Insight Flash: Consumer Edge credit and debit card data indicates that Limited Service restaurants are outperforming Full Service on traffic and ticket amid a deteriorating consumer environment.

CE data reveals that every restaurant sub-industry saw October traffic declines and all but Quick Service – Pizza accelerated into November. The current consumer environment could be a catalyst for Limited Service to steal traffic share from Full Service, as consumers continue to trade down in search of value. With limited opportunities to continue taking price due to moderating inflation, restaurant operators need to boost traffic to return to growth. 

*CE Credit/Debit card data, USA1+USA2 panel; Data does not include third-party delivery spend

2023 Restaurant Ticket Growth Year Over Year

Select Full Service operators such as Applebee’s, Texas Roadhouse and Chili’s Grill & Bar could be better positioned than the overall industry as their value menu could serve as a hedge to a weakening consumer environment. Limited Service operators could all benefit due to their lower price points as consumers look for more out of their dollar.

CE data reflects pricing strength in upscale casual dining and casual dining and weakness in fine dining and family dining. This divergence could be an indication that consumer behavior is changing most at the high end and low end. Unsurprisingly, Limited Service has held up well across all segments. 

*CE Credit/Debit card data, USA1+USA2 panel; Data does not include third-party delivery spend

Restaurant Spending Behavior by Consumer Income Levels

Using the CE cohort panel, we can gauge behaviors for consumers at different income levels over time. Notably, Full Service saw dramatic transaction declines in all income levels with middle income consumers at $80k-$100k showing the most resiliency. Notably, high income earners echoed Full Service trends and also were the laggard in Limited Service. 

*CE Credit/Debit card data, cohort panel; Data does not include third-party delivery spend

Limited Service Restaurants Winning on Affordability

Limited Service operators outperforming on traffic who aren’t rapidly expanding unit count are Chipotle, In & Out Burger, Chick-Fil-A and Potbelly. Chipotle recently cited strength in all consumer income levels, attributing it to their affordability and infrequent price hikes. Domino’s believes that “a weakening consumer will result in a switch into the value pizza category”. Potbelly stated “We’re taking traffic share”,  “we’re in a good spot as it relates to our demographic” and “our consumer seems to be hanging in there really well”. 

Full Service Restaurants See Softened Spending

Full Service operators outperforming on traffic who aren’t rapidly expanding unit count are Darden’s Olive Garden, Dine’s Applebee’s, Brinker’s Chili’s Grill & Bar and Texas Roadhouse. Dine Brands recently stated that their guests are “limiting their discretionary spending and have become more selective” and saw “guests trade down into the lower tiers of our value menu”. While Brinker boasted their “unbeatable $10.99 platform, which delivers a complete value that gives us a competitive edge in the current consumer environment”. Darden mentioned “softness versus last year with household incomes above $125,000 which primarily affects our fine dining brands”. Texas Roadhouse commented that consumers “are both trading down to dine with them for value and also trading up for their hospitality”. 

Consumer Edge is the leading provider of alternative data for consumer spending behavior, and the only provider of global revenue signals. If you’d like to benefit from using CE Transact US, CE Vision, or other products for restaurant insights, retail data, and other industry data year-round to track trends and market hits like these, reach out to insights@consumeredge.com.

About the Authors

Katherine Bjorkman is the Director of Insights for the CEIC. Explore more of her insights here and follow her on LinkedIn.

Greg Potter is a Financial Analyst for the CEIC. Explore more of his insights here and follow him on LinkedIn.