In rural markets across America, 60% of consumers have noticed price increases in dining out1. In response to price increases, 27% of these consumers are using coupons more, and 19% are doing more comparative shopping with advertising inserts1.
Inflation Finally Slows for the First Time in Two Years
Inflation finally slowed to 4.0% in May and is now below wage growth of 6.1%, after 2 years of inflation outpacing wage growth2. During this period, the restaurant rate of inflation dropped to 8.3% (from 8.6% in April), while grocery continued to drop to 5.8% (a significant decrease from 7.1%), and below restaurant inflation. Gasoline moved to -19.7% in May after hitting –12.2% in April, with household energy at 1.6%, which was a decrease from 5.9% in April.
Grocery (food at home) maintains a cost advantage over restaurants/dining out (food away from home).
Rate of Inflation for Key Household Categories, May 2023
- Consumer discretionary spending is down as ritual household expenditures such as utilities, dining out and groceries face strong upward pressure.
- Customers are trading brand preference and loyalty for greatest perceived value.
Did you know?
- 61% of consumers surveyed said rising prices are causing them to be less brand loyal3.
- 25% of restaurant customers chose where to dine based on a coupon4.
Even with higher inflation and slower return to normal, restaurants can continue to win at the cash register by offering their diners more value for their dollars. Brands that understand the new consumer value equation can create preference and steal share.
Balancing Pricing is Critical
An inflation advantage typically translates to sales. Restaurants must watch the impact price increases have on top line sales and grocery prices dropping.
Restaurants can increase the chance of repeat visits as 36% of U.S. diners are members of a restaurant loyalty program5. The top drivers to join loyalty programs include discounts or coupons and the ability to earn free items6.
Restaurant or Takeout Customers respond to ads across a variety of advertising channels. In the past 12 months:
- 57% responded to ads/offers in the mailbox7.
- 52% responded to streaming TV ads7.
- 48% responded to a pre-roll video ad7.
- 48% responded to an online ad7.
Our targeting capabilities enable you to reach your most likely customers with engaging offers that drive action. Reach out today to plan your strategy.
Sources: Prosper Insights & Analytics1; Bureau of Labor Statistics, May 2023 CPI Report, June 20232; Vericast Awareness to Action Study3; Vericast Restaurant Trendwatch Report 20234; Diner Report 20235; touchbistro.com May 20236; AdMall AudienceSCAN 20227
