U.S. restaurant operators expect higher sales and traffic this summer, and seafood restaurant chains are likely to benefit as a result, though they’ll likely have to offer specials and discounts to lure deal-hunting customers in for a meal.
Over the past year, inflation-ravaged consumers in the U.S. shifted to preparing food at home instead of eating out to save money. But that trend could be shifting, with nearly 60 percent of restaurant operators surveyed by Datassential saying they expect more traffic and sales in the coming months. Roughly a third are already planning summer specials, deals, and discounts, as well as expanding outdoor dining capabilities, he added.
“If this year’s economic trajectory plays out similar to last year, this level of operator optimism may increase even further going into July and August,” Huy Do, research and insights manager at Chicago, Illinois, U.S.A.-based food and beverage firm Datassential, told SeafoodSource.
Do said restaurateurs are still “cautiously optimistic” in anticipating a summer spike in dining out, following an annual trend in the U.S – 47 percent of restaurant operators say they usually see higher levels of sales and traffic during summer months, according to Datassential.
Do acknowledged U.S. consumers have “a degree of hesitance” to eating out due to financial concerns.
“Inflation is still weighing heavy on consumers’ minds, since 48 percent say they’ve cut back on dining out at restaurants in the past month,” Do said. He said that rate has held fairly steady since last July.
Food-away-from-home inflation jumped up 8.3 percent in May, according to the U.S. Bureau of Labor Statistics, compared to a 5.8 percent hike in food-at-home inflation. Eating at home has become Americans’ go-to strategy for combating rising prices, and 31 percent of Datassential survey respondents said they plan to decrease their dining out frequency or stop dining out completely to save money.
However, 50 percent of consumers plan on going out to eat just as often as the month before, according to Datassential, and Do said there is still pent-up demand for restaurant dining among slices of U.S. consumers – especially those who are seeking out a “special” occasion or “splurges.”
That could be good news for seafood restaurants, though he warned U.S. consumers are “choosing their occasions more strategically and economically.” But Do said there is potential for seafood restaurant operators to “ride the wave in the current mixed economic environment.”
Do said data shows U.S. consumers choosing to eat out are hunting for discounts. Visits to restaurants and retail foodservice outlets that offered them deals rose 8 percent in the quarter ending in March 2023 compared to a year ago. In May, around 21 percent of consumers said they chose a more affordable restaurant, and between 22 percent and 29 percent chose a lower-cost menu item. It’s clear consumers are more closely analyzing trading down their item and venue choices, Do said.
“The biggest consideration, then, will be price,” he said.
But restaurant operators still must cover their own rising costs from inflation. Menu prices on numerous seafood species rose in the first quarter of this year, led by oysters and tuna – both up 14 percent – and shrimp, lobster, and clam prices jumped 13 percent, according to Datassential. Squid prices also rose 10 percent, and calamari prices increased 8 percent.
In Datassential’s November 2022 Meat/Poultry/Seafood Keynote Report, the firm found that 60 percent of consumers who decreased their seafood consumption did so because of higher prices, so seafood could lose out if consumers decide their desire to splurge can be satisfied by lower-priced proteins.
“Consumers are pretty sensitive to price changes in this category,” Do said.
Total commercial foodservice visits grew 1 percent over a year, which is not much, but comes after four consecutive quarters of flat or declining growth, according to Circana. But the grow was not spread evenly – the 73 percent of all foodservice venues surveyed that were not offering coupons or discounts recorded no increase in visits in the quarter.
Despite the headwinds, established seafood restaurant chains navigated the complex economic climate adroitly, according to Do. In Datassential’s recent Top 500 Chain Restaurants report, some of the fastest-growing chains by both unit count and sales performance were seafood chains, including Crab Du Jour, Hook and Reel, and The Juicy Crab, Do noted.
“Seafood chains, in particular, have performed very well in the past two years,” Do said.
Orlando, Florida, U.S.A.-based Red Lobster reported its sales were up 13 percent in 2022. The chain contributed to a profit increase for Thai Union in the first quarter of 2023, but Thai Union is still considering an exit from Red Lobster after multiple years of losses, the Bangkok Post reported in March.
Upscale eatery McCormick & Schmick’s, based in Chicago, Illinois, U.S.A., enjoyed a 19 percent sales uptick in 2022, while The Capital Grille, owned by Orlando, Florida, U.S.A.-based Darden, also enjoyed a 6 percent increase in sales in 2022.
Limited-service seafood chains like Captain D’s and Long John Silver’s, the latter of which is expanding in both the U.S. and Southeast Asia, also had solid sales performance in 2022, even with a marginal decline in unit count, according to Datassential.
Photo courtesy of TMP - An Instant of Time
