Food Inflation: Quarterly % Change vs. Year-Ago

Away from Home In Home 2006 2007 2008 2009 2010 2011 2012 2013 2014 -2 0 2 4 6
  Away from Home In Home
2006 3 2.3
2007 3.3 2.6
2008 4 5.2
2009 4.7 4.9
2010 1.4 -1.4
2011 1.6 2.9
2012 3 4.5
2013 2.3 1.1
2014 2.1 0.9

Source: Bureau of Economic Analysis

Growth in restaurant dollars mirrors away-from-home food inflation

When at-home food inflation starts to increase at an accelerated rate, there are fewer dollars available for discretionary purchases, like visiting restaurants. Historically, when at-home food inflation was higher than away-from-home rates, restaurants would benefit. In today’s world, history does not seem to be repeating itself. Americans still eat the vast majority of meals at home, so if retail food costs increase, that leaves less money for visiting restaurants. Either consumers cut back on the number of visits they make to restaurants, or they find ways to manage how much they spend when they go out to eat. A review of industry sales for the summer months shows consumer spending in line with the overall food-away-from-home inflation rate of 3 percent. Restaurant dollar growth last summer was driven entirely by increases in the average price paid for a meal or snack.

Percent Change in Dollars — Total Restaurants Summer 2014

June July August 0 1 2 3 4
  Value
June 3
July 3
August 3

Source: The NPD Group/CREST®

As mentioned previously, there are several ways consumers can manage how much they spend when they go out to eat. Check management has definitely been at play in 2014. Consumers have continued to visit restaurants, but by being cautious and controlled in their spending habits, they managed to hold the line on the price they paid for meals and snacks.

Check management through less expensive menu choices

Shown below are the menu choices that have found the most favor with consumers over the past seven years (YE August 2014 vs. YE August 2008). It did not matter which segment they chose to visit during this timeframe – the findings were the same. Consumers traded down in menu choices wherever they could. Across the board, burgers, sandwiches, and appetizers were the menu items of choice. Since appetizers are typically considered add-on purchases, the increased appeal of these menu items suggests consumers may have ordered them in lieu of purchasing an entrée, or they were purchased as a part of a bundled offer.

QSR Midscale Casual Dining
Breakfast Foods Burgers Burgers
Burgers Sandwiches Sandwiches
Sandwiches Appetizers Appetizers
Appetizers    

As consumers chose to order more of the menu items shown above, they became less inclined to order higher-priced main dish entrees and add-on items like sides, desserts, and beverages.  Here again, the pattern was the same across all segments of the industry — managing check by trading down in menu choices.

QSR Midscale Casual Dining
Main Dish/Entrees Breakfast Foods Breakfast Foods
Sides Main Dish/Entrees Main Dish/Entrees
Breads/Sweet Rolls Sides Sides
Desserts/Snacks Breads/Sweet Rolls Breads/Sweet Rolls
Beverages Desserts/Snacks Desserts/Snacks
  Beverages Beverages

Check management by ordering fewer menu items

As consumers chose to order fewer items when they went out to eat, order size declined by 5 percent in 2014 compared to 2008.

Check management by taking advantage of deals

Consumers continue to take advantage of deal-related offers. Over the past six years, traffic on deal rose by 10 percent, while regular-priced meals decreased by 7 percent. Clearly these incentives help consumers spend less when they go out to eat, shown by the check price on deal vs. non-deal:$6.32 vs. $7.35 respectively. Without these incentives to help consumers manage their checks, it is likely the industry would be experiencing overall restaurant visit declines. The use of coupons, buy some/get some, and discounted price promotions are the main drivers behind the increase in deal traffic.

Traffic % Change vs. Year-Ago*
Total Restaurants
YE August 2014 vs. YE August 2008

chart 1
 

Source: The NPD Group/CREST®

When we examine all of the factors that can have an impact on check size, it’s clear consumers have many ways to manage their restaurant spending. Trading down in menu choices, ordering fewer items, increasing use of deals, and choosing to visit at times of day when they do not have to spend as much are among the possibilities. It will take a great deal of creativity for operators to build consumers’ value perception and/or add to the dining experience in order to drive traffic increases. While the dining experience is about more than just price, it is a major component in consumers’ willingness to visit restaurants. Aside from managing their own operating and food cost variables, restaurant operators face the additional challenge of consumers working to hold steady (or close to it) on their restaurant spend level.

