Industry Trends July 2021
Full Service & Limited Service Price Changes Continue to Increase
This month, RMS is looking at price changes in Full Service vs. Limited Service restaurants. Price increases for Limited Service, or Quick Service, restaurants have remained steady since April 2021, currently at 6.19% YOY. However, Full Service restaurant prices experienced a significant increase starting in March 2021. As the vaccine became available, operational restrictions were slowly lifted and more diners felt comfortable dining out, prices jumped from 2.91% in February to 4.13% in May. Demand for restaurants continues to be strong though Full Service price changes seem to have stabilized, trending at 4.12% YOY.
Yet Consumer Demand Is Still There
The pent-up demand for restaurants seems to drive more acceptance of price increases from customers. In our latest Q2 consumer report, dine-in restaurants saw the biggest activity shift (20%) since February 2021, which was led by older generations (Gen X and Boomers). We know from our Q1 consumer report that Boomers in particular are most understanding of price increases when directly linked to new safety precautions, increased wages, and rising food costs. In short, Full Service customers are forgiving price increases.
Limited Service remains in high demand, likely due to summer vacations and dine-in restrictions that remain in place in some states across the US. In fact, 91% of family households reported visiting a drive-thru at least once a week. How does this relate to price? In our special edition report, which focused on drive-thru trends, families considered the drive-thru a form of entertainment during the pandemic, or at least an excuse to get out of the house. Keeping children busy and maintaining the emotional health of the household remain top concerns among families, so they are more likely to accept price increases at their favorite QSR.
Consumers seem to be responding positively to price increases, but how long will this last? Will the demand (and acceptance of higher prices) wane as schools and workplaces reopen? RMS will continue to monitor the industry and consumer behavior trends. Stay up to speed by following us on LinkedIn and explore our previous consumer reports today.
Post-Pandemic Menu Optimization (Podcast)
In a recent episode of Modern Restaurant Management’s The Main Course, host Barbara Castiglia sits down with RMS’ Christina Norton and Chris Norton to talk about how data delivers essential insights for operators to help improve operations and optimize menus to drive profit.
US fast-food chains cut discounts, push pricy meals post-pandemic
Reuters’ Hilary Russ interviewed RMS’ Mark Kuperman along with top operators and industry experts to find out more about the current state of value meals and discounting in the QSR segment. Read Russ’ article or contact RMS today.