QSRs Should Expect a Mixed Bag of Consumer Behavior for the Holidays
  • Consumer perceptions of dining out and grocery prices reflect reality: They are not that different.
  • Daily meals get made at home, but special occasions call for dining out.
  • Intent to dine out more or much more is on the rise

Consumers continue to feel the impact of Inflation, especially as costs like interest and rent increase. If spending projections for this holiday season are accurate, consumers are holding tightly to their wallets and looking for deals.

Revenue Management Solutions surveyed nearly 800 US consumers to get their thoughts and intentions regarding dining out and cooking at home, and restaurant and grocery prices — now and in the future.

The consensus? For quick-service restaurants (QSRs), it’s beginning to look like … well, like consumers are all over the place. Read on for some of the biggest takeaways regarding QSR consumer behavior for the remainder of 2022 and beyond.

Get the full Q3 consumer report here.

Price sensitivity on the rise

Consumer perception has aligned with reality. Compared to Q2 2022, the percentage of consumers who believe restaurant prices are higher increased from 68% to 72%, while the perception of grocery inflation stabilized at 78%.

Consumers’ perceptions were correct. According to the US Department of Agriculture’s Economic Research Service, Food At Home (FAH) prices declined slightly in Q3, and Food Away From Home (FAFH) increased.

However, what may be more important, is that the gap between grocery and restaurant price perceptions is closing, decreasing from 10% at the end of Q2 to the current 6%.

According to Mark Kuperman, COO at RMS, while QSR brands should be aware that restaurant price perception is on the rise again, they should also capitalize on the shrinking gap in price perception between eating at home versus dining out. His advice to QSRs? Offer abundant value meals and strengthened loyalty offers. 

Celebrate and socialize, but not at home

RMS found that everyday home cooking is on the rise among respondents, jumping from 59% to 72% since Q1. When trying to cut household costs, this behavior isn’t a surprise. For special events and spending time with friends, however, consumers still want — and do — go out to eat.

When celebrating a special occasion, 45% of guests said they were more likely to go to a restaurant (up 14% vs. Q1) than entertain at home. Socializing with friends and family at restaurants instead of at home is also seeing a slight uptick, climbing 2% compared to the end of Q1.

Desire for more dining options is on the rise as well. Although survey respondents still favor local restaurants, national chains are gaining momentum, with 1 in 4 respondents visiting them “more” or “much more” in Q3 2022.

Traffic is down; check is up

In RMS’ recap of October QSR trends, we reported that both traffic and basket size were down 2.6% and 4.6%, respectively. Even with that continued slide in basket size in October, a 10.5% increase in average check YoY offset the decline in traffic trends.

QSRs saw net sales also continue their upward trajectory at +7.6% YoY. While this growth is welcome, RMS analysts believe the surge is due to brands taking price not only on the main menu but also on value items. A 15.8% YoY increase in QSR average price supports this theory.

Consumers do not seem particularly fazed by pricing changes. When asked about FAFH frequency, in contrast to earlier quarters, survey respondents reported increased visits across all segments in Q2 2022 and Q3 2022 YoY. While all FAFH segments grew in Q3 2022, QSRs maintained the highest share at 35%.

At 84% share of weekly visits, guests self-reported that the drive-thru was their preferred channel during Q3. Takeout held steady, and dine-in increased by 9%, while delivery grew by 6%.

When looking at October QSR data only, figures indicate consumer perception is a bit skewed from reality, at least for the drive-thru. This “preferred channel,” which is down 11.3% YoY, is the only channel registering YoY decreases. Kuperman says this may be more than a trend. “Looking over the past few months,” he said, “drive-thru may have hit a new normal, having stayed in the -11% range since May 2022.”

When it comes to QSR dine-in, takeout and delivery, RMS data indicates the customer is right. For the month of October, dine-in performance remained strong (+37.1% YoY), takeout (+28%) is still performing positively, and delivery traffic remains positive YoY (+12.9%) but continues to slow compared to previous months.

Looking ahead, intent for dining out is up

Going forward, approximately 1 in 3 respondents intend to dine out more often. This renewed vigor — particularly for drive-thru visits — might be based on the 25.9% decrease in gas prices during Q3 and presents opportunities for QSR brands.

Most of all, mind your value

Whether it’s holiday shopping or dining out, during uncertain economic times, consumers pay strict attention to cost and look for ways to save. RMS findings confirmed this: Among survey respondents, 68% said that when browsing a menu, they compare prices before making a choice, and 67% of guests know the cost of the menu item they’re ordering before they order it. Up 19% and 8% respectively from Q1, these figures demonstrate that value is now more important than ever.

As customers continue their new discipline of check management, it’s critical to adjust now to ensure traffic continues to flow and loyalty thrives. If you would like help using the data you already have to avoid trade-out and develop a profitable plan for growth, please get in touch. RMS is here to help.

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