"> Food Inflation: Quarterly % Change vs. Year-Ago

Away from Home In Home 2006 2007 2008 2009 2010 2011 2012 2013 2014 -2 0 2 4 6
  Away from Home In Home
2006 3 2.3
2007 3.3 2.6
2008 4 5.2
2009 4.7 4.9
2010 1.4 -1.4
2011 1.6 2.9
2012 3 4.5
2013 2.3 1.1
2014 2.1 0.9

Source: Bureau of Economic Analysis

Growth in restaurant dollars mirrors away-from-home food inflation

When at-home food inflation starts to increase at an accelerated rate, there are fewer dollars available for discretionary purchases, like visiting restaurants. Historically, when at-home food inflation was higher than away-from-home rates, restaurants would benefit. In today’s world, history does not seem to be repeating itself. Americans still eat the vast majority of meals at home, so if retail food costs increase, that leaves less money for visiting restaurants. Either consumers cut back on the number of visits they make to restaurants, or they find ways to manage how much they spend when they go out to eat. A review of industry sales for the summer months shows consumer spending in line with the overall food-away-from-home inflation rate of 3 percent. Restaurant dollar growth last summer was driven entirely by increases in the average price paid for a meal or snack.

Percent Change in Dollars — Total Restaurants Summer 2014

June July August 0 1 2 3 4
  Value
June 3
July 3
August 3

Source: The NPD Group/CREST®

As mentioned previously, there are several ways consumers can manage how much they spend when they go out to eat. Check management has definitely been at play in 2014. Consumers have continued to visit restaurants, but by being cautious and controlled in their spending habits, they managed to hold the line on the price they paid for meals and snacks.

Check management through less expensive menu choices

Shown below are the menu choices that have found the most favor with consumers over the past seven years (YE August 2014 vs. YE August 2008). It did not matter which segment they chose to visit during this timeframe – the findings were the same. Consumers traded down in menu choices wherever they could. Across the board, burgers, sandwiches, and appetizers were the menu items of choice. Since appetizers are typically considered add-on purchases, the increased appeal of these menu items suggests consumers may have ordered them in lieu of purchasing an entrée, or they were purchased as a part of a bundled offer.

QSR Midscale Casual Dining
Breakfast Foods Burgers Burgers
Burgers Sandwiches Sandwiches
Sandwiches Appetizers Appetizers
Appetizers    

As consumers chose to order more of the menu items shown above, they became less inclined to order higher-priced main dish entrees and add-on items like sides, desserts, and beverages.  Here again, the pattern was the same across all segments of the industry — managing check by trading down in menu choices.

QSR Midscale Casual Dining
Main Dish/Entrees Breakfast Foods Breakfast Foods
Sides Main Dish/Entrees Main Dish/Entrees
Breads/Sweet Rolls Sides Sides
Desserts/Snacks Breads/Sweet Rolls Breads/Sweet Rolls
Beverages Desserts/Snacks Desserts/Snacks
  Beverages Beverages

Check management by ordering fewer menu items

As consumers chose to order fewer items when they went out to eat, order size declined by 5 percent in 2014 compared to 2008.

Check management by taking advantage of deals

Consumers continue to take advantage of deal-related offers. Over the past six years, traffic on deal rose by 10 percent, while regular-priced meals decreased by 7 percent. Clearly these incentives help consumers spend less when they go out to eat, shown by the check price on deal vs. non-deal:$6.32 vs. $7.35 respectively. Without these incentives to help consumers manage their checks, it is likely the industry would be experiencing overall restaurant visit declines. The use of coupons, buy some/get some, and discounted price promotions are the main drivers behind the increase in deal traffic.

Traffic % Change vs. Year-Ago*
Total Restaurants
YE August 2014 vs. YE August 2008

chart 1
 

Source: The NPD Group/CREST®

When we examine all of the factors that can have an impact on check size, it’s clear consumers have many ways to manage their restaurant spending. Trading down in menu choices, ordering fewer items, increasing use of deals, and choosing to visit at times of day when they do not have to spend as much are among the possibilities. It will take a great deal of creativity for operators to build consumers’ value perception and/or add to the dining experience in order to drive traffic increases. While the dining experience is about more than just price, it is a major component in consumers’ willingness to visit restaurants. Aside from managing their own operating and food cost variables, restaurant operators face the additional challenge of consumers working to hold steady (or close to it) on their restaurant spend level.

