Sluggish Economy Equals Consumer Restaurant Cutbacks
Nearly 40% of Americans are eating out less frequently than they did six months ago, and 54% plan to further cut back restaurant visits in the next three months. Read more from RBC Capital Markets' Annual Consumer Conference.
By Allison Perlik, Senior Editor -- Restaurants & Institutions, September 18, 2007
Nearly 40% of Americans are eating out less frequently than they did just six months ago, and 54% plan to cut back restaurant visits even further in the next three months, analysts from New York City-based RBC Capital Markets told an audience of institutional investors and media at the investment banking firm’s Annual Consumer Conference today in Naples, Fla., citing consumers’ negative views on the economy as a key culprit behind the slowdown.
The just-released data from RBC’s CASH Index (Consumer Attitudes toward Spending by Household), a consumer confidence index based on regular surveys of 1,000 U.S. households that historically has had a high correlation with restaurant same-store sales performance, highlights several more industry challenges and opportunities worth noting:
• Males, Gen Y fueling QSR’s strength. While four in 10 Americans are eating out less frequently today than six months ago, 11% are dining out more. These consumers are primarily males, diners aged 18-29, and singles, all typical quick-service customers.
• Diners are looking to spend less, too. 40% of consumers say they’re less willing to order a higher-price entrée, appetizer or dessert than they were six months ago, compared with 18% who are somewhat more willing and 8% who are much more willing to do so. Demographically, the groups most unlikely to trade up include low-income, female and Generation X diners.
• Casual Dining on the upswing? Households with incomes between $50,000 and $100,000 and older age groups including pre-boomers and baby boomers—all core casual-dining users—were among the 26% of consumers who say they are willing to spend more on restaurant meals, suggesting positive results to come for the segment, says RBC analyst Larry Miller.
• Quality first. Though consumers’ actions may often seem to contradict the finding, food quality far outpaced price and convenience as the most-cited driver of restaurant choice, 55% to 12%. Menu offerings ranked second at 18%, with convenience next at 10%.
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