QSR Inflation Outpaces Table Service as Consumers Grapple With Price Increases

With menu prices continuing to rise, quick-service restaurant (QSR) inflation is outstripping full-service dining by a considerable margin.

Specifically, Bureau of Labor Statistics (BLS) Consumer Price Index (CPI) data reported Wednesday (Sept. 13) showed that in August, prices for “limited service meals and snacks” were up 6.7% relative to last year, while “full-service meals and snacks” were only up 5.2%. In other words, year-over-year QSR and fast-casual inflation is 29% higher than full-service restaurant (FSR) inflation.

Notably, however, PYMNTS Intelligence found that QSRs have also been more active in their discounting. Data from a February survey of more than 1,800 consumers carried out for PYMNTS’ exclusive report “Connected Dining: Consumers Like the Taste of Discount Meals,” found that 29% of diners had received a discount on their last QSR purchase, while only 23% said the same of their last FSR purchase. Plus, 47% had received a discounted QSR meal in the prior month, while only 40% had gotten a deal on full-service dining in the same period.

QSRs have been touting their discounts as a way to bring consumers into the fold amid inflation and to keep them coming back. For instance, Wendy’s, which has around 7,000 locations around the world, shared on its most recent earnings call how it plans to step up its deals and offers.

“We’ve got some innovation that’s going to be announced and launching soon,” President and CEO Todd Penegor said at the time. “We’ve got more consistent promotional activity to drive trial and repeat.”

Plus, on an earnings call with analysts in July, global QSR giant Domino’s Pizza, which has more than 20,000 locations around the world, discussed how it is offering discounts not only to drive orders but also to encourage consumers to adopt its direct channels instead of choosing third-party aggregators.

“All of our national promotions and all the special deals that we have will only be on our platform,” Domino’s Chief Financial Officer Sandeep Reddy said at the time.

Overall, prices are prompting consumers to cut back on restaurant dining. Additional research from PYMNTS’ “Connected Dining” series noted that 58% of consumers made restaurant purchases in June, which marked a 9 percentage point drop from May — the steepest drop month to month since last November.

This pullback is spurred in part by consumers’ tendency to view restaurant inflation as even more intense than it truly is. For instance, additional research for the study found that when restaurant inflation was at 7.4%, consumers perceived it to be as high as 23%.

QSR inflation may be steeper, but for FSRs, it appears to be a grass-is-always-greener situation. Cracker Barrel noted Wednesday in discussing its fourth-quarter fiscal year 2023 financial results, that traffic challenges continued throughout the summer.

“We do believe there is a reaction from consumers to just generally higher prices in casual dine-in and full-service dine-in more broadly,” Cracker Barrel CFO Craig Pommells commented. “… There is a factor to prices as a whole in the macroeconomic environment and the amount of full-service visits that are available as a result of that.”