By PYMNTS
As food prices skyrocket and consumers become increasingly anxious about the looming recession, many are cutting back on unnecessary food spending, shifting away from dining out toward less costly food-at-home options and sticking to the essentials.
Quick-service restaurant (QSR) Clean Juice, for one, a USDA-certified organic juice bar chain with about 200 locations across the United States, is feeling the impact, as customers who may otherwise have sprung for a $13 juice begin to trade down to lower-priced alternatives. In an interview with PYMNTS, Landon Eckles, the brand’s co-founder and chief executive officer, laid out the situation.
“Consumers are spending less money out, and so Clean Juice, as a consumer-driven business, we’re going to have fewer guests coming into our store,” Eckles said. “The biggest challenge today is just how do we make sure that we are maintaining our guest count and that, when people do decide to spend money on food outside of their home, they’re coming to Clean Juice?”
In fact, restaurant brands that promise nutritious options are in an interesting position wherein, on the one hand, given their higher price point, they are in a difficult spot as consumers seek value, but on the other hand, consumers’ ongoing prioritization of health and wellness can help mitigate the impact of this trade-down.
Need, Not Want
Eckles noted that consumers have been “switching gears” from viewing products in the health benefits as “something I want” to viewing them as “something I need,” a shift that Clean Juice and other comparable brands can leverage to remain part of consumers’ routines even as they cut back on costly indulgences.
Indeed, PYMNTS research supports that consumers are increasingly focused on purchasing only the basic food items. Findings from the recent “Consumer Inflation Sentiment” study, which draws from a July survey of nearly 3,800 US adults, reveal that 60 percent of consumers have cut down on nonessential grocery spending due to rising prices and 45 percent have switched to cheaper grocery merchants. Similarly, 36 percent of restaurant customers have been going to restaurant prices.
Get the report: Consumer Inflation Sentiment: July 2022 — Consumers Pull Back and Prepare for the Long Haul
While a significant share of consumers may see health and wellness purchases as being among the necessities that they cannot remove from their lives, there are many brands competing for these diners’ spending.
“[Consumers] are focused on self-help, they are focused on improving themselves, and I don’t think that’s going anywhere,” Eckles said. “But again, there’s only so much of the pie.”
The New Homebody
In 2021, when consumers were returning to their lives away from home after lockdown, many were excited to return to dining out, and the industry benefitted from a sales surge due to this pent-up demand. Now, however, while contagion concerns may not have much of an impact on most restaurant customers’ behaviors, these inflationary challenges are prompting diners to consider at-home options once again.
In fact, the same Consumer Inflation Sentiment report revealed that 77 percent of consumers are shifting to eating more at home instead of at restaurants in response to inflation. Eckles noted that, as prices continue to rise, consumers are “probably going to be making that decision to eat out a little less often,” though he maintained that “there’s always going to be a market for QSR.”
Related news: As Prices Rise, Three-Quarters of Consumers Eat at Home More Often
One Size Does Not Fit All
One way that the company is keeping consumers coming back is by offering promotions such as buy one, get one (BOGO) deals and other buzz-generating initiatives such as the brand’s “National Smoothie Week” with personalized smoothies and secret menu items.
Research from the March/April edition of PYMNTS’ Digital Divide series, “The Digital Divide: Regional Variations in U.S. Food Ordering Trends and Digital Adoption,” created in collaboration with Paytronix, and drew from a February survey of more than 2,500 US adults, found that 26 percent of QSR customers consider the availability of promotions or deals when deciding between restaurants.
Read more: New Research Shows That Regional Dining Quirks Matter in Tailoring Restaurant Offers
Additionally, loyalty programs can go a long way toward driving frequency, with nearly a third of consumers using restaurant rewards programs every month, according to data from the same study. Eckles emphasized the importance of making these rewards members feel an individualized connection with the brand.
“[We’re] making it more personalized to the consumer, so they feel like it’s something that they appreciate, and not just what ‘a consumer’ would appreciate,” Eckles said. “I don’t think rewards programs are going anywhere. In fact, I think they’re only going to get better and only more personalized for what the consumer wants themselves.”
