In 2023, the restaurant industry faced a gloomy outlook as reports from publications like FSR Magazine and Nation’s Restaurant News revealed a significant drop in sales and customer traffic. Unlike previous years, when labor shortages and supply chain woes were the main culprits, the primary cause in 2023 was clear: people simply couldn’t afford to eat out anymore.
Experts predict that this trend will continue into 2024, as middle-class families grapple with the consequences of a long-standing habit of relying on restaurants to do their cooking for them. Rising menu prices, coupled with the shrinking discretionary income of middle-class households, have forced many to cut back on dining out.
For several years now, my weekly grocery bill has run right around $200. for just 2 of us, give or take a few $$. My purchases don’t vary much week to week.— JAYE 🇺🇸 (@Jaye_inUSA) May 13, 2021
My grocery bill in the last 3-weeks has been between $240-250 & this week, $262. #BidensInflation is out of control. pic.twitter.com/6w5iHUUz4z
Steven Kibbel, a certified financial planner, entrepreneur, and financial advisor at Day Tradingz, has seen firsthand how the perfect storm of factors has affected his clients’ ability to dine out. “Clients who once went weekly now speak of monthly outings, if even that,” Kibbel said.
One major factor contributing to the decline in restaurant visits is the post-pandemic inflation that has made both needs and wants more expensive. This has forced many middle-class families to reduce spending on life’s little pleasures to cover essential expenses like rent, car payments, and groceries. As a result, dining out has become an obvious candidate for budgetary belt-tightening.
Another factor is the realization that Americans have been overspending on eating out for far too long. In 2015, restaurant sales overtook grocery spending for the first time in history, and since then, the line between essential and discretionary spending has blurred. Despite the financial tribulations of the pandemic and subsequent inflation, the country has been slow to adjust its habits, leading to the current situation where people are paying the price.
Inflation causes restaurant owner to charge nearly $16 for sandwich, calls jump in prices 'incredible' https://t.co/JmuCEx0yPo— FOX Business (@FoxBusiness) January 8, 2024
Inflation has also made it more expensive to be a restauranteur, with rising costs of food, labor, energy, transportation, rent, and other business overheads cutting into already thin profit margins. To stay profitable, many restaurant owners have had no choice but to raise menu prices, further deterring middle-class families from dining out.
The National Restaurant Association (NRA) Restaurant Business Conditions Survey reveals that nearly all full-service restaurant owners consider rising food costs a significant challenge. Increased labor costs and utilities present further difficulties. In response, many restaurants have raised menu prices, with 89% of full-service restaurants implementing price hikes.
Lunch prices are insane now, you used to be able to get something decent under $10, now its closer to $15! How can anyone afford to pay $42 for 2 people for lunch every day, crazy! https://t.co/E4vyzhIVVC— AlphaFo𝕏 (@Alphafox78) December 1, 2023
Additionally, some restaurants have resorted to adding surcharges to offset rising prices, further increasing the cost of dining out for middle-class families. The widespread practice of tipping at sit-down restaurants, food delivery services, and even carryout coffee shops has also put a strain on consumers’ wallets, making the occasional dinner out an increasingly rare luxury.
In conclusion, the perfect storm of factors, including inflation, the habit of overspending on dining out, and rising costs for restaurant owners, has made it difficult for middle-class families to afford eating out in 2023. As these challenges persist into 2024, it remains to be seen whether the restaurant industry can adapt and regain the patronage of middle-class consumers.
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