As inflation continues to put pressure on consumers’ budgets, a recent report from AlixPartners reveals a shift in behaviour when it comes to dining out.

Unlike the Great Recession, in which consumers sought bargains and opted for cheaper restaurant options, today’s consumers are more likely to reduce their visits to restaurants altogether to preserve their budgets. 

Rising costs of eating out 

The cost of dining out has been steadily increasing for over a year.

In March, prices for meals eaten outside the home rose faster than prices at grocery stores, marking the first time since mid-2021 that this occurred.

According to the US Bureau of Labour Statistics, food away from home prices increased by 8.6% in April compared to the same period the previous year while food at home prices rose by 7.1%. 

Declining restaurant traffic 

Data from Black Box Intelligence indicates that in April, traffic at restaurants open for at least a year dropped by 3.5% compared to the previous year.

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By GlobalData

A survey conducted by AlixPartners in December 2023 revealed that 74% of respondents planned to reduce dining out while only 39% indicated they would choose less expensive restaurants.

This shift in behaviour contrasts with the Great Recession, where only 12% of respondents in January 2009 said they would cut back on restaurant spending. 

Changing consumer preferences 

Consumers have evolved over the past decade and a half since the financial crisis, with the pandemic further impacting their dining habits.

Many people have become more comfortable cooking at home, leading to a greater preference for dining-in rather than trading down from casual dining to fast food.

AlixPartners managing director Andrew Sharpee believes that consumers will now prioritise budgeting their restaurant spending for unique experiences that cannot be replicated at home. 

Impact on young consumers and delivery services 

The report highlighted that young consumers are particularly reducing their takeout and food delivery orders, opting instead to dine in person.

Delivery orders tend to be more expensive due to associated fees and sometimes higher food prices. Consequently, the cost of delivery has become a deterrent for many consumers.

DoorDash has recognised this concern and plans to offer eateries with comparable in-store and delivery pricing more prominent placement in its app to address inflated delivery prices. 

Mixed reactions from restaurants 

While some restaurants have reported declining traffic, others claim they haven’t experienced significant changes due to inflation.

Starbucks customers, for example, haven’t shown a shift in spending habits or a preference for lower-priced options. Restaurant Brands International, the parent company of Burger King, also hasn’t observed a major impact on its business. 

Adapting strategies 

Restaurant companies that have experienced changes in consumer behaviour are adjusting their strategies accordingly.

Chipotle Mexican Grill, for instance, plans to pause price hikes unless inflation escalates again. Brinker International, the parent company of Chili’s, is phasing out its Maggiano’s Italian virtual brand, which was exclusively available for delivery orders.

Noodles & Company is also focusing on its value offerings to cater to price-conscious consumers.