Consumers are looking for and want deflation.
So said BJ’s Restaurant & Brewhouse CEO Greg Levin at the Barclays Eat Sleep Play conference in New York this week, where conversations with restaurant operators focused on the mood of consumers heading into a new year.
Levin described consumer health as “in the middle,” in that they still have good balance sheets, they like to go out and do things and eat out. BJ’s has not seen any real shift in consumer behavior, like choosing water over soda or beer instead of a cocktail to trim their checks—as they did during the Great Recession.
But he said consumers are still comparing prices to 2019.
“They were used to going out and getting a value meal in QSR under $10 and now it’s in the teens, or getting XY and Z for a certain price and it’s now up. And I think they’re still adjusting to that,” he said.
Consumers remember what things cost four years ago, and they’re still experiencing sticker shock, he contended. And when they do go out, consumers are more discerning.
“And I think we’re going to have to see in the industry over the next couple of years more moderate pricing or less pricing per se. So the consumer catches up to where we are today,” he added.
BJ’s held off on increasing prices in 2022, when inflation costs were skyrocketing, so the polished casual chain is still raising prices to catch up to inflation—prices are up about 8% from menu price hikes earlier this year. Levin said pricing is likely to return to more typical 2% to 4% increases in 2024.
In the industry, however, Levin said there has definitely been more marketing activity that includes discounting.
“Maybe they’ve done something that used to be, ‘at $20 get X off,’ now they’ve done it ‘at $25 get X off,’ or ‘at $30 get X off.,’” he said. “You are starting to see people shift back towards a more normalized marketing cadence to drive traffic in there, and it’s a combination of brand building as well as a value play.”
Meanwhile, BJ’s is focused on trying to offer value at both the high and low end of the menu, he said, but their pricing strategy could target more premium items and hold off on increases for lunch or brewhouse specials, or at Happy Hour to keep the menu accessible.
Members help make our journalism possible. Become a Restaurant Business member today and unlock exclusive benefits, including unlimited access to all of our content. Sign up here.