Consumers See Restaurants Getting Stingier with Discounts Amid Inflation
As food inflation puts pressure on restaurant margins, consumers have noticed restaurants scaling down their deals and promotions.
By the Numbers
Of more than 1,800 U.S. consumers PYMNTS surveyed in February, 44% said that during the last year, the discounts and benefits granted by restaurants have been less generous. That’s according to supplemental research from the PYMNTS study “Connected Dining: Consumers Like the Taste of Discount Meals.” In contrast, 36% said they have stayed about the same, and 20% said they have been more generous.
Since the time of the survey, restaurants have continued to raise their menu prices, so those percentages may be slightly different today, but it is clear that consumers have observed, throughout this inflationary period, that restaurants have been more conservative with their offers.
The Data in Context
Indeed, casual dining chain Red Robin Gourmet Burgers, which has more than 500 restaurants in the U.S. and Canada, shared on an earnings call its second-quarter FY2023 results Thursday (Aug. 17) that it is scaling back its discounting efforts.
“We are making changes to [our loyalty] program, pivoting away from what we view as an overreliance on discounts, instead rewarding those who are truly most loyal to the brand,” Red Robin CEO G.J. Hart said. “As we continue to make investments in our people and food, we intend to reduce our reliance on discounts going forward.”
Similarly, Brinker International, the parent company of Chili’s Grill & Bar, Maggiano’s Little Italy and two virtual brands, shared on its earnings call Wednesday (Aug. 16) that it is reducing its discount offers to reduce costs.
“We removed some discounting last year, a significant amount,” CEO Kevin Hochman told analysts. “We’re going to continue to remove discounting, probably at a slower pace. … We’re going to replace those emails with more relevant emails, and more of [them]. They are more relevant, [so] over time, you would expect to get more traffic from those, not less. It just wouldn’t cost you as much.”
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