Consumers spend just as much on restaurants lately, just on fewer occasions
Consumers spend just as much on restaurants lately, just on fewer occasions
It’s a big week on the earnings calendar, especially in food and beverage. McDonald’s, Kraft-Heinz, Coca Cola, Nestle, DoorDash and many more companies will be reporting quarterly results. Since food is such a big part of our essential and discretionary spending, these earnings can tell us a lot about consumer trends.
Formally speaking, Eric Gonzalez is a restaurant analyst at KeyBank. Less formally, he is a regular at his local Chili’s.
“You know, ’cause my kids love it. And I can get in and out of there for less than 40 bucks with my three little girls,” he said.
Chili’s — yes, that Chili’s — has made an unexpected comeback. In its most recent quarter, the chain reported same store sales growth of over 30%. Gonzalez said it shows consumers aren’t only thinking about prices. They’re focused on what those prices get them, like sit down service or bottomless chips.
“And I think consumers will pay a dollar more if you’re meeting some consumer need,” he said.
Gonzalez said in the last couple years, fast food got too aggressive with its pricing so people turned to fast casual and full-service restaurants.
But consumers are compromising, said Robert Byrne, who leads consumer research at Technomic.
“Consumers are still spending as many dollars as they always have at restaurants, it just translates into fewer actual occasions,” he said.
It means overall? Food budgets have stayed consistent. The average American puts about 60% of theirs toward food at home and 40% toward eating out, according to David Portalatin, a food industry advisor at Circana. He said consumers’ daily eating habits can be fickle: “You know, what’s going on with pricing, what happened with the weather.”
But mostly, he said, our share of consumption has really been “very, very stable.”
Breakfast, lunch and dinner are a given. It’s just up to grocers and restaurants to duke it out and see who wins each meal.
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