ALEXANDRIA, Va.—Restaurants are expecting strong sales this summer, but consumers may be more cautious about discretionary purchases, including dining out, as inflation still holds a grip on Americans’ budgets, reports CNBC.
“I think operators are still hopeful for a good summer boon in foot traffic and sales ... but I think on the consumer side, they’re more hesitant,” Huy Do, research and insights manager at market research firm Datassential, told CNBC.
About a third of consumers plan to eat out less over the next month, and half will keep their current dining out habits, according to Datassential.
“Inflation and the economy are still more top of mind to consumers in terms of their financial planning, rather than any sort of fun or anticipation for travel,” Do told CNBC.
However, restaurants believe they’ll see a lift in sales and traffic, with half of operators surveyed by Datassential anticipating higher sales or improved traffic this summer season. The National Restaurant Association issued a “cautiously optimistic” seasonal forecast and projects that restaurants and bars will add half a million seasonal jobs over the summer. If the restaurant industry meets those expectations, it would be the strongest summer for hiring since 2017.
“The summer of 2023 is obviously going to be the most normal summer employment market since 2019,” Hudson Riehle, the association’s senior vice president of research, told CNBC.
Last year, sales were down across eateries, as consumers navigated through decades-high inflation, paying more for their restaurant meals, gas and groceries. Sweetgreen saw sales decline after Memorial Day 2022 and said it was due to a range of factors, including erratic returns to offices and surging summer travel. Chipotle also saw sales dip in late May last year, and Shake Shack’s June 2022 sales were a disappointment, according to the QSR.
But a strong travel season could boost sales for some restaurants, with more consumers planning to travel and stay in paid lodging this summer over last year. Roughly a quarter of every dollar spent at restaurants is tied to travel and tourism, the restaurant association estimates. Across restaurant segments, fast food and fine-dining restaurants tend to benefit the most from tourism, Datassential’s Do told CNBC, and casual dining is likely to realize higher sales due to travel.
However, a Deloitte survey found that only 53% of respondents plan to take at least one road trip, which is down from nearly two-thirds last year. This could spell lower sales for roadside fast food joints, as well as convenience stores.
Consumers are also beginning to push back on higher menu prices and looking for a value. In the first quarter, restaurant traffic from consumers who took advantage of deals rose 8% compared with the year-earlier period, according to market research firm Circana.
For advice on how to stop leaking c-store customer trips to fast-feeders, read the NACS Magazine article “Competing With QSRs.”