Skip to main content

Inflation finally hit restaurant traffic

Earlier this year, we brought up an argument that rising food prices could give restaurants an edge because the price gap between dining out and cooking at home had become narrower (Kwok, 2022). It did not take long for the inflation to finally hit the restaurant traffic.  

Inflation in April almost hit the highest level in 40 years 

The Consumer Price Index (CPI) increased by 8.3% from 2021 (Cox, 2022). Not only was it higher than Dow Jones estimation at 8.1%, but it remained close to the highest level since the summer of 1982. After removing food and energy prices, the core CPI still rose 6.2%, still higher than the anticipated level of 6%. Because of the record-high inflation, workers’ real earnings dropped 2.6% year to year despite that the average hourly earnings had increased 5.5%. The unexpected high inflation in April also cast doubts on the market about whether the inflation “peak” in March had really hit the ceiling.  

 

Restaurant traffic, especially drive-thru, dropped significantly in April

 

Data has shown that restaurant traffic in April dropped 9.4% from the 2021 level (Kelso, 2022). Notably, the continuously rising and record-breaking gas prices likely have substantially discouraged people from driving. Drive-thru traffic for restaurants was down by over 13%, whereas dine-in patrons recorded an increase of 2.4%. 

 

Because many restaurants had raised menu prices to offset the inflation of “everything,” restaurant sales did not get hit as much as the store traffic. Nonetheless, it seems that consumers had reached a threshold that they would cut restaurant visits and spending. 

 

It is uncertain that less foot traffic in restaurants would help ease the industry’s labor shortage challenge. Drops in traffic for sure worried many restaurant owners and operators.  

 

How concerned are you about the inflation’s effects on restaurant traffic and sales? 


Note: This article is first published in the Hospitality News Magazine. The picture was downloaded from RevenueManage.com

Comments

Popular posts from this blog

Luxury vs. Millennials and Their Technology: The Ritz-Carlton (By Julia Shorr)

Embodying the finest luxury experience, The Ritz-Carlton Hotel Company, LLC has been established since 1983. In 1998, Marriott International purchased the brand offering it more opportunity for growth while being independently owned and operated. They are known for their enhanced service level as the motto states, “Ladies and Gentlemen serving Ladies and Gentlemen”. The luxury brand now carries 97 hotels and resorts internationally and is attempting to keep the aspects of luxury while keeping up with the trends of the technologically improving generations. The Varying Demographics of the Target Market The Ritz-Carlton’s typical target market includes: business executives, corporate, leisure travelers, typically middle-aged persons and elders, and families from the upper and upper-middle class section of society .   This infers a large range of types of travelers in which all are similar in that they are not opposed to spending extra for the luxurious ambiance. However, with

The challenges of SB 93 (California Senate Bill No. 93) will impose on the employers and their human resource management team (by Brittany Schaffer)

The COVID-19 pandemic started in early 2020, and it has caused massive changes within a short period of time. One of the most rememberable effects of the COVID-19 pandemic was that businesses had to come to a complete halt, forcing them to lay off employees. California's unemployment rates went up.  Now that the stay-at-home orders have lifted, people start to come out. Businesses are now reopening, looking to rehire their laid-off employees. Before the pandemic, employers had the option of recalling only a certain number of laid-off employees they would want to rehire based on employees' job performance. That option had been changed after Governor Gavin Newsome signed into law - Senate Bill 93, which went into effect on April 16th, 2021. The California Senate Bill No. 93 (SB 93) According to SB 93, companies in specific industries, mainly the hospitality industry, have the obligation to provide job opportunities in written form to qualified employees being laid off due to COVI

Want to win in future competitions? Invest in data-driven decisions now

Speaking of the permanent changes in the hospitality industry, many people will probably agree that demands for “bleisure”/“work-from-anywhere” travel and contactless self-service will continue to grow in the near future. Not everyone, however, realizes that data-driven decisions will become a key driver for growth in the industry, which has already affected how we do business now.   Automatic service enables businesses to capture more operational and consumer data for business decisions   One advantage of using automatic service comes from its ability to spontaneously capture and store real-time operational and consumer data for additional analysis. In the old-time when businesses still relied on workers to serve customers, operational data were collected usually through careful book-keeping, documentations, and observations; consumer data through market research were often limited to their perceptions, behavioral intentions, or past experience.     Now that automatic service is provi