Consumers are cutting back on dining out due to rising restaurant prices driven by inflation. Diners are visiting restaurants less frequently, with traffic at restaurants open at least a year falling 3.5% compared to a year earlier. However, consumers are not necessarily choosing less expensive restaurants, as a survey conducted by AlixPartners in December revealed that 74% of respondents planned to reduce dining out, while just 39% said they would choose less expensive restaurants. AlixPartners Managing Director Andrew Sharpee suggests that consumers are more likely to budget their restaurant spending for experiences that cannot be replicated at home. While young consumers are cutting back on food delivery orders due to their high costs, they still plan to dine in person.
Some restaurants, such as Starbucks and Burger King owner Restaurant Brands International, have not noted any significant changes in their businesses due to inflation. However, other restaurants, such as El Pollo Loco, Domino’s Pizza, and Outback Steakhouse owner Bloomin’ Brands, have reported some declines in traffic. In response, some companies, such as Chipotle and Noodles & Company, are pausing price hikes or leaning into their value offerings. DoorDash is also starting to give eateries with the same delivery and in-store pricing more favorable placement in its app to push back against inflated delivery prices.