"> Food Inflation: Quarterly % Change vs. Year-Ago

Away from Home In Home 2006 2007 2008 2009 2010 2011 2012 2013 2014 -2 0 2 4 6
  Away from Home In Home
2006 3 2.3
2007 3.3 2.6
2008 4 5.2
2009 4.7 4.9
2010 1.4 -1.4
2011 1.6 2.9
2012 3 4.5
2013 2.3 1.1
2014 2.1 0.9

Source: Bureau of Economic Analysis

Growth in restaurant dollars mirrors away-from-home food inflation

When at-home food inflation starts to increase at an accelerated rate, there are fewer dollars available for discretionary purchases, like visiting restaurants. Historically, when at-home food inflation was higher than away-from-home rates, restaurants would benefit. In today’s world, history does not seem to be repeating itself. Americans still eat the vast majority of meals at home, so if retail food costs increase, that leaves less money for visiting restaurants. Either consumers cut back on the number of visits they make to restaurants, or they find ways to manage how much they spend when they go out to eat. A review of industry sales for the summer months shows consumer spending in line with the overall food-away-from-home inflation rate of 3 percent. Restaurant dollar growth last summer was driven entirely by increases in the average price paid for a meal or snack.

Percent Change in Dollars — Total Restaurants Summer 2014

June July August 0 1 2 3 4
  Value
June 3
July 3
August 3

Source: The NPD Group/CREST®

As mentioned previously, there are several ways consumers can manage how much they spend when they go out to eat. Check management has definitely been at play in 2014. Consumers have continued to visit restaurants, but by being cautious and controlled in their spending habits, they managed to hold the line on the price they paid for meals and snacks.

Check management through less expensive menu choices

Shown below are the menu choices that have found the most favor with consumers over the past seven years (YE August 2014 vs. YE August 2008). It did not matter which segment they chose to visit during this timeframe – the findings were the same. Consumers traded down in menu choices wherever they could. Across the board, burgers, sandwiches, and appetizers were the menu items of choice. Since appetizers are typically considered add-on purchases, the increased appeal of these menu items suggests consumers may have ordered them in lieu of purchasing an entrée, or they were purchased as a part of a bundled offer.

QSR Midscale Casual Dining
Breakfast Foods Burgers Burgers
Burgers Sandwiches Sandwiches
Sandwiches Appetizers Appetizers
Appetizers    

As consumers chose to order more of the menu items shown above, they became less inclined to order higher-priced main dish entrees and add-on items like sides, desserts, and beverages.  Here again, the pattern was the same across all segments of the industry — managing check by trading down in menu choices.

QSR Midscale Casual Dining
Main Dish/Entrees Breakfast Foods Breakfast Foods
Sides Main Dish/Entrees Main Dish/Entrees
Breads/Sweet Rolls Sides Sides
Desserts/Snacks Breads/Sweet Rolls Breads/Sweet Rolls
Beverages Desserts/Snacks Desserts/Snacks
  Beverages Beverages

Check management by ordering fewer menu items

As consumers chose to order fewer items when they went out to eat, order size declined by 5 percent in 2014 compared to 2008.

Check management by taking advantage of deals

Consumers continue to take advantage of deal-related offers. Over the past six years, traffic on deal rose by 10 percent, while regular-priced meals decreased by 7 percent. Clearly these incentives help consumers spend less when they go out to eat, shown by the check price on deal vs. non-deal:$6.32 vs. $7.35 respectively. Without these incentives to help consumers manage their checks, it is likely the industry would be experiencing overall restaurant visit declines. The use of coupons, buy some/get some, and discounted price promotions are the main drivers behind the increase in deal traffic.

Traffic % Change vs. Year-Ago*
Total Restaurants
YE August 2014 vs. YE August 2008

chart 1
 

Source: The NPD Group/CREST®

When we examine all of the factors that can have an impact on check size, it’s clear consumers have many ways to manage their restaurant spending. Trading down in menu choices, ordering fewer items, increasing use of deals, and choosing to visit at times of day when they do not have to spend as much are among the possibilities. It will take a great deal of creativity for operators to build consumers’ value perception and/or add to the dining experience in order to drive traffic increases. While the dining experience is about more than just price, it is a major component in consumers’ willingness to visit restaurants. Aside from managing their own operating and food cost variables, restaurant operators face the additional challenge of consumers working to hold steady (or close to it) on their restaurant spend level.

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How Consumers Manage Their Restaurant Spend

Foodservice Brief — November 2014

The economic outlook is more positive today than it has been in several years. This should bode well for consumers’ ability to increase spending at restaurants. Unemployment continues its downward trend, and Americans are displaying more optimism about the economic future. However, food inflation continues to be a concern to both consumers and restaurant operators as at-home food prices have risen a fair amount versus 2013.

