Consumers continue to spend on dining out, even as other economic indicators show that there’s been a pullback in consumer activity.

Earlier this year, The Outcome ran an analysis on dining out purchases to see if consumers had reduced their restaurant spending in response to rising prices. To our surprise in July, consumers continued spending on dining out amid the historic inflation rates of the past four years — and to our surprise, again, people are still spending just as much on dining out, even despite signs of a cooling retail market.

The average transaction amounts in September 2024 for fast food and restaurant trips were $16 and $29, respectively, mostly flat since 2020, when inflation rates reached decades-long highs amid the pandemic. Purchase frequency for both categories remained flat, as well.

It’s puzzling considering the wider economic forces at play. Dining out is a discretionary expense, the exact kind of category you’d expect consumers to pull back on when prices go up. But, according to Attain data, consumers have continued to frequent dining establishments and spend money at the same rate, even as prices have climbed higher.

There’s conflicting data on the health of the restaurant industry.

Meanwhile, McDonald’s reported its sales declined 1 percent in the second quarter from the same period the previous year, its first decrease in sales since Covid lockdowns were enacted in 2020. Yum! Brands, the holding company for KFC, Pizza Hut and Taco Bell, experienced a similar dip in sales. In a recent survey, a majority of consumers reported spending less on fast food due to price hikes. A majority of restaurants (58 percent) reported lower traffic to their stores in August 2024 from August 2023, according to the latest data released by The National Restaurant Association. Yet the group also reports that restaurant sales grew in September 2024 from the previous month. “Consumers’ ability and willingness to spend in restaurants remains intact,” the NRA reported.

Yet fast casual restaurants, such as Cava and Chipotle, continue to do good business despite having even higher prices than fast food chains.

There are several possible explanations for this mishmash of data:

• Wealthy consumers are picking up the slack: Rick Miller, partner at data marketing firm Big Chalk Analytics, states that while there has been an overall decrease in foot traffic to fast food establishments, higher income consumers (those making more than $125,000 a year) have not been affected by inflation and continue to spend at the same rate on dining out. Big Chalk also found that consumers are buying frozen pizzas at a higher rate in the past 13 weeks than the same period a year earlier, suggesting that price conscious consumers are opting to eat at home instead of ordering pickup or delivery.
• Loyal food fans are undeterred by higher prices: “Habits are hard to break,” Elizabeth Marsten, vice president of commerce media at Tinuiti, performance marketing agency, sagely tells The Outcome. It could very well be that, while some casual diners are no longer spending as much on dining out, the die-hards have remained unfazed by higher prices and continued their spending apace, making up for the difference.
• Consumers are pulling back in other areas, but not on fast food: The Federal Reserve’s decision last month to reduce interest rates in response to cooling inflation would indicate consumption is no longer as high as it once was. Food might be the one area where consumers indulge as they tighten their budgets in other areas. “If you’re going to treat yourself, food is going to be one of the first things you reach for,” Marsten says.

Whatever the explanation, this conflicting data encapsulates the peculiar economic moment we’re living in — the so-called “vibecession” where empirical data about the state of the economy doesn’t align with consumer sentiment about the economy. 

The real tell about the state of the economy will be the upcoming holiday shopping season. Trust we will be watching it closely.