URGENT UPDATE: Fast-food giants including IHOP and Chipotle are raising alarms as a staggering decline in restaurant visits has left them reeling. New data shows that Americans consumed 1 billion fewer meals at restaurants between January and March 2023 compared to the previous year, sparking concerns among industry leaders about the future of dining out.
This sharp decline is attributed to rising consumer fears over high prices and an unstable job market, compelling many to opt for home-cooked meals. Executives from major chains, including Denny’s and Wendy’s, have voiced their concerns about an increasingly cautious U.S. consumer landscape. Denny’s CEO Kelli Valade described the current market as “a very choppy consumer environment,” highlighting the challenges faced by restaurant operators.
Despite some recovery signs for chains like McDonald’s, where sales have rebounded thanks to value-oriented offerings, CEO Chris Kempczinski noted a troubling trend: visits from low-income customers dropped by “double-digits” from April to June. “The result of that is you’re seeing people either skip occasions or trading down to eating at home,” he explained, emphasizing a significant shift in consumer behavior.
Additionally, data from market research firm Black Box Intelligence reveals a 1% drop in U.S. restaurant visits this year, with fast-food establishments suffering the most, experiencing a 2.3% decline in traffic during the second quarter.
The impact of these trends is palpable. Restaurants are witnessing a decrease in not just foot traffic, but in average spending per visit, as diners purchase fewer beverages and appetizers. Dine Brands CEO John Peyton noted that consumers are “trading down” to cheaper menu items, further straining revenue.
The situation is exacerbated by ongoing concerns about food inflation, which, while slowing, continues to make dining out more expensive. The Bureau of Labor Statistics reported a 0.3% increase in dining costs in July, contrasting with a 0.1% decrease in grocery prices. The Department of Agriculture anticipates that costs for dining out will keep exceeding those for home-cooked meals.
Experts like Sally Lyons Wyatt, a Circana adviser, warn that significant changes are necessary to rebuild consumer confidence in dining out. “It’s going to take a lot of levers being pulled in order to get consumers more comfortable to spend money out of home,” she said, predicting that relief may not come until next year.
Despite the gloomy outlook, some industry leaders remain optimistic. Chipotle CEO Scott Boatwright stated that much of the current downturn is linked to broader macroeconomic factors. “As sentiment improves, the business will improve,” he said, indicating hope that easing tariff concerns might encourage consumers to return to restaurants.
As the fast-food industry grapples with these significant challenges, all eyes will be on upcoming consumer trends and economic indicators to determine if the tide will turn in favor of dining out again. The stakes are high, and the future of many beloved chains hangs in the balance.