Why aren't restaurant sales increasing?

Something about this movie feels familiar...
man typing graphic

Sometime in the past, the editor of Drive-In Theater Business probably stared at a blank sheet in the typewriter and wondered what he’d say about the industry in his next column. Possible topics abounded. Even on perfect summer weekends, fewer customers were wheeling their Ramblers and Oldsmobiles up to the portable speakers. Sales were slipping, costs were spiking, and patrons were balking at the pass-along bump up in prices.

And then there was the killer competition. Why pack four whining kids into the station wagon and spend a fortune at the snack bar when you could watch a movie for free on CBS Playhouse, a cold one parked on the tray table next to the La-Z-Boy? The appeal of the drive-in was the opportunity to see recent movies without commercial interruption, but cable TV was now delivering those benefits right to homes for a small charge.

Was a classic form of American entertainment, an activity as much a part of summer life as ice cream and barbecues, actually about to sunset? 

I feel for that long-ago brother in ink. What the restaurant industry hoped would be a short-term sales sniffle has turned into a persistent case of the flu, with the symptoms refusing to lift. With few exceptions, operations aren’t seeing year-over-year visit increases, and the ploy of raising prices for remaining customers is backfiring. Labor costs are skyrocketing, and new employer mandates are raising tempers and expenses.

Worst of all, no one has pegged the cause of the traffic and sales meltdowns. The consensus holds that restaurant prices are likely a factor—at least, as they compare to dropping grocery prices—yet there’s no proof.

There’s also considerable agreement that restaurant supply and demand are out of whack, with restaurants continuing to open as dining slackens. But the question remains, why is demand weakening?

Is it because of increased competition? In May, we reported online that consumers preferred the service provided by the Wawa c-store chain to the likes of Seasons 52 and Fleming’s. Clearly, grab-and-go joints and supermarkets are gaining credibility in the battle for share of stomach.

Meanwhile, meal kits are pulling a cable TV move and bringing restaurant fare into consumers’ homes at a fraction of the cost and effort. And a Grucci rocket has been lit under at-home dining by third-party delivery.

But what if the problem is more fundamental than those issues? What if America’s love of dining out as a pastime is ebbing? Horse racing was once the nation’s passion. Ditto for prize fighting, bowling, horseshoes, roller-skating and frying on a beach, melanoma be damned.

What if restaurants’ unshakeable role as America’s kitchen is not as fixed as everyone thought for the last two decades? What if dining out is slipping out of sync with current lifestyles, particularly nesting at home and binge-watching whatever Hulu or Netflix have added to their stream?

It’s a big “if,” and not merely because the implications are so profound. Admittedly, there’s ample evidence to the contrary. Nine out of 10 consumers enjoy going to restaurants, and four out of five prefer it to cooking and cleaning up, according to the National Restaurant Association.

The bigger thing: We don’t have to see movies, much less ones shown at a drive-in, but we do have to eat.

But the industry shouldn’t wait to see if this danger is an imagined monster under the bed. Concepts realize they have to align with new fashions, interests and leisure preferences. It’s not a coincidence that the places doing well are the concepts that cater to the new realities. Just look at Domino’s.

Still, the business also has to enrich the experience of dining out, or that huge chunk could erode quickly. Think about it the next time you drive by that abandoned drive-in. 

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