Economic concerns drive consumers away from restaurants
The US restaurant industry is taking a hit as economic struggles plague the country.
New consumer research from Mintel reveals that 54% of people who dine out regularly are restricting their restaurant spending because of economic worries.
Rising gas and food prices, home foreclosures and a fear of recession have caused many Americans to curb out-to-eat spending. Seventy per cent of those attempting to cut back are saving money by going out to eat less, rather than by choosing cheaper entrees, avoiding desserts or dining at less expensive restaurants, reports Mintel. “People aren’t trading down for cheaper or lower quality food; they’re just trading out,” explains David Morris, senior analyst at Mintel. “Especially when you consider the price of casual and fine dining, staying in can reduce costs significantly.”
Though people are cutting back, Mintel’s survey still showed consistent restaurant usage with three-quarters of survey respondents having gone out to dinner at least once in the past week. On average, people who dined out reported eating 2.3 evening meals from a restaurant in the past seven days.
But as budgets tighten, home cooking is coming back in vogue. Mintel established that 72% of people who regularly cook at home do so because it is cheaper than other options. “As people try to curb their spending, restaurants have to focus more on price and convenience to draw them in,” states Mr Morris. “The recession is taking a toll, but certain innovations can help restaurants succeed.”
Mr Morris is looking toward fast food and fast casual dining, both of which have done well with value pricing and carry-out convenience, for growth in the industry. “By highlighting cost savings, all restaurants can maintain steady business,” he asserted.
The survey highlights that the Australian restaurant industry may witness similar struggles if costs of living pressures continue to force consumer confidence down. Though, considering America is experiencing greater economic turmoil than Australia, it is a welcome site to see that many consumers are still frequenting restaurants more than twice a week.