The cost of living continues to drive significant consumer behaviour change as restaurants and brands will be forced to adapt if they want to protect their customer-base, according to a new report from advertising platform Cardlytics.
The State of Dining Spend report, based on the spending habits of over 20 million UK bank accounts, found that rising costs and inflationary pressures are driving customers away from certain restaurants and chains – including prominent ‘City’ lunch spots, upscale dining venues, and takeaway pizza chains – towards more affordable alternatives – such as ‘on-the-go’ bakeries, burger chains, and chicken shops.
Cardlytics’ report examines three specific dining categories, which together demonstrate a clear trend of increasingly cost-conscious customers changing their spending habits in response to a difficult macroeconomic environment, as well as changes in the make-up of key sectors. The report includes analysis on these key contributing factors, alongside key recommendations for dining brands to mitigate the impact – and start to reverse – these consumer behaviour changes.
Pizza shops lose ground to fast-food rivals
The quick service restaurant (QSR) sector, which provides affordable and accessible nutrition to time-poor consumers, has seen a significant rise of 13% in customer spending across from 2022 to 2024, but this seems to have come at the expense of takeaway pizza restaurants, which comparatively have struggled to maintain their market share.
Interestingly, this is not a reflection of price rises. Pizza restaurants’ costs have risen, with an 11% rise in average transaction for their customers. However, this is a relatively stable rise when compared to their competitors, with customers spending an average of 21% and 18% more during their visits to chicken shops and fast-food restaurants, respectively.
As the UK welcomes an increasingly diverse range of QSR restaurants, and economic pressures remain high, consumers are continuing to rely on fast-food, but are seemingly choosing to move away from one of the traditional staples of pizza and towards alternative options at a similar price point.
Burger chains benefit as diners tighten purse strings
Dining out is often understood as one of the first areas of discretionary spend that consumers look to reduce when finances are stretched, and this is a trend that has been confirmed in the report, with a 13% drop in the number of visits made to casual dining restaurants over the last year. This may be driven by a rise in the costs associated with visiting restaurants, as when customers do visit, they are spending an extra 7% more than they were last year.
This is even more pronounced for upscale dining restaurants, who have faced a further 11% drop in visits in relation to general trips to visits – just another sign that increasing cost pressures are forcing consumers to think twice before indulging.
Interestingly, it seems burger chains are the beneficiary of this changing consumer behaviour, seeing a 17% rise in transaction volume over the last year. And as consumers are also spending 6% more per visit, the sector has experienced a 12% rise in overall customer spend. This is perhaps an example of certain restaurants, such as Honest Burger, Patty & Bun, and Byron, successfully capturing the ideal middle ground for customers between affordability and an upscale dining environment.
Coffee-loving commuters look for alternatives
As the post-covid, hybrid-working era continues to take shape, changing consumption patterns are starting to take shape, with lunch spots and coffee shops the most impacted.
‘City’ lunch spots, historically the ‘go-to’ option for many commuting office-workers have been forced to react to inflationary pressures by increasing costs, with the average customer spending 5% more per visit. As a result, cost-conscious customers are looking elsewhere for cheaper alternatives, which has led to a reduction in the number of visits by 9%, driving overall spend down by 5%. High-end coffee shops have experienced a similar trend, as the group saw a 14% drop in visits – a higher figure than the 9% drop experienced by chain coffee shops.
However, the on-the-go bakery sector has not felt the same impact, instead seeing a rise of 4% in total customer spending, alongside a 1% increase in the number of transactions made across the same period. This is perhaps reflective of the sector’s cost-effectiveness, compared to the more expensive lunch spots many customers used to frequent more regularly in better economic conditions.
Chris Harris, Partnerships Director at Cardlytics, said:
“When economic conditions are tough, consumers change their spending behaviours in order to get by, and this is especially true within dining. Food and restaurants of all types play a role in everyone’s lives, but tighter purse strings mean people are thinking twice about where they visit, which has led to some interesting changes in spending habits.
“The growth in visits to burger chains and on-the-go bakeries is in contrast to the impact felt by pizza restaurants, coffee shops, and traditional ‘city’ lunch spots. But those on both side of this will need to remain proactive and aware of these changes, whether their objective is to maintain their growth or reverse such trends.
“For all these brands – who regularly interact with their customers – data will be key. If the customer behaviours are changing, what do those changes look like? Looking at an individual’s data, and using that to create tailored offers and rewards, not only shows that your brand cares, but also helps to put the right offer in front of them at the right time. Those brands that can grow and retain their customer base now, when times are tough, will be most likely to succeed in future.”
