Operations

Report finds rising costs push diners to value-conscious choices

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May 2, 2024

With Americans consuming an estimated 50 billion hamburgers annually, restaurants are facing a challenge: how to keep customers coming back in the face of rising prices. A report by Vericast finds cost is a major factor influencing dining decisions, according to a press release.

The 2024 Restaurant TrendWatch report shows 60% of surveyed consumers are opting for fast food over casual dining for cheaper burgers. This trend extends to other popular choices, with 55% choosing frozen pizza or fast-food tacos over restaurant options.

"The steadily increasing cost of dining out is testing the limits of what consumers can and will spend," Dana Baggett, executive director, Restaurant Division at Vericast, said in the release. "There's a noticeable decrease in consumers dining out, especially with consumers that have a household income under $75,000. Many diners are choosing to dine out less, trade down to less expensive restaurants, order less or opt to eat out for more affordable mealtimes like breakfast or snacks. As consumers are intentionally spending less at restaurants, acquiring new guests should be a key area of focus for restaurant brands. With the intensifying competition for share of stomach, I anticipate acquisition strategies such as offering deals and coupons to increase, as this is the fastest way to drive incremental sales and traffic."

The report attributes this shift to the significant price disparity between restaurants and grocery stores. Restaurant prices are climbing at a rate of 5.1% annually compared to just 1.2% for groceries. As a result, 68% of respondents are turning to groceries to avoid dining expenses.

To attract customers, Vericast suggests restaurants use coupons and deals. The report highlights the continued importance of discounts, with 51% of respondents saying coupons entice them to try a new restaurant and 49% using them to choose between options.

The study also emphasizes the growing influence of social media and mobile apps. Inspired by online recipes and videos, 39% of consumers are opting to cook more at home, with TikTok being a particular source of inspiration for replicating restaurant meals.

The full Vericast Restaurant TrendWatch report offers further insights on consumer behavior and strategies restaurants can employ to navigate the changing dining landscape.