Consumer Trends

Consumers tighten their restaurant budgets, but mainly on the margins

Lower-income people are clearly pulling back, while higher earners and families show resilience, according to new data.
Households with children are still finding good value at restaurants. | Photo: Shutterstock

Lower-income households are visiting restaurants less often as prices rise, but wealthier people appear unbothered, and most people say their restaurant spending won't change.

Those are some takeaways from two recent surveys that asked consumers how often they’re using restaurants, how much they’re spending and why. Together, they paint a picture of a fairly resilient dining public that is nonetheless showing some sensitivity on the margins.

The results come as menu prices rise and restaurant traffic falls. In September, menu prices were 6% higher than they were a year ago, according to the Bureau of Labor Statistics. And in the third quarter, many restaurants saw lower traffic, suggesting that higher prices are impacting demand.

Consumers themselves say that it is. A survey by credit reporting agency TransUnion found that 19% of households expect to spend less at restaurants through the end of 2023, with 80% citing higher prices as the reason. Sixty-four percent plan to spend the same and 17% see themselves spending more.

Besides eating out less frequently, consumers told TransUnion they’re also visiting less-expensive restaurants (17%) or ordering less-expensive menu items (14%). Relatively few are cutting back on alcohol: Just 2% said they’ve stopped ordering an adult beverage at restaurants to help save money.

Price also tends to be the first thing consumers look for when they’re deciding where to eat, and by a fairly wide margin. Sixty-three percent said price is the most influential factor, followed by menu (54%) and location (50%).

Much of this price sensitivity appears to be coming from lower-income households. According to data from Technomic, people who earn less are also visiting restaurants less, while higher earners are largely unaffected.

In the third quarter, half of consumers who earn less than $25,000 a year told Technomic they use restaurants once a week or more. That was down from 53% the year before and 54% in 2021. 

A similar trend occurred in the $25,000 to $50,000 income bracket, where 61% said they visit restaurants once a week or more. That was down from 63% last year and 65% in 2021.

The behavior of higher earners did not change as drastically, if at all. In fact, 84% of the wealthiest consumers—those earning more than $150,000 a year—said they use restaurants once a week or more, an increase of 2 points from a year ago. 

Generally this makes sense. People with less money are more likely to feel the effects of higher prices. Restaurants have noticed it too. 

“What you end up seeing is that the pressure is felt more on the lower-income consumer,” McDonald’s CEO Chris Kempzcinski told analysts last month. “And so, one of the things that we saw industry-wide is that that low-income consumer, which we would say is $45,000 and under, was negative from an industry standpoint.”

Higher earners may not be the only group willing to roll with higher menu prices. According to TransUnion, households with children are also more likely than those without to continue using restaurants. 

Nearly a quarter (24%) told TransUnion that the state of the economy is actually causing them to eat out more frequently. 

And when asked why they planned to use restaurants more, 40% of households with families said that it’s because someone is returning to the office. And 25% said it’s because they want to take advantage of promotional offers.

This suggests that families still see restaurants as a relatively good value because of the convenience they provide as well as the frequent discounts. 

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