Business

Consumers are slashing restaurant spending, but executives say it won’t affect all chains.

Howard Schultz

David Ryder | Reuters

Some restaurants are reporting lower sales or lower attendance in the second quarter, indicating that diners are cutting back on their out-of-home meals to save money.

But executives disagree about how consumer behavior is changing and whether it affects their companies.

Chris Kempchinski of McDonald’s and Brian Niccol of Chipotle Mexican Grill are among those who told investors that low-income consumers spend less money at their establishments, while higher-income customers visit more frequently. Other executives such as Starbucks’ Howard Schultz and Bloomin Brands’ David Deno have said they haven’t seen their customers back down.

Mixed observations arise from restaurant companies raising menu prices to account for higher ingredient and labor costs. According to the Bureau of Labor Statistics, the price of food eaten out rose 7.7% in the 12 months ending in June. People are also paying much more for basic necessities like gasoline, toilet paper and groceries, raising concerns about the possibility of a recession.

Historically, the more expensive fast food chains and sit-down restaurants usually see their sales drop during recessions as people choose to stay at home or pack their own meals. Fast food tends to be the most lucrative restaurant sector as people trade in cheaper meals when they want to indulge.

More details about how food habits may change will come next week when salad chain Sweetgreen, owner of Applebee Dine Brands and Dutch Bros Coffee report earnings.

Here’s what the restaurant companies are saying.

Hunt for deals

Still spending


Source link

Leave a Reply

Your email address will not be published. Required fields are marked *

Back to top button