Q1 Restaurant Consumer Insights: Higher-Income Households Are Spending Less on Eating Out

In early March 2023, Revenue Management Solutions (RMS) surveyed more than 800 restaurantgoers across the US to find out more about their usage, including frequency and formats. While insightful, it wasn’t all great news.

At a high level, the findings indicated that usage across restaurant segments and revenue channels has fallen compared to Q4 2022.

The profile least likely to spend more may surprise you

The biggest contributor to these report cutbacks? Higher-income households (those earning more than US $99,000). With a little help from family households, this group drove decreases across all restaurant segments. In fact, ​​among higher-income households, the number of respondents saying they are spending more drastically dropped, from 73% in Q4 to 37% this quarter.

Q1 2023 Respondent Frequency by Segment

For context and perhaps a bit of consolation, year over year, Q1 2022 and Q1 2023 were similar in frequency across quick service restaurants (QSRs), fast casual and full service.

No surprise: Higher prices are the culprit

But why the overall decline between the end of 2022 and now? If you guessed “higher prices,” you are correct. While the gap between restaurant and grocery price perception is narrowing among RMS respondents, 3 in 4 still believe they are paying higher restaurant prices. According to the Bureau of Labor Statistics, in reality, Food-Away-From-Home (FAFH) prices (+8.8% YOY) exceeded Food-At-Home (FAH) (+8.4% YOY) for the first time in 18 months.

Q1 2023 Respondent Reasons for Spending More at Restaurants

Spend takeaway: Even though respondents that stated spending more at restaurants blame higher prices as the reason— the percentage rose 10% YOY — there is a bright spot not related to economics: 1 in 4 are spending more because they are ordering from restaurants more often.

Some diners are spending more because they’re ordering more. Conversely, among those spending less at restaurants, 61% are doing so not only by ordering less often, but a significant 40% is doubling down on saving money by choosing less-expensive restaurants.

Bright spot: Remaining consistent YOY, roughly a third of consumers (32%) are opting to order less-expensive items (trading down) instead of totally ceasing to eat out (trading out). This, too, is good news for QSR brands and operators.

Delivery is no longer the preferred channel

When it comes to how consumers are getting their FAFH, delivery has taken the biggest hit since Q4, decreasing overall by 13%. The most significant drops in the delivery channel can be attributed to higher-income (-25%) and family households (-13%). Whether due to delivery fees or the change of seasons, more people are willing to get their food themselves. Takeout is now the leading channel, securing the lead over dine-in, the previously most-used channel. In Q1 2023, 70% of respondents reported that they get takeout at least once a week.

Finally, when those surveyed were asked about their plans for eating out in the future, RMS found that all revenue channels may see a decline in frequency. This is likely in response to increasing prices (whether that increase is fact or perception) and the ongoing consumer fear of rising inflation.

In helpful news, RMS determined that younger generations and higher-income households were less likely to use takeout, dine-in and delivery in the future. This leaves the drive-thru wide open for these two demographics but not for Gen X and boomers: They plan to use the drive-thru less.

To check out previous consumer insights, visit our Consumer Reports page. You can also receive future reports straight to your inbox by joining our mailing list.

As the restaurant landscape remains unpredictable, knowing how your guests want to experience your brand’s offerings can make a difference in connecting with them — or not. RMS can help you shape a profitable plan for the rest of 2023 using our proprietary and patented data analysis and tech-enabled services. Our team of data analysts is ready to help you turn your customer insights into profitable actions.

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