quarter, but stalled completely in March, April and May.

Fast food is something of a canary in a coal mine, and it flatlining out of the blue is considered "a red flag because it’s been an area of growth and it’s 80 percent of the industry,” NPD restaurant analyst Bonnie Riggs said.

When people are feeling a little expansive they eat out, but with gas prices on the increase and job growth slowed, those flush feelings have not been on display. And it seems as though they may not be for a while since the U.K. had decided that 1,000 years of being stoicly reasonable is quite enough, and has decided to experiment with being erratic and unpredictable.

Clifford Hudson, chief executive of burger chain Sonic Corp., told investors a week ago that consumers are becoming “more guarded” and are even more sensitive to prices.

That has translated to falling visits to fast casual last month — the first time that has happened in over a decade — and that is true even if one strips out figures from ailing Chipotle.

Plus, the economics are flowing to home cooking. Commodities prices are on the decline, and grocery is insanely competitive in the 18 months. Consumers are the big winners there, as grocery prices have declined five times in seven months. Restaurant meals are increasing in cost, on the other hand, to offset rising overhead (mainly wage).

“The next few months are fraught with the potential for consumer distractions, from the political conventions in July to the Olympics in August to the presidential debates this fall,” William Blair analyst Sharon Zackfia said in a note to investors. “As a result, we would not be surprised to see restaurant trends remain somewhat volatile throughout the summer and potentially into the fall.”

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