Consumers are keeping a wary eye on menu prices as they continue to tighten their belts in “today’s unpredictable economy,” according to a recent report from TouchBistro. And there is a certain price-hike threshold they don’t want restaurant operators to cross.
The report, based on a survey of more than 1,500 diners around the U.S., notes that “fewer Americans are dining out, and price hikes are one of the biggest culprits.” It found that 31% of diners said that if a restaurant raised its prices, it would “significantly” impact their interest in dining there. That compares to 21% who said the same in 2022. Forty-one percent of the diners surveyed said higher menu prices would “somewhat” affect their willingness to order from a restaurant, “suggesting that even those who can spend a little more are feeling less comfortable doing so,” the report states.
Those same concerns apply to off-premise dining, as 31% said higher menu prices for takeout and delivery would significantly impact their interest in ordering from that restaurant, while 43% said it would somewhat impact their interest.
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“This data suggests that even though takeout sales are up, consumers are keeping a close eye on how much they’re spending,” the report states. “Indeed, restaurateurs must keep in mind that a year of high inflation has pushed customers to their financial limits, and many of the people who previously absorbed menu price hikes are no longer able to do so.”
So where do diners draw the line at menu price hikes? “It turns out that restaurateurs only have a window for a 10% to 11% increase before diners will be deterred from visiting their venue,” according to TouchBistro. It adds that quick-service restaurants “should be even more cautious when raising prices, as Americans expect these restaurants to be more affordable and are therefore less forgiving of price increases.”
The report breaks down the maximum price increase that diners will tolerate as follows:
Dine-in at a full-service restaurant: 11%
Ordering takeout/delivery from a full-service restaurant: 10.5%
Dining in at a quick-service restaurant: 10.4%
Ordering takeout/delivery from a quick-service restaurant: 10.3%
Gen Z diners are the most sensitive to menu price increases, with 40% saying that price hikes would significantly impact their interest in dining in at a restaurant and 37% saying the same about ordering carryout or delivery.
“These numbers aren’t surprising, given that most Gen Zs have less disposable income than older Americans,” the report notes. “This group is particularly vulnerable to economic shifts, which is key for restaurateurs to remember, since Gen Zs are valuable customers who spend more at restaurants than any other age demographic.”
