TL;DR
New data reveals that consumers are becoming unhappy with rising menu prices, leading to a decline in net sentiment towards pricing in restaurants. As a result, small and independent restaurant owners should focus on factors like taste, quality, speed, and convenience to retain customer loyalty during inflation.
The increasing inflation has forced many restaurant operators to keep their menu prices higher to protect their profits. However, consumers’ acceptance of these elevated prices seems to be diminishing, leading to a potential impact on businesses.
A recent report on NRN analyzed over 400,000 customer feedback pieces from June 2022 to June 2023 across various restaurant brands. The findings indicated that net sentiment towards menu prices has fallen by 7% over the past year.
This change in sentiment might explain the 1.8% year-over-year decrease in Q2 traffic for Quick Service Restaurants (QSR), coupled with a 10.6% increase in average prices. Despite a slight decrease in menu prices compared to last year, the data suggests that consumer fatigue from spending might be setting in.
Several Q2 earnings reports from restaurant companies shed light on this trend. Companies like El Pollo Loco and Papa John’s experienced decreases in transactions, partly attributed to higher prices. Wendy’s increased its margins primarily through pricing, but customer count declined. These observations highlight that consumers might be reaching their spending limit.
Moreover, the U.S. Department of Commerce reported a drop in consumer spending growth in Q2, pointing to a potential acceleration of this trend due to factors like increasing credit card debt, household debt, and interest rates.
For independent restaurant owners, this data signifies the need to strategize amid consumer spending fatigue. The silver lining is that consumers prioritize taste and quality over price, quality and taste drive future purchase intent more than pricing.
Despite falling net sentiment towards price, data shows that consumers’ intent to dine out remains steady. The data suggests that restaurant owners should focus on enhancing taste and speed to keep consumers engaged.
In a market where inflation and consumer spending pressures prevail, independent restaurant owners can stay resilient by emphasizing factors beyond price. Providing exceptional taste, quality, speed, and convenience can foster customer loyalty and create a positive dining experience, even in challenging times.
