Dara Wechsler’s Post

Navigating the Restaurant Sales Decline The restaurant industry continues to face significant shifts as we approach 2025. Years after the pandemic, sales are either declining or stagnating across various segments. In August 2024, restaurant sales were flat at $94.5 billion, only 2.7% higher than the previous year, one of the smallest increases during the recovery period. After adjusting for inflation, real sales have actually dropped by 1.3%. While the demand for dining out remains strong, rising menu prices and economic pressures are causing particularly lower-income households to think twice and dine out less. Even wealthier customers, who drive nearly 60% of restaurant spending, are dining out less frequently. This shift is affecting both small businesses and major food chains. To navigate these challenges, companies like Starbucks and Denny’s are closing underperforming locations, focusing on quality, and enhancing customer experiences to maintain profitability. Unfortunately, this isn’t an option for most businesses. From experience, I would recommend taking small baby steps to reduce costs and risks. By using a free app like Dine Market, restaurants can streamline their produce purchasing by viewing multiple suppliers' products, prices, and availability in one place. This helps them save 10% or more on every purchase. These savings can give you the flexibility to keep your menu competitive and attractive. Give it a try, and let me know your thoughts! #RestaurantIndustry #CostSaving #2025Outlook #Automation #HospitalityTips #DineMarket https://lnkd.in/eEb4mipm.

According to National Retail Monitor/Affinity Solutions restaurant spending year-over-year is down 1.79% while grocery spending increased 0.47%. Translation…”when consumers are beaten up, they rein in their discretionary spending.” Big Chalk claims that 28% of the U.S. consumer population has “traded down” (or out) and that could lead to a loss of revenue between $44-88 billion for restaurants over the next 12 months. #retailtrends #foodandbeverage #consumer https://lnkd.in/gUmQnDam

Restaurants have persevered through pandemic shutdowns, high inflation and a shortage of workers, and many operators are coming off a big year of sales. However, advance, seasonally adjusted data from the U.S. Census Bureau shows that January sales from restaurants and drinking establishments increased only 6.3% year over year, slower growth than in any month the previous year. It’s too soon, of course, to say whether that’s a blip or the start of a trend. #restaurantexpansion

Consumer spending in restaurants regained some of the positive momentum that it lost at the end of 2023. Eating and drinking places registered total sales of $93.7 billion in March. That was up 0.4% from February and represented the second consecutive monthly gain. Despite the recent uptick, monthly eating and drinking place sales volume remained below November’s recent seasonally-adjusted high of $94.2 billion. That was followed by declines in both December and January. Even with the recent choppiness, the overall trajectory of restaurant sales remains generally positive, and with a steeper trendline than many other retail sectors. Total eating and drinking place sales increased 6.5% between March 2023 and March 2024. In comparison, consumer spending in non-restaurant retail sectors rose 3.6% during the last 12 months – nearly 3 percentage points below the restaurant sales gain. Looking ahead, the outlook for consumer spending continues to be optimistic. Employed consumers will spend money, and the national labor market is showing little signs of fatigue. Although nominal restaurant sales trended higher in recent months, growth was more modest in inflation-adjusted terms. After adjusting for menu price inflation, eating and drinking place sales were up 2.3% during the last 12 months. #restaurants #sales #economy #outlook (From the National Restaurant Association's Bruce Grindy. See the original post: https://lnkd.in/eFgtP2N3.)

More restaurants are experimenting with surge pricing where prices are adjusted based on demand and sales patterns. Consumers don’t like the idea of higher prices during high demand times, but they don’t mind restaurants offering discounts during low demand times even though these are essentially the same thing. #financialnews #retirementplanning

CONSUMER HEADLINES   * Dining Out – Slowing. Households in general have been slowing their "appetite" for dining out, with further evidence revealed in the retail sales data released last week. If there is one line item to follow in the monthly retail sales report that reflects the state of household finances it is the category of dining out (officially named 'food and drinking places'). This is a category of spending that tends to show the first signs of financial stress. So what is it telling us now? It's slowed quite a lot - and we have added it to our watch list of indicators alongside risks to job growth. – Ellen Zentner   Dining out saw the largest monthly drop since January (-0.4%M) Adjusting for short-term seasonality / volatility, growth in dining out slowed to just 1.5% through May vs a run-rate of 6.0% from 2015 to 2019. This is based on a 6-month smoothed annualized rate of growth (SMSAR) -Morgan Stanley

