Restaurants Boost Rewards as Inflation Catches up to Perception

With restaurant inflation now outpacing grocery, demand for value is greater than ever.

For much of this inflationary period, consumers have understood restaurant inflation to be greater than grocery, and recently, the reality finally caught up to that perception. The latest data from the U.S. Bureau of Labor Statistics (BLS) showed restaurant price increases finally exceeding grocery for the first time in the past couple of years. Food away from home prices rose 8.8% while food at home rose 8.4%.

Yet, consumers have continually viewed restaurant price increases as far greater than they have been. For instance, research from PYMNTS’ “The 2022 Restaurant Digital Divide: Restaurant Customers React to Rising Costs, Declining Service,” showed consumers estimating restaurant price increases at 24%, more than three times the BLS-measured rate at the time of the survey.

Meanwhile, research around the same period from PYMNTS’ “Consumer Inflation Sentiment: Perception Is Reality“ had consumers estimating that grocery price increases were slightly lower, about 22%, when at the time, they were far greater than restaurant price increases, in the low double digits.

Throughout this period, consumers have been making changes to their restaurant dining to curb spending in response to those perceived increases. As the reality grows to meet the previous perception, it seems likely that these shifts will only intensify.

Consumers are seeking out discounts more than ever. Research from PYMNTS’ “Connected Dining: Consumers Like the Taste of Discount Meals” found that the share of diners who had paid a reduced price on their most recent restaurant purchase skyrocketed from 14% to 26% from March 2022 to February 2023.

As such, restaurants are announcing new deals, discounts, coupons and rewards offerings. For instance, in the last month, fast-casual chains Noodles and Company and Sweetgreen both announced major changes to their rewards programs. The former is offering free daily deals, and the latter is bringing back its paid subscription. Plus, El Pollo Loco relaunched its loyalty app, shifting from a flat points-per-dollar model to a tiered structure where those who spend more get exclusive access to certain perks and promotions.

“One thing that we found is that most of our members said, ‘We would come more often if we felt like we were getting something every time we come,’ and it doesn’t necessarily mean that it has to be the same thing every single time,” Stacey Pool, chief marketing officer at Noodles and Company, told PYMNTS in an April interview. “This was all really driven by what our rewards members were telling us would engage them and would get them to come back more often.”

Plus, discounts can be key not only to maintaining diner frequency but also to attracting new customers. Research from PYMNTS’ study “The 2022 Restaurant Digital Divide: Turning First-Time Diners Into Loyal Customers,” revealed that one in four first-time diners cite deals and discounts as key factors influencing their decision to try out a new restaurant.