The Consumer Shift to Casual Dining Makes Sense

To me, it's just common sense that many consumers appear to be trending towards more casual dining options and ditching fast food. A trend that has many facets to it, I think. Beyond the ballooning prices at fast food places, fast food was also trending to be something it's not.

A dining experience.

Granted, that's been something fast food has been doing for quite some time now. But now it just makes less sense as a business strategy. Fast food is supposed to be, well...fast. But now when you order it takes more time to get your food.

It used to be that you'd place your order and walk away from the counter with a tray. Now you tend to get an order slip, or in the case of some fast food restaurants, you get a placard to be served at your table. It's also way more common to be directed out of the drive through lanes to a parking spot to wait for something.

Sorry folks, but that's not what fast food was ever supposed to be. 

Of course, they say they are aiming for better quality. If your order is made to order it will be hotter and fresher. But I have to tell you, for me, that's rarely true. I find the quality of the made to order food no better than how it was before. In fact, the faster food was actually better.

Let's face it. The chains did it to save money too. Ideally, if you miscalculate the burger drop on the grill, you might wind up throwing away more food. 

What people are doing now is weighing the differences. If the food costs as much as a sit down restaurant, and at the same time they'll wait about the same time for their food, why bother with fast food? 

My wife and I have marveled at the exorbitant prices of fast food lately. Not that we eat it that often. But there are periods when we tend to eat more of it—such as when we are coming back from camping trips or have more things going on during the summer that leave fewer dinner or lunch options.

We recently went to A&W and bought a double bacon cheeseburger, some hand-tossed chicken fingers and an order of fried cheese curds. That cost us around $32. On another trip, with just two Quarter Pounders and two large orders of fries, that ran about $24. And when we went to Hardees, we dropped about $28 on some onion rings, a chicken sandwich and a mushroom and Swiss burger.

We did not order drinks with any of these meals.

From purely an economic standpoint, we could have gone to Applebee's or Chili's or some other place and spent about the same amount, and probably would have spent about the same amount of time with presumably tastier menu options. 

And that's what consumers are doing. They are considering, "If I have to wait about the same time for my order and even if maybe I drop another $10, it's worth it."

The fact is that fast food was always the cheaper option. In fact, it was usually much cheaper. Quicker and cheaper. Those factors no longer exist. So therefore, consumers are shifting because they want a bigger bang for their buck, and fast food simply isn't offering that anymore.

Imagine the cost to a family of four making a simple, quick trip to McDonald's. That might cost over $100 easily. Why not go to a sit down restaurant instead? 

At the same time, I don't blame the fast food chains for some of the price increases. They are dealing with inflation just like everyone else is. On top of that, there's been a long and strong push to raise wages for employees, and as the old saying goes, money doesn't grow on trees. It has to come from somewhere, and where it is coming from are consumer's pockets.

What will be critical now for fast food chains is to become very creative in their approach. The consumer shift may be something that is long lasting, and if fast food wants their customers back, they are going to really have to dig in hard on what they can do to get them back.

One thing, in the short term, I think they will need to do, is going back to at least being fast food. Before, they were never really in direct competition with casual dining. But now they are. If they want to succeed, they need to separate themselves again and not only offer good food fast, but in an economical way.

Like the way I write or the things I write about? Follow me on my Facebook page or on X to keep up with the latest writings wherever I may write them. Looking for some free cryptocurrency? Check out FreeBitcoin for a fun way to get some.

© 2024 Jim Bauer

It's Not Price Gouging, It's Survival

The Democrats are trying to sell the idea that businesses are price gouging their customers. Of course, we all know that's not true. But it's a nice and easy way to pass on the debilitating effects of inflation and put the blame somewhere other than on their policies which are at the root of what's causing it.

The rising cost of labor, which the Democrats have long been pushing for, are not without their own contribution to the higher costs we are facing everywhere. It's not the only reason for the inflation, of course. But it doesn't help.

Fast food operators, for example, in California are being slaughtered by the $20 minimum wage.

The reality is that price gouging can't occur. That's not to say it never happens or even that it can't happen. It simply has limits. So, the reality is that it isn't happening, and that is evidenced by fast food businesses in particular having to do all sorts of things to ramp up business since customers are not eating at their restaurants as much due to the higher cost to do it.

In other words, you can't just charge whatever you want and expect customers to automatically pay it. If that were the case, the fast-food chains wouldn't be seeing their sales suffer.

As a general rule, the markets dictate what things cost, outside of external factors of course. Inflation, for example. But generally speaking, a business can only charge for its goods and services what the market is willing to bear.

It wasn't that long ago when a family of four was out and about on a weekend and stopping by for a quick bite at McDonald's was a reasonable proposition. Now that quick stop might cost upwards of $100. So, it's much more of a consideration than it was before, and many people are simply saying no.

It's just not worth it.

As a result, instead of gouging customers, fast food chains are revisiting value menu concepts. But those come at a cost. Even though when these value menus first arrived on scene, they were very profitable business drivers, that's not the case now.

The difference is we didn't have inflation and people had more disposable cash. People were more willing to upgrade their orders and buy higher margin menu items on top of their $1 McChicken sandwich, for example, that helped to defray some of the costs of offering cheaper menu items to customers.

Almost all of the fast-food chains are rolling out some type of value offering. McDonald's offers a $5 value meal, Burger King is rolling out a $3 offering and Wendy's has an offering of their own as well. 

It hurts the business, as most franchisees will say. These items are being sold at cost and sometimes at a loss, and so the hope is that customers will do the same as before when considering value items and add higher margin items to their order.

But again, with inflation, they may not be as willing to do it.

The bottom line is that businesses are dealing with the impact of the rising costs of doing business just like everyone else is dealing with the higher cost of living on everything else. There's no gouging going on here. Because again, the market is not willing to bear any cost. Businesses are at the whim of their customers, not the other way around. And in many ways, while it is painful at least in the short term, in order to keep customers walking through their doors, they are willing to lose a little money in the process.

The last thing these restaurants want is for customers to opt for staying home for lunch rather than considering what was before a fairly economical prepared one.

When my wife and I could opt for a quick bite out when we were running some errands and it only cost around $10, it was rarely a second thought. But when that same trip costs $30, you think twice about it. "Is it worth it?" Most people are saying no. Not when I can go home and make a sandwich and maybe even toss a few chips on my plate for under $2.

Businesses are out to make a profit. It's the whole point of being in business of course. And in order to do that, you need customers, and you won't get them at any cost. The villains are not the operators. They are victims just like the rest of us of the impact of higher wage demands and inflation—and they are running out of workarounds that work.

If price gouging was a thing, businesses would not be having to consider loss leaders to keep customers coming in.

Like the way I write or the things I write about? Follow me on my Facebook page or on X to keep up with the latest writings wherever I may write them.

© 2024 Jim Bauer