The Modest Man
Restaurants may face another tough summer as inflation weighs on consumers’ minds and wallets. According to market research firm Datassential, nearly a third of consumers surveyed plan to dine out less over the next month, and roughly half plan to maintain their current restaurant-spending habits. Salad chain Sweetgreen and Chipotle experienced slowed sales after Memorial Day, with the former blaming erratic returns to offices and surging summer travel. Shake Shack also reported disappointing June sales as lower-income consumers visited less frequently. Inflation may be easing this year, but prices are still rising, adding to worries about regional bank failures and a potential recession before year-end.
However, despite diners’ caution, restaurants are still optimistic that they’ll see a summer boom. The National Restaurant Association issued a ‘cautiously optimistic’ seasonal forecast, with bars and eateries set to add more than half a million seasonal jobs this summer. Assuming lawmakers raise the debt limit, it would be the strongest summer for hiring since 2017. Restaurants are also hoping for a boost from the travel industry, as half of Americans plan to travel and stay in paid lodging this summer, up from 46% last year.
Deals and promotions are slowing down going into summer, but diners are starting to push back on higher menu prices. Some restaurants are pivoting to value meals and other deals to draw in customers, such as fast-casual chain Noodles & Co., which brought back its popular 7 for $7 menu and introduced a $10 mac and cheese meal. In the first quarter, restaurant traffic from consumers who took advantage of deals rose 8% compared to the year-earlier period, according to market research firm Circana.
In conclusion, restaurants may face challenges this summer due to inflation, cautious diners, and decreased road travel. However, the travel industry’s anticipated strong demand and restaurants’ pivot to value meals and promotions could help boost sales.
