Restaurant sales are up despite dining out going down
Many full service restaurants report growing sales. However, more sales don’t necessarily translate to more customers. The dining out scenario is a constantly changing moving target and it’s hard to measure merely at the cash register.
Restaurants have been raising menu prices over the past few years, so they get a sales boost because each bill is higher, even if fewer customers are buying their food or people are coming in less often. In fact, rising food prices are driving diners to quick service restaurants which are growing in popularity.
For most people, the crowning raison d'être to dine out is looking for a certain type of food or special cuisine. It could be a craving for seafood or a sizzling steak or even an ‘all-you-can-eat buffet. Following closely, is the reason to celebrate a special occasion or to reunite with friends. For others it is simply a break from cooking a home meal. There are of course, those who eat at home to secure the health of both wallet and body and don’t belong to this discourse.
Nearly three out of four diners indicate a preference of the traditional dining out experience, where the waiter/ess takes the diners’ orders, serves them their food and presents the check -done in that sequence, and whilst the diners remain seated at their tables. What they wanted when dining-out was: ambiance, convenience, entertainment, efficiency and value for money.
Entering the dining-out landscape was a new kind of restaurant, the “fast food” franchise, which though less favoured, due to its fast-casual, over-the-counter interactions, has found upward traction, where the availability of cheaper fast food options enabled many more people to dine-out. Additionally, the drive-through lane is gaining traffic, while visits to physical restaurants are crawling at the crossroads.
Nothing however, beats the delicate balance of back and front of the house staff coexisting theatrically with the diners, as experienced in a well - choreographed full-service restaurant.
A three-year pandemic which saw life intermingled with zoom calls and take-out meals amongst other adaptations has changed the way people work and think. This includes eating out in restaurants, where the definition of eating out from restaurants has now taken on an extended meaning.
Covid -19 restrictions drove away traffic but it also prompted restaurateurs to be innovative. The ones that survived did so by overhauling their way of doing business; by offering extensive takeout menus, developing online ordering apps, providing outdoor dining that minimised contact – adaptations many restaurants will continue to provide even in this post-pandemic era.
People are indeed dining out again. Overall however, consumers are dining out less than before the pandemic. And what is apparent is that a great majority of them are cutting back on spending – eating out less frequently and or spending less per visit at restaurants.
Food prices have increased exponentially in all categories, from farmhouse to dining table and when the bottom line hovers just above the red and profit margins are low, restaurants have little choice but to pass the increases on to their customers.
But is that the best strategy? Will raising prices resolve the profitability crisis?
Not unless, it is accompanied by upping one’s customer service and the dining experience game.
Shafeek Wahab – Editor, Hospitality Sri Lanka, Consultant, Trainer, Ex-Hotelier
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