Restaurant Marketing: Offer a Cost Advantage as Grocery Inflation Climbs

Restaurant Marketing July Inflation Update: As rates climb faster for groceries than for restaurants, the window of opportunity is open for restaurants to steal share. 

Consumers are facing pressure from multiple points, and the current economy is shifting their behavior, which presents a restaurant marketing opportunity.

Inflation was 8.5% in July and continues to outpace wage growth.  During this period, restaurants dipped slightly from 7.7% to 7.6%, while Grocery continued to climb at 13.1%. Gasoline is the highest increase consumers are facing at 44.0%, which is a decrease from 59.9% in June.

Spending is down, and consumers say dining out is one way to compensate for rising prices, the economy in general, and high gas prices.

Brand preference becomes expendable when a greater perceived value is available – from ANOTHER BRAND. Brands who understand the NEW CONSUMER VALUE EQUATION can generate trial, create preference, and steal share.

Restaurants continue to have a cost advantage over grocery stores with lower inflation increases.  When the gap widens and restaurant inflation is lower, restaurants typically see a rise in sales when the manager of the household budget determines, “It is cheaper to eat out!”  The gap increased to 5.5 points in July.  Grocery went from 12.2% to 13.1% inflation while restaurants dropped one-tenth from 7.7 to 7.6%

However, inflation is hitting pocketbooks hard, and consumers are looking for better prices (52% want more deals and value).

Check out our case studies below to see how restaurants have leveraged multi-channel campaigns anchored by direct mail to increase market share and ROI. For more restaurant marketing strategy and insights, visit our Restaurant Resources page, and download our Restaurant Marketing eBook. Reach out today to plan your strategy!

Sources: Bureau of Labor Statistics July 2022 CPI report; Prosper Insights & Analytics July 2022