A waitress serves sushi orders at Masa Hibachi Steakhouse & Sushi House in Silver Spring, Maryland.
Bill O’Leary | Washington Post | Getty Images
Warmer weather usually boosts restaurant sales, but diners may decline for the second summer in a row as inflation takes a toll on consumers’ minds and wallets.
“I think operators are still hoping for a good summer boom in traffic and sales…but I think on the consumer side, they’re more hesitant,” said Huy Do, director of research and insights at market research firm Datassential.
Last year, consumers held back on restaurant visits in May, June and July amid fears of inflation. In addition to higher restaurant bills, diners were also paying more at the pump and at grocery stores.
Salad series sweet green It said its sales slowed after Memorial Day and blamed the trend on a combination of factors, including erratic office returns and increased summer travel. Chipotle He told investors its sales slowed as of late May, citing the broader economy, a new workforce and a return to normal seasonal fluctuations in college towns. And Shake Shack Its June sales disappointed with fewer visits from low-income consumers, it said.
Restaurant sales fell again in August, which Black Box Intelligence attributed to rising levels of consumer confidence as gas prices fell.
Inflation may ease this year, but prices are still rising, adding to concerns about regional bank failures and a possible recession before the end of the year. U.S. consumer sentiment fell to a six-month low in May, spurred by concerns about a standoff over debt limits, according to a University of Michigan survey of consumers.
Nearly a third of consumers surveyed by Datassential plan to dine out less frequently over the next month, and almost half plan to maintain their current restaurant spending habits.
“Inflation and economics are still at the forefront of consumers’ minds in terms of their financial planning, not any kind of fun or anticipation of travel,” Du said.
Despite diners’ caution, restaurants are optimistic they’ll still see a summer boom. Almost half of the operators surveyed by Datassential expect to increase sales or improve traffic this summer season.
The National Restaurant Association issued “cautiously optimistic” seasonal forecasts, according to Hudson Reel, senior vice president of research for the trade group.
Bars and restaurants will add more than half a million seasonal jobs this summer — assuming lawmakers raise the debt limit, the NRA predicts. If the restaurant industry lives up to these expectations, this will be the strongest summer to date since 2017.
“It’s clear that summer 2023 is going to be the most normal summer job market since 2019,” Riel told CNBC.
Summer usually ushers in a wave of seasonal restaurant jobs to meet growing demand, particularly in the Northeast and tourist destinations.
Tail travel wind
The travel industry expects strong demand this year, which could boost sales for some restaurants. Half of Americans plan to travel and stay in paid housing this summer, up from 46% last year, according to a Deloitte survey.
Nearly a quarter of every dollar spent in restaurants is related to travel and tourism, Riel estimates. Datassential’s Do said that across the restaurant sectors, fast food and fine dining restaurants tend to benefit the most from tourism. Casual dining, which is already struggling to attract eaters, is the least likely to see a sales jump from travel.
But even a rosy travel forecast won’t necessarily lift the US restaurant industry. The Deloitte survey also found that more Americans are planning to travel internationally this summer — though international tourists visiting the United States can help make up for the difference.
Furthermore, only 53% of respondents plan to take at least one road trip, up from nearly two-thirds last year. This is bad news for roadside fast food restaurants that depend on the business of feeding hungry commuters.
Pay for the value
With summer approaching, deals and promotions usually slow down because operators don’t need them to attract customers. But diners are starting to back away from high menu prices and are embracing ways to pay less for their meals.
In the first quarter, restaurant traffic from consumers who took advantage of the deals rose 8% compared to the same period a year ago, according to market research firm Circana.
At the same time, most restaurants’ profit margins are improving, so some are focusing on value meals and other deals to attract customers.
For example, a fast casual series Noodles and Co. It told investors earlier in May that its customers were resisting its higher prices, especially after the last 5% increase in February. At the same time, the cost of ingredients for dishes like BBQ Chicken Mac has fallen faster than executives expected, the company said.
So, Noodles & Co. Plan to bend to deals. He brought back his popular $7 menu for $7 and offered a $10 mac and cheese meal.
“Looking at consumer sentiment today, some of the data that we’re seeing, we feel like we have to be more value-oriented,” CEO Dave Boenighausen told CNBC.