Around 50 billion hamburgers are consumed annually in the U.S., presenting a big opportunity for restaurants to reach consumers' hearts through their stomachs at a reasonable price point. Research from Vericast has shown 60 percent of consumers surveyed will 'trade down' from a casual dining restaurant to fast food for less expensive burger prices.
According to Vericast's 2024 Restaurant TrendWatch report, the same goes for other fan favourites – pizza and tacos – with 55 percent of respondents switching to frozen pizza from the grocery store versus pizza from a restaurant, and 55 percent opting to get fast food tacos instead of fast-casual dining. Notably, 67 percent said the increased costs are making restaurant dining too expensive. The uptick from 64 percent last year showed cost concerns were still climbing.
While both grocery and restaurant prices continue to rise even as inflation slows, restaurant prices are climbing at a much higher rate than groceries – 5.1 percent annually versus 1.2 percent. Sixty-eight percent of respondents are trading down from restaurant meals to food from the grocery store to avoid the rising costs, with more than 71 percent of Gen Z and millennials doing so.
"The steadily increasing cost of dining out is testing the limits of what consumers can and will spend," said Dana Baggett, executive director for Restaurant Division at Vericast.
"There's a noticeable decrease in consumers dining out, especially with consumers that have a household income under $75,000. Many diners are choosing to dine out less, trade down to less expensive restaurants, order less or opt to eat out for more affordable mealtimes like breakfast or snacks. As consumers are intentionally spending less at restaurants, acquiring new guests should be a key area of focus for restaurant brands. With the intensifying competition for share of stomach, I anticipate acquisition strategies such as offering deals and coupons to increase, as this is the fastest way to drive incremental sales and traffic."
Other key findings from the report indicated that deals and a value for money price point have a lasting effect on consumers, and that the digital influence of cook-at-home meals has disrupted the U.S. restaurant market.
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