US restaurants suffering from a decline in traffic

A man sits in a mostly empty restaurant.

U.S. consumers cut back on their restaurant visits in the second quarter of 2022 due to inflation and rising prices, according to data from The NPD Group.

Physical and online restaurant traffic declined by 2 percent in the quarter versus a year ago, 6 percent below the pre-pandemic level in the same quarter in 2019.

However, consumer spending in restaurants was up 2 percent in the second quarter compared to the same quarter a year ago, but that was a reflection of higher costs, NPD said in a press release. Spending also rose by 3 percent versus the pre-pandemic second quarter in 2019.  

“Consumers continue to deal with rising inflation and higher prices,” NPD Food Industry Advisor David Portalatin said in a press release.

In response to higher menu prices, consumers typically trade down to lower-priced items, cut back on the number of items ordered, or reduce restaurant visits altogether, according to Portalatin.

“Operators and manufacturers can win in this environment by differentiating value, understanding that value doesn’t always translate to the lowest price," Portalatin said. "Quality and value become a critical differentiator when consumers spend on a restaurant meal during these challenging times.”

Full-service restaurants lost the most traffic, down 3 percent in the quarter, versus a 1 percent decline to quick-service restaurants.

In related news, the National Restaurant Association is urging the U.S. Small Business Administration to release USD 180 million (EUR 176 million) in unobligated Restaurant Revitalization Fund (RRF) money to applicants who did not receive initial funding.

The unobligated funding includes USD 24 million (EUR 23.5 million) set aside for litigation, and the remainder reserved for “realized or anticipated recoveries,” the NRA said in a press release. Around USD 56 million (EUR 55 million) came from funds officials said were returned by the recipients or their financial institutions.

“Now more than ever, every dollar appropriated by Congress for restaurant relief needs to be unlocked and put in the hands of operators struggling to keep their doors open,” NRA Executive Vice President for Public Affairs Sean Kennedy said.

The U.S. Senate voted against passing the Small Business COVID Relief Act of 2022 (S. 4008) in May, ending any realistic possibility it will replenish the RRF, the NRA said.

“The potential for replenishing the RRF remains uncertain at best, thus the efficient disbursement of the existing funds is of critical importance to our industry,” Kennedy said. “Restaurants remain battered with worker shortages, runaway food costs, and an uncertain level of customer confidence in the coming months.”

Forty-three percent of restaurant operators believe economic conditions will worsen in six months, the highest level of economic pessimism since 2008, according to the NRA’s June 2022 Operator Tracking Survey.

The restaurant industry still has not recovered 728,000 jobs lost in the initial government shutdowns, the NRA said, and wholesale food costs that have risen 13 percent in the last 12 months.

Photo courtesy of Master1305/Shutterstock


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