Food Inflation: Quarterly % Change vs. Year-Ago

Away from Home In Home 2006 2007 2008 2009 2010 2011 2012 2013 2014 -2 0 2 4 6
  Away from Home In Home
2006 3 2.3
2007 3.3 2.6
2008 4 5.2
2009 4.7 4.9
2010 1.4 -1.4
2011 1.6 2.9
2012 3 4.5
2013 2.3 1.1
2014 2.1 0.9

Source: Bureau of Economic Analysis

Growth in restaurant dollars mirrors away-from-home food inflation

When at-home food inflation starts to increase at an accelerated rate, there are fewer dollars available for discretionary purchases, like visiting restaurants. Historically, when at-home food inflation was higher than away-from-home rates, restaurants would benefit. In today’s world, history does not seem to be repeating itself. Americans still eat the vast majority of meals at home, so if retail food costs increase, that leaves less money for visiting restaurants. Either consumers cut back on the number of visits they make to restaurants, or they find ways to manage how much they spend when they go out to eat. A review of industry sales for the summer months shows consumer spending in line with the overall food-away-from-home inflation rate of 3 percent. Restaurant dollar growth last summer was driven entirely by increases in the average price paid for a meal or snack.

Percent Change in Dollars — Total Restaurants Summer 2014

June July August 0 1 2 3 4
  Value
June 3
July 3
August 3

Source: The NPD Group/CREST®

As mentioned previously, there are several ways consumers can manage how much they spend when they go out to eat. Check management has definitely been at play in 2014. Consumers have continued to visit restaurants, but by being cautious and controlled in their spending habits, they managed to hold the line on the price they paid for meals and snacks.

Check management through less expensive menu choices

Shown below are the menu choices that have found the most favor with consumers over the past seven years (YE August 2014 vs. YE August 2008). It did not matter which segment they chose to visit during this timeframe – the findings were the same. Consumers traded down in menu choices wherever they could. Across the board, burgers, sandwiches, and appetizers were the menu items of choice. Since appetizers are typically considered add-on purchases, the increased appeal of these menu items suggests consumers may have ordered them in lieu of purchasing an entrée, or they were purchased as a part of a bundled offer.

QSR Midscale Casual Dining
Breakfast Foods Burgers Burgers
Burgers Sandwiches Sandwiches
Sandwiches Appetizers Appetizers
Appetizers    

As consumers chose to order more of the menu items shown above, they became less inclined to order higher-priced main dish entrees and add-on items like sides, desserts, and beverages.  Here again, the pattern was the same across all segments of the industry — managing check by trading down in menu choices.

QSR Midscale Casual Dining
Main Dish/Entrees Breakfast Foods Breakfast Foods
Sides Main Dish/Entrees Main Dish/Entrees
Breads/Sweet Rolls Sides Sides
Desserts/Snacks Breads/Sweet Rolls Breads/Sweet Rolls
Beverages Desserts/Snacks Desserts/Snacks
  Beverages Beverages

Check management by ordering fewer menu items

As consumers chose to order fewer items when they went out to eat, order size declined by 5 percent in 2014 compared to 2008.

Check management by taking advantage of deals

Consumers continue to take advantage of deal-related offers. Over the past six years, traffic on deal rose by 10 percent, while regular-priced meals decreased by 7 percent. Clearly these incentives help consumers spend less when they go out to eat, shown by the check price on deal vs. non-deal:$6.32 vs. $7.35 respectively. Without these incentives to help consumers manage their checks, it is likely the industry would be experiencing overall restaurant visit declines. The use of coupons, buy some/get some, and discounted price promotions are the main drivers behind the increase in deal traffic.

Traffic % Change vs. Year-Ago*
Total Restaurants
YE August 2014 vs. YE August 2008

chart 1
 

Source: The NPD Group/CREST®

When we examine all of the factors that can have an impact on check size, it’s clear consumers have many ways to manage their restaurant spending. Trading down in menu choices, ordering fewer items, increasing use of deals, and choosing to visit at times of day when they do not have to spend as much are among the possibilities. It will take a great deal of creativity for operators to build consumers’ value perception and/or add to the dining experience in order to drive traffic increases. While the dining experience is about more than just price, it is a major component in consumers’ willingness to visit restaurants. Aside from managing their own operating and food cost variables, restaurant operators face the additional challenge of consumers working to hold steady (or close to it) on their restaurant spend level.

To learn more about Checkout Tracking, please contact your NPD client service representative, call our restaurant analyst, Bonnie Riggs, at 847-692-1767, or email bonnie.riggs@npd.com.

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