Will Consumer Spending at Restaurants Dip?

Published on Tuesday, May 10, 2011

Written by The Editors

Research by Restaurant Trajectory shows the industry could be in for a cooler summer.

Consumer spending at restaurants is expected to drop as spring turns to summer, according to Kurt Salmon's Restaurant Spending Trajectory, a report develoed by the global management consulting firm. The latest data shows intent to spend continuing a three-month slide after 18 months of steady growth.

The proprietary index, which tracks consumers' intent to spend on dining out, has been highly correlated with personal consumption expenditures at restaurants over the last five years.

"Consumers are paying more for gas, food and clothing. That simply leaves less for restaurant spending," said Todd Hooper, Kurt Salmon retail and restaurant strategist. "Although reported spending has been rising strongly in 2011, this government data is subject to revision and we believe this level of growth is not sustainable."

"This will put more pressure on restaurants to enhance their value propositions," Hooper added. "Quick-service and lower-tier full-service concepts in particular will feel the pressure, as lower-income consumers say they are almost twice as likely to reduce restaurant spending compared to higher-income consumers."