Eating out is losing its luster with cash-strapped consumers.
Restaurant visits declined in the third quarter, research and consulting firm NPD Group said on Tuesday. Fast-food chain visits, which make up 80 percent of restaurant visits overall, fell for the first time in five years.
Restaurant visits had stalled in the first six months of this year, a downturn NPD restaurant analyst Bonnie Riggs blames on a combination of consumers’ lack of disposable income, rising restaurant prices and a failure by some restaurants to keep up with eating trends.
That lack of disposable income is due in part to rising health care costs and student loan debt, Riggs said. A recent NPD survey revealed that 75 percent of respondents were eating out less, and a “high percentage” of those think that restaurant prices are too high.
Restaurants have been eager to raise prices after keeping a lid on hikes immediately after the recession. But consumers are clearly resisting, especially since they have a growing number of options for eating dinner outside of restaurants, such as prepared food at grocery stores and meal kits.
The average restaurant meal cost has risen by 21 percent over the last 10 years, and lower grocery prices are leading to a widening gap in the price of eating out versus eating at home. Eighty-two percent of meals now are consumed at home, NPD said.
“The marketplace is changing and despite improving economic indicators, the consumer landscape is fundamentally reshaped,” Riggs said. “Restaurant operators … will need to find the means to stay relevant in consumers’ minds — innovative products, unique promotions, competitive pricing, stating the benefits of eating at restaurants compared to home — while delivering an enjoyable experience.”