Restaurants will have to continue to battle for their share of consumers’ wallets this year, with Americans expecting to both dine out less and spend less per meal. That’s according to a survey of more than 1,000 consumers, released by AlixPartners, a global consulting firm. Overall, consumers said they plan to spend an average of $14.95 per meal this year, down from the $15.20 they said they spent over the past year. Furthermore, 31 percent of respondents in the survey said that “lower price” was “important” or “very important” to them in defining value, vs. 21 percent who said that in a similar AlixPartners survey released in the spring of 2017.
The fast-casual sector may be hardest hit this year in terms of dining occasions, according to the survey, with just 20 percent of millennials surveyed saying they intend to visit fast-casual establishments twice weekly or more over the next 12 months, compared with 24 percent who said that in the 2017 survey. Meanwhile, according to the survey, fast food has surpassed fast casual for as the preferred spot for lunch, with just 32 percent of diners in this year’s survey picking fast casual as their preferred location for lunch, down from 37 percent in AlixPartners’ survey of a year ago—while fast food was preferred for lunch by 35 percent in this year’s survey, up from 30 percent in AlixPartners’ survey of a year ago.
For all those surveyed who are planning to dine out less, saving money to re-allocate toward other expenses was the No. 1 reason, chosen by 54 percent of those surveyed, vs. 50 percent in last year’s survey. Meanwhile, among all respondents, travel and retirement were cited as the biggest outside “share-of-wallet” pressures, cited by 38 percent and 33 percent, respectively, as their top pick. And among millennials, “lifestyle” purchases (e.g., home, car, etc.) was the No. 1 reason, chosen by 43 percent of millennials, compared with 27 percent in the survey of a year ago.
“We’re starting to see a shift in spending patterns among the millennial generation, and restaurant operators need to be prepared,” says Adam Werner, global co-head of AlixPartners’ Restaurant, Hospitality and Leisure Practice and a managing director at the firm. “A lot of focus in recent times has been on the buying patterns of this generation, but it’s important to understand that Millennials are now having families and children, and that their spending priorities are beginning to reflect that.”
The AlixPartners survey also suggests that technology’s influence on consumer dining choices may be plateauing. For instance, the percentage of respondents rating nine major technologies, ranging from digital menus to mobile apps to mobile payments, as a “4” or “5” in terms of influencing restaurant choice (on a scale of 1 to 5) all declined in this year’s survey vs. the one released a year ago. However, when asked about their use of any mobile technologies by restaurant sector, 28 percent said they’ve used them in the fast-food sector (up from 23 percent in last year’s survey) and 23 percent said they have in fast casual (up from 18 percent in last year’s survey), suggesting that limited-service restaurants may be the most fertile ground for mobility.
At the same time, though, 40 percent of all respondents said they have never used any type of mobile technology related to dining, only a slight reduction from 42 percent in last year’s survey. Similarly, only 46 percent in this year’s survey said they are at least somewhat influenced by loyalty programs, the same percentage as in the survey released last year. And only 24 percent in this year’s survey said they follow their favorite restaurant on social media.
“There are two, very disparate consumer groups in this industry today: the technologically-engaged and those who are not—and, in fact, may never be,” says Kurt Schnaubelt a managing director in AlixPartners’ Restaurant, Hospitality and Leisure Practice. “It’s important for operators to fully assess investments they are making in technology and loyalty, to make sure they’re truly geared towards gaining net new market share, and not just wasting money chasing the latest fads.”
According to the survey, both delivery and take-out are expected to decrease slightly in the year ahead, particularly at fast-food and casual restaurants, with consumers saying they expect their monthly delivery and take-out orders to dip 11 percent (to an average of 3.34 visits this year) and 8 percent (to an average of 1.67 visits), respectively, vs. their number of visits in the past year. Meanwhile, respondents said they have increased interest in delivery and take-out from fast-casual and fine-dining establishments, saying they expect their number of annual visits to increase to an average of 2.06 visits and 1.48 visits, respectively, an increase 6% in each segment.
Among respondents who said they order delivery, 47 percent said they prefer delivery directly from the restaurant, vs. only 4 percent preferring to order via a third-party service (services such as Uber Eats, DoorDash, Postmates, etc.).
Meanwhile, meal-kit services (services such as Blue Apron, HelloFresh, Sun Basket, etc.) seem to be slow in gaining consumer adoption, according to the survey, with only 18% of respondents having tried such a service. In addition, 68 percent of those who said they haven’t tried a meal-kit service say they don’t plan to try one in the near future.
Survey results also suggest that ready-to-eat meals from grocery and convenience stores could be becoming a bigger threat to restaurants, with 25 percent of respondents citing such meals as a way to reduce restaurant spending, up from 19 percent in the AlixPartners survey released a year ago.
Among the other things also covered in this year’s AlixPartners survey: Consumer sensitivity to food-safety scares may be increasing, as 35 percent of respondents said they will “never” return to a restaurant chain that experienced a foodborne-illness event, regardless of the specific location of the incident. That compares with 28 percent who said that in a third AlixPartners survey, one conducted in the first quarter of 2016.
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