Consumer Survey Suggests Restaurant Industry Faces a “Defining Moment”
A better “restaurant experience” may be needed as frequent customers of quick-service and fast-casual eateries plan to cut back their spending this year.
Many consumers say they plan to cut back on dining out in order to pay for “travel experiences.”
While a majority of restaurant customers say they plan to eat out as much this year as they did in 2016, some frequent customers of quick-service and fast-casual restaurants say they will be going out less, according to a new survey by global business advisory firm AlixPartners in New York.
In the survey, diners who frequent fast-food and fast-casual establishments at least twice a week said they plan to cut back their visits by 8% and 13%, respectively. But more than half of the survey’s respondents—57 percent—said they plan to dine out as many times in 2017 as they did last year. And they expect to spend slightly more, from $15.38 over the past 12 months to $15.43 in the next year.
Of those who said they would dine out less often, 50% said they wanted to save money while 44 percent said they wanted to eat healthier. Additionally, among those planning to dine out less, 32% said they want to save money for “travel experiences.” Crunching the numbers down further, 47% of baby boomers said they would save the money for retirement, while 46% of millennials said they’d spend that money on “personal services,” such as getting their hair and nails done, housekeeping and dry cleaning.
The survey also found that technology plays a key role in some consumers’ decisions about eating out, but it varies according to age. Forty-two percent of millennials said technologies are “very” or “extremely” influential to their decision to dine out, while only 18% of baby boomers said the same. But the availability of online ordering and free Wi-Fi remain that top two technological influencers for diners, described as “very” or “extremely” influential by 40% and 35% of the survey’s respondents respectively. Loyalty programs ranked as “very” or “extremely” important to 19% of the consumers surveyed, and 40% said they haven’t joined a loyalty program at all.
In a summary of the survey, which also covers the importance of delivery and higher worker wages, AlixPartners observes that “the turbulence in the chain restaurant industry of late—from underperforming results to an uptick in bankruptcies to renewed shareholder pressures—might not just be a blip but rather a sign of structural changes besetting the industry,” adding that the restaurant industry “faces a defining moment.”
“While lower fuel prices have helped operators by putting more money in consumers’ pockets, that’s become a two-edged sword as cheap gas and the lowest air fares we’ve seen since the recession seem to be enticing consumers to allocate at least some of their restaurant spending on travel and other experiences,” noted Adam Werner, managing director at AlixPartners and co-head of the firm’s restaurant, hospitality and leisure practice. “Meanwhile, the all-important millennial consumer, enabled the most by social media and other technologies that allow them to stay in close touch with friends even when they’re traveling, is the cohort most fundamentally shifting spending to experiences. Clearly, the challenge for the industry is to reinvent the “restaurant experience” in order to compete with all the other experiences out there today.”