Consumers Failed to Cut Back on Restaurant Dining Over the Holidays

Consumers may have meant to tighten their belts when it came to restaurant spending over the holidays, but the data reveals that the opposite happened, with restaurants apparently having gained a share of total meal occasions during the festive season.

Mastercard’s SpendingPulse released Tuesday (Dec. 26), which examined consumer purchases from Nov. 1 to Dec. 24, revealed that spending in the restaurant sector grew 7.8% relative to last year’s holiday season.

The report showed that restaurants’ sales growth outperformed the grocery industry’s, suggesting that restaurants likely captured a greater share of total food occasions during the holiday season. Grocery spending only increased by 2.1%.

The findings mark a departure from consumers’ stated intentions. The PYMNTS Intelligence study “The Credit Economy: How Consumers Are Approaching Holiday Spending and Travel,” created in collaboration with i2c, drew from a survey of more than 3,300 U.S. consumers. It found that 79% reported they planned to cut back on buying food from restaurants this holiday season.

The intended cutbacks were meant to offset seasonal distress. The report “New Reality Check: The Paycheck-to-Paycheck Report – The Seasonal Financial Distress Deep Dive Edition,” a PYMNTS Intelligence and LendingClub collaboration, drew on insights from more than 4,200 survey respondents. It found that consumers most commonly experience financial pressures in November and December.

Yet restaurants did everything they could to secure consumers’ holiday season spending and preempt the intended cutbacks. Many brands offered holiday-specific menu options to capture consumers’ enthusiasm for the season, from themed items with seasonal flavors to special catering deals for those hosting at home.

Additionally, restaurants made efforts to capture consumers’ gifting spending, both with traditional gift cards and with more innovative approaches. For instance, fast-casual brand Panera Bread announced earlier this month that it made its Unlimited Sip Club beverage subscriptions giftable, enabling consumers to buy plans for one, six or 12 months to give to others.

Some restaurants streamlined their menus to meet digital demand over the holiday season. In an interview with PYMNTS, Randy Ramdass, operational manager of New York restaurant HAAM, noted the eatery tailored its menu items to be efficient and reheatable so that it could perform better on digital ordering channels during the season, when many consumers were spending time at home.

“[We’ve learned to] be efficient on the food items, so that will when it’s reheated, it will be quick and taste good, and all of those attributes of high-quality food will be there,” Ramdass said. “… We’ve embraced [digital]. It’s made a positive impact for us, where from a productivity standpoint … it’s just simplified and streamlined everything.”

One area where restaurants may have had the advantage during the season is in capturing the spending of those who traveled for the holidays. The November installment of the PYMNTS Intelligence Connected Dining series of reports, “Tracking the Impact of Digital Tools on Food Tourism and Travel Preferences,” revealed that travelers eat at restaurants 20% more frequently than those same consumers do during their at-home daily routines.

As the holiday season ends, the restaurant industry can celebrate its success in navigating the challenges posed by consumers’ financial distress. With the ability to adapt to changing consumer preferences and capitalize on seasonal opportunities, restaurants have proven their ability to thrive in this challenging period.