Nation's Restaurant News published a new article highlighting the projected sales of the restaurant industry, and the results are positive. The industry is projected to break the $1T dollar mark in 2024. And the "how" is almost as important. "Fifty-two percent – including 67% of #millennials and 63% of #GenZ adults – say ordering #takeout from a #restaurant is an “essential part of their lifestyle,” meaning pricing isn’t the only driver here. Notably, the trillion-dollar breakthrough is a cause for optimism given that the industry remains much smaller than it was in 2019. According to Technomic, Inc. Ignite data, there were just over 631,500 restaurants in 2023 versus just over 703,000 in 2019." Thank you to Alicia Kelso for a great article. What do YOU think? https://lnkd.in/gcNB6NuF

https://lnkd.in/gz6tGzAi The US Consumer Price Index data released Wednesday morning from the Bureau of Labor Statistics show that menu prices ticked up by 0.3% in August, compared to 0.2% in July. Food-away-from-home prices are 4% higher year-over-year, compared to 4.1% in July. Though August was slightly higher, the 0.3% is lower than May and June (both up 0.4%) and consistent with March and April’s menu inflation. The index for limited-service meals increased 4.3% over the last 12 months and the index for full-service meals rose 3.8% over the same period. By comparison, food-at-home prices, or grocery/supermarket, were flat in August after ticking up 0.1% in July. Year-over-year, grocery prices are up just 0.9%, compared to 1.1% in July and marking the 17th month in a row in which restaurant prices outpaced grocery prices, according to Kalinowski Equity Research. President and chief executive officer Mark Kalinowski notes that the gap between grocery inflation and restaurant inflation widened by 10 basis points during August and is now 310 basis points in favor of grocery prices. The 22-year historical average is a 60-basis-point gap. The current gap is inching closer to the 2016 full-year disparity of 390 basis points, which resulted in the second-lowest same-store sales performance for the restaurant industry behind just the pandemic, he added. Indeed, the restaurant/grocery pricing gap has been cited by several executives as a driver behind traffic erosion in recent months. New research from Circana finds a growing trend toward at-home dining in the past year, with 86% of eating occasions sourced from home. “With dining out costing four times more than eating at home, many are cutting back on restaurant visits,” David Portalatin, senior vice president and industry advisor at Circana, said in a statement. “Meal patterns have shifted as consumers spend more time at home and adapt to new daily rhythms.” Menu prices also continue to outpace the overall CPI, which came in at 2.5% in August, down 0.4% from July and its lowest level since early 2021.

Consumers Feeling The Pinch: High Cost-Of-Living Drives Key Swings In Consumer Behaviour The cost of living continues to drive significant consumer behaviour change as restaurants and brands will be forced to adapt if they want to protect their customer-base, according to a new report from advertising platform Cardlytics. The State of Dining Spend report, based on the spending habits of over 20 million UK bank accounts, found that rising costs and inflationary pressures are driving customers away from certain restaurants and chains – including prominent ‘City’ lunch spots, upscale dining venues, and takeaway pizza chains – towards more affordable alternatives – such as ‘on-the-go’ bakeries, burger chains, and chicken shops. Cardlytics’ report examines three specific dining categories, which together demonstrate a clear trend of increasingly cost-conscious customers changing their spending habits in response to a difficult macroeconomic environment, as well as changes in the make-up of key sectors. The report includes analysis on these key contributing factors, alongside key recommendations for dining brands to mitigate the impact – and start to reverse – these consumer behaviour changes. Pizza shops lose ground to fast-food rivals The quick service restaurant (QSR) sector, which provides affordable and accessible nutrition to time-poor consumers, has seen a significant rise of 13% in customer spending across from 2022 to 2024, but this seems to have come at the expense of takeaway pizza restaurants, which comparatively have struggled to maintain their market share. Interestingly, this is not a reflection of price rises. Pizza restaurants’ costs have risen, with an 11% rise in average transaction for their customers. However, this is a relatively stable rise when compared to their competitors, with customers spending an average of 21% and 18% more during their visits to chicken shops and fast-food restaurants, respectively. As the UK welcomes an increasingly diverse range of QSR restaurants, and economic pressures remain high, consumers are continuing to rely on fast-food, but are seemingly choosing to move away from one of the traditional staples of pizza and towards alternative options at a similar price point. Burger chains benefit as diners tighten purse strings Dining out is often understood as one of the first areas of discretionary spend that consumers look to reduce when finances are stretched, and this is a trend that has been confirmed in the report, with a 13% drop in the number of visits made to casual dining restaurants over the last year. This may be driven by a rise in the costs associated with visiting restaurants, as when customers do visit, they are spending an extra 7% more than they were last year. This is even more pronounced for upscale dining restaurants, who have faced a further 11% drop in visits in relation to general trips to visits – just another sign that increasing cost pressures are forcing consumers to …

Black Box Intelligence™ Restaurant Performance Update ➡ June Highlights the Economic Challenges in 2024 🔑 Key topics covered: 1️⃣ Sales and Traffic Slow Downs 2️⃣ 2024 Consumers Expecting More Value From Their Meals 3️⃣ Inflation Remains Key Concern for Consumers 4️⃣ Restaurants With Best Traffic Growth Have Better Value Scores 5️⃣ Value Is Not Just Low Check Growth 6️⃣ Worth It Or Not Worth It 7️⃣ Segment Performance: Who’s Thriving and Who’s Struggling? https://lnkd.in/eYQ-N2Hb