Restaurants may be benefitting from consumers’ willingness to use buy now, pay later (BNPL), but the popularity of this payment method belies a larger challenge for the industry.
According to PYMNTS Intelligence from the new report “Tracking the Digital Payments Takeover: What BNPL Needs to Win Wider Adoption,” created in collaboration with Amazon Web Services, 47% of consumers in the United States reported having used BNPL to buy restaurant food in the previous three months. Additionally, 59% said the same of credit card installment plans.
On the one hand, this is good news for restaurants, as it means budget-strapped consumers continue to dine out. Intelligence from the latest edition of PYMNTS’ “New Reality Check: The Paycheck-to-Paycheck Report,” created in collaboration with LendingClub, “The Nonessential Spending Deep Dive Edition,” revealed that 83% of those who live paycheck to paycheck with issues paying bills reported having spent money at a bar or restaurant in the previous 30 days.
Yet the popularity of these payment methods, stemming from ongoing menu price inflation, is resulting in consumers dining out less frequently. Data from PYMNTS’ “Connected Dining” series found that 70% to 80% of consumers (depending on generation) reported that they have been eating at home more often in response to rising meal prices.
The U.S. Bureau of Labor Statistics (BLS) Consumer Price Index (CPI) showed that year-over-year restaurant inflation amounted to 7.1% in July, and menu prices have grown every month this year.
Restaurant brands are seeing declining traffic overall as well as consumers shifting to lower-priced channels, such as trading delivery for pickup. While the rise of BNPL in restaurants may enable eateries to hold onto the loyalty of consumers who might otherwise not be able to afford to dine out, it is nonetheless indicative of an issue that negatively impacts the entire industry.
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