Cutting Spending?
Are consumers cutting back on delivery to save money?
According to a survey of more than 1,000 consumers by the personal finance site Personal Capital, 94% of respondents either ordered less delivery or dining out less over the past year. The findings are at odds with reports from restaurants and delivery companies like DASh that show demand has held steady even as prices rise; in 3Q22, DASH orders increased 27% year over year, and sales rose 30%. The general belief is that many people are willing to pay more for convenience. And yet 28% of people surveyed by Personal Capital said they’ve been using DoorDash less. Respondents went from spending an average of more than $70 per month on the app to just over $45. Grubhub users said they were spending about $20 less monthly, while Uber Eats customers cut back by $13. Nearly half (47%) of those consumers cited the high delivery cost for the change.
The service can be much more expensive than ordering an in-restaurant because it includes delivery and service fees as well as tips, and the menu prices themselves are often inflated. We cited one study in our DASH deck that McDonald’s delivery costs nearly 100% more on average than ordering on-site. Those upcharges most impacted Gen Z: 57% said the delivery cost caused them to pump the brakes. Another 47% of all respondents said they had less disposable income to spend on delivery, while 51% said they were saving up for something in the future. The wallet tightening came amid a year of historical inflation. According to the Bureau of Labor Statistics, consumer prices finished the year 6.5% higher than in 2021 after peaking at 9% over the summer. That has affected all kinds of consumer habits, not just restaurant delivery. About a quarter (24%) of people surveyed by Personal Capital said they were dining out less in general and also spending less in restaurants: The monthly average fell from $95 to about $57. That could reflect fewer visits and a shift to lower-priced options such as fast food. Industry traffic has largely slowed over the past year, while sales have risen gradually but did lose some momentum at the end of 2022.
Restaurant Jobs
As industry sales accelerated in January, so did the hiring. February will slow slightly; watch out for March.
Restaurants and bars led the U.S. in job creation during January with the addition of 98,600 positions, signaling strength for the business in January. Last month’s increase compares with the addition of 31,600 jobs during December. Hiring numbers released last Friday morning by the U.S. Bureau of Labor Statistics also show an upswing in hotel hiring, with 14,800 jobs added. Still, total employment within the leisure and hospitality segment remains about 495,000 jobs short of where that category was in Feb. 2020, a decline of 2.9%, BLS reported. The agency noted that restaurants and bars employed a total of about 12.2 million workers by the end of last month. That compares with a workforce of more than 12.3 million in February 2020, before the pandemic and closures of dine-in services led to widespread layoffs. Restaurants are now less than 200,000 jobs short of a full employment recovery. The numbers show that restaurants outstripped traditional competitors for recruits such as retailing and healthcare in January. The former added 30,000 jobs after basically holding steady in December, while healthcare hired another 58,000 employees. Overall, the economy continues to add jobs. Employers added 517,000 workers in January, and the unemployment rate was 3.4%.
High-End Steak House sales
In January 2023, HIGH-END STEAKHOUSES had a 20.1% comp sales increase and a 16.4% traffic increase.
The spread between the weekly high comparable sales results and the low comparable sales results for the U.S.A. in January was 9.1%. The best week was the 2nd week with a comparable sales result of 23.4%. The low week was the 3rd week at 14.3%. In January 2023, the results were positively impacted by strong comparisons to the prior year, January 2022, due to the dramatic increase in Omicron. Omicron cases peaked on January 14, 2022. Also, the movement of NYE from January 22 to December 2022 negatively affected comp sales in January 2023. The comp sales run rate for the first 2 weeks of January 2023 is 23.1%. The comp sales run rate for the last 2 weeks of January 2023 is 17.4%.
HIGH-END STEAKHOUSES WEEKLY
COMP SALES COMP COVERS
Week ending JANUARY 08 22.7% 19.2%
Week ending JANUARY 15 23.4% 17.9%
Week ending JANUARY 22 14.3% 10.0%
Week ending JANUARY 29 20.5% 18.7%
MONTH OF JANUARY 2023 20.1% 16.4%
