Restaurant prices push consumers to grocery store; coupons critical for diners

Restaurant food prices are rising — and impacting consumer behavior.

Restaurant food prices are climbing at a much higher rate than groceries – 5.1% annually versus 1.2%, according to Vericast’s 2024 Restaurant TrendWatch survey.  A large majority (68%) of survey respondents are trading down from restaurant meals to food from the grocery store to avoid the rising costs, with more than 71% of Gen Z and millennials doing so.

More than two-thirds (67%) say increased food costs are making restaurant dining too expensive. This number is a slight increase from 64% last year, showing that cost concerns are still climbing.

When it comes to specific restaurant categories, 60% of consumers surveyed will “trade down” from a casual dining restaurant to fast food for less expensive hamburger prices. More than half (55%) of respondents reported switching to frozen pizza from the grocery store versus pizza from a restaurant, and the same number reported opting to get fast food tacos instead of fast-casual dining.

"The steadily increasing cost of dining out is testing the limits of what consumers can and will spend," said Dana Baggett, executive director of Vericast’s restaurant division. "There's a noticeable decrease in consumers dining out, especially with consumers that have a household income under $75,000. Many diners are choosing to dine out less, trade down to less expensive restaurants, order less or opt to eat out for more affordable meal times like breakfast or snacks.”

Restaurant discounts and coupons remain important for consumers, as 51% of respondents said a coupon or discount entices them to try a restaurant. A similar number (49%) said deals help them choose between restaurants, and 30% noted that they won't try a restaurant without a coupon or discount offer.

When asked what helped them decide where to dine in the past 30 days, 25% said a discount on a restaurant app and 23% said a print ad with coupons. When fast food customers have a coupon/discount, about half (49%) will spend more by upgrading items or ordering more.

Many consumers are also seeking recipe ideas and inspiration for increased at-home cooking, with 39% of those surveyed saying they are cooking more at home. TikTok is especially prevalent, with 29% saying they get inspired to make restaurant copycat meals at home after seeing cooking videos on the app.

A quarter (25%) of diners, especially among Gen Z, parents, and people dining out at least once a week or more, are attracted to a restaurant through dining apps. More than half (52%) of those surveyed have two or more restaurant apps on their mobile phone and 34% say they have three or more.

"As consumers are intentionally spending less at restaurants, acquiring new guests should be a key area of focus for restaurant brands," added Baggett. "With the intensifying competition for share of stomach, I anticipate acquisition strategies such as offering deals and coupons to increase, as this is the fastest way to drive incremental sales and traffic."