Consumer Trends

Inflation drives surge in happy hour traffic

Early evening restaurant visits are up across the board as customers look to socialize while saving some money, according to new data from InMarket.
Restaurant traffic has been generally stagnant, but is up from 4 to 7 p.m., according to InMarket. | Photo: Shutterstock

Free from the shackles of COVID-19 and on the run from inflation, Americans are flocking to happy hour, where they can once again socialize safely while saving some money on food and drinks.

That’s according to newly published data from researcher InMarket, which found that restaurant traffic in the hours between 4-7 p.m. was up across the board in the second quarter compared to the same period last year.

That includes a 9% increase on weekdays and 13% on weekends at casual-dining restaurants and a 20% jump on weekdays and 25% on weekends at limited-service concepts. InMarket’s research is based on location data from more than 200 million consumer mobile devices. 

The rise in happy hour visits comes as industry traffic has been generally stagnant over the past year, particularly at full-service concepts. And some of that traffic is apparently moving to an earlier time slot. “4 o’clock is the new 7 o’clock,” said InMarket Chief Strategy Officer Michael Della Penna in an interview.

There are a few factors driving this noticeable shift in consumers’ p.m. dining habits, Della Penna said. 

Some of them have to do with the ongoing fallout from the pandemic. Americans continue to enjoy the ability to move freely and gather in public. They’re “beginning to learn how to be social people again,” Della Penna said, and that has benefited businesses that encourage that sort of activity, like restaurants. 

At the same time, the persistence of remote work has transformed daily commutes into free time for many 9-to-5 workers. That’s allowing them to get their evenings started earlier, including at restaurants.

There’s another thing incentivizing consumers to go eat and drink earlier: inflation. As people’s expenses rise, they are prioritizing value when they go out, giving those early evening discounts an added appeal.

“Consumers [are] taking advantage of those special offers or those early bird prices or promotions, whether it’s alcohol-related or food-related, and they’re doing that because of some of the uncertainty around the economy,” Della Penna said.

While restaurants have raised menu prices significantly over the past year—by nearly 8% as of June, according to the Bureau of Labor Statistics—they have also done more to meet consumer demand for value. InMarket noted that Chili’s, Applebee’s, Taco Bell and Hardee’s have all been running happy hour-type deals recently. Fleming’s Prime Steakhouse recently added a discounted Social Hour menu from 4-6 p.m.; Red Robin launched happy hour for the first time; and just this week, P.F. Chang’s debuted a happy hour menu to commemorate its 30th birthday. 

Such deals can have a significant effect on traffic. Last fall, Olive Garden’s Never-Ending Pasta Bowl promotion delivered a “step change” in guest counts during the seven weeks it ran and helped the chain outperform industry traffic by 500 basis points in the quarter. 

“There’s really been a formula in driving traffic spikes,” Della Penna said. “Value is one of the big ones.”

That said, restaurants’ desire to drive traffic coincides with a need to boost earnings, and discounts and profits don’t typically align. That has led many to pursue a barbell pricing strategy that pushes both lower-priced options and more premium items. 

Chili’s, for instance, has been running TV ads promoting a 3 for Me value menu starting at $10.99, while in-restaurant merchandising points customers toward full-price items.

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