The cost of living continues to drive significant consumer behaviour change, and restaurants and brands will be forced to adapt if they want to protect their customer base, according to advertising platform Cardlytics.
The State of Dining Spend report found that rising costs and inflationary pressures are driving customers away from certain restaurants and chains – including prominent ‘City’ lunch spots, upscale dining venues, and takeaway pizza chains – towards more affordable alternatives – such as ‘on-the-go’ bakeries, burger chains, and chicken shops.
Many commuting office-goers are being forced to modify their spending habits, whilts the broader macroeconomic challenges have had a significant impact on ‘city’ lunch brands, causing prices to hike, with the average costs per transaction up 5%.
This has caused consumers to seek cheaper alternatives, leading to a 9% reduction in the number of transactions made across the year, whilst overall spending has reduced by 4%.
A similar trend can be seen in spending at high-end coffee shops, a sector which saw a 14% drop in visits. This is a higher figure than the 9% drop in visits to chain coffee shops – which saw a 5% reduction in total customer spending.
Interestingly, this is not a trend that has affected the on-the-go bakery sector, with companies such as Greggs experiencing a 4% rise in spending for the year. This did not correlate with a proportionate increase in trips to such bakeries, which saw a 1% rise.
Cardlytics notes that this suggests either loyalty to the brands as a result of their consistent pricing, or perhaps resulting from customers shifting from the more expensive coffee or city lunch spots to more cost-effective alternatives.
Casual and upscale dining are both dropping off while burger chains see a hike
The number of transactions within casual dining restaurants has dropped 13% year-on-year. This followed a small 2% growth in transactions between 2022 and 2023.
However, despite the decline in trips to restaurants this year, consumers who are eating out are spending 7% more per transaction compared with the same time period in 2023. This is likely as a result of inflation hiking prices, increasing the average spend per transaction.
Overall, casual dining has seen a 7% decline in total spend by consumers. As purse-strings continue to tighten, upscale dining has seen a significant decline of 11% relating to trips to restaurants.
On the flip-side, burger chains – such as Honest Burger, Patty & Bun and Byron – have seen a massive 17% hike in transaction volume in the last 12 months. This has coincided with a 6% growth in the amount spent per transaction on average, contributing to an overall 12% growth in spend in burger chains this year.
The report suggests a number of reasons behind this; numerous establishments have launched their own vegan and healthier-option burgers and menus, for example, as well as the restaurants potentially representing a solid ‘middle ground’ for households, or an alternative between fast-food and fine-dining.
Pizza shops lose ground to fast-food rivals
Despite the average transaction value (ATV) at pizza restaurants increasing by only 11% between 2022 and 2024 (compared to a 21% rise in chicken shops and 18% at fast-food restaurants), diners have cut the number of visits to popular pizza takeaway chains by 20% over the same period.
This is significantly greater than the 4% reduction in visits to fast-food restaurants and 7% drop seen by chicken shops during the same period.
Cardlytic analysis notest that consumers haven’t been entirely deterred from discretionary spending, as fast-food restaurants saw a 13% rise in spending between 2022 and 2024, whilst chicken shops saw an 11% increase. Comparatively, takeaway pizza restaurants saw a reduction in spending by 12%.
The report points towards increasing availability of similar quality products at more affordable price points in supermarkets, and a growing variety of fast-food and chicken shop chains in the UK market, as potential causes of this trend.
Chris Harris, partnerships director at Cardlytics, said, “When economic conditions are tough, consumers change their spending behaviours in order to get by, and this is especially true within dining. Food and restaurants of all types play a role in everyone’s lives, but tighter purse strings mean people are thinking twice about where they visit, which has led to some interesting changes in spending habits.
“The growth in visits to burger chains and on-the-go bakeries is in contrast to the impact felt by pizza restaurants, coffee shops, and traditional ‘city’ lunch spots. But those on both side of this will need to remain proactive and aware of these changes, whether their objective is to maintain their growth or reverse such trends.
“For all these brands – who regularly interact with their customers – data will be key. If the customer behaviours are changing, what do those changes look like? Looking at an individual’s data, and using that to create tailored offers and rewards, not only shows that your brand cares, but also helps to put the right offer in front of them at the right time. Those brands that can grow and retain their customer base now, when times are tough, will be most likely to succeed in future.”
