雅虎香港財經 Restaurants: Americans went out to eat less in March, but still spent more. Why?
Consumers spent more than $96.5 billion at restaurants last month, up more than 13% compared to the same time last year, per the latest data from the U.S. Census Bureau.
Americans went out to eat less in March compared to last year but spent more money at restaurants.
During the week of March 13, in-person visits to quick-service and full-service restaurants, in addition to coffee, bakeries, and dessert shops, were down 4.4%. The week of March 20, they were down 3.9%, and during the week of March 27, down 2.5%, according to the foot traffic intelligence platform Placer.ai.
U.S. consumers spent more than $96.5 billion at restaurants last month, up more than 13% compared to the same time last year, per the latest data from the U.S. Census Bureau.
But why the fewer visits? R.J. Hottovy, head of analytical research at Placer.ai, blamed inflation. "It's not just food inflation or restaurant inflation," he said, "but just inflation across the board. [It] has really started to wear on consumers' ability to go dine out."
Other factors weighing on consumers: the price of gas, rent, and health care.
The cost of food away from home, which includes dining out, vending machines, and food at employee sites and schools increased 0.6% in March, according to the Bureau of Labor Statistics' (BLS) March Consumer Price Index (CPI). That's the largest 12-month increase since August 1981. "Quite high by historical norm," said BLS economist Steve Reed.
Reed said the away-from-home index is influenced by three main factors: raw food costs, demand, and labor costs. EY Parthenon Senior Economist Lydia Boussour agreed that inflation is changing consumer behavior and expects the consumer to spend less in the near future.
"As we look forward, the consumer has become more cautious and is likely to pull back on spending further in the coming months as labor market trends continue to soften and economic uncertainty continues to increase," she told Yahoo Finance.
Boussour expects consumer-facing companies' first quarter results to be strong, reflecting a surge in spending at the beginning of the quarter but says this downward shift in consumer behavior will be reflected in the second and third quarters this year.
The lower restaurant visit trend in March is already leaking into April — during the first week, foot traffic was down 6.4%.
McDonald's, Taco Bell are winners?
Overall the fast food and quick-service restaurant space felt the impact of consumers dining out less. During the first week of March, visits dropped 4%.
However, Hottovy said some chains are coming out on top thanks to their digital and marketing efforts in addition to consumers trading down. Two of the winners include McDonald's (MCD) and Taco Bell (YUM).
A sneak peek of Placer.ai's newest report on McDonald's showed it found about 53% of in-person McDonald’s customers went at least twice during Q1 of 2023. That's up from 50% in Q1 of 2022.
"We are starting to see some middle-income consumers (in the $70,000 to $110-120,000 annual income range) start to frequent QSR more than they did. We are starting to see evidence of trade down," Hottovy said adding that "the compounded effect of inflation is really starting to eat into consumers' discretionary spending ability."
How can other restaurants do the same? No path is similar, he said: "You've got a player like McDonald's who's doing it through kind of unique things on the marketing front. You got Taco Bell who's doing interesting things on the value front as well as some innovation [like the Mexican Pizza], so there isn't a direct path."
Hottovy added: "There's a lot of ways to drive visits."
On Monday, McDonald's unveiled a revamp of its burger lineup. The Golden Arches is set to report Q1 2023 earnings on Tuesday, April 25. Taco Bell's parent company YUM! Brands is set to report on May 3.
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Brooke DiPalma is a reporter for Yahoo Finance. Follow her on Twitter at @BrookeDiPalma or email her at bdipalma@yahoofinance.com.
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