Household Income's Impact on Casual Dining

Corporations spend millions of dollars on marketing to drive customer traffic. New campaigns, specials, discounts and food combinations all designed to keep customers coming through the door. But, how often do they reach out to customers to determine what their household income situation currently looks like, and has looked like over the past few years? With the state of casual dining currently what it is, struggling under the mounting pressure of QSR, we observed the household income fluctuation data over the past 2 years for a random sampling of nationwide consumers and couldn’t help but see a very clear picture sitting in front of us.

Over a period of one week in July 2016, SeeLevel received feedback from more than 2,300 nationally sampled respondents. Our focus was not based simply on direct responses to questions as much as it was two or three questions cross-referenced with one another. When looking at question versus question, this is where the most subconsciously honest answers from your customer base are truly revealed.

The Cheesecake Factory is, and has been, performing very well as a brand. Thus, it makes complete sense that The Cheesecake Factory’s customers are doing really well. As seen in the graph below, they have the highest percentage of customers in the entire survey with increasing household income. They have the second lowest “stayed the same” percentage, which would technically be considered “stagnation”. And, the brand rounds this question out with the fourth lowest household income decrease. In short, they have the highest increase and the lowest combination of income stagnation and decrease. The health index for The Cheesecake Factory’s customer is quite high.

 

HOUSEHOLD INCOME FLUCTUATION OVER THE LAST 2 YEARS

Contrast this with the customer numbers for Carrabba’s Italian Grill, seeing almost 60% combined household income stagnation and decrease over the last 2 years. This is in direct correlation with the 4.8% sales slump the brand experienced for Q2 2016.

Looking at The Olive Garden’s numbers, as their brand has turned around and sales are on the rise, their customers are also doing well. However, what does stand out for this Darden brand is that it’s the only represented brand that actually reports a decrease in customer household income that is higher than its stagnation number. Right now, their increase reporting is quite good, but as should be pointed out, a brand like Maggiano’s Little Italy shows a decrease number of more than 13% lower than its stagnation, whereas The Olive Garden’s is more than a percentage point higher. This should really be monitored moving forward as this could be a future indicator of a much larger problem to come.

 

EXCELLENT & VERY GOOD COMBO RATINGS

When it comes to “Excellent or Very good” Portion Size and Customer Service ratings, however, the story slightly changes. And, while the graph above does show Maggiano’s Little Italy leading the pack when it comes to the Portion Size rating, it should be noted that the best performer in this graph is actually Texas Roadhouse, with almost even numbers for the rating of both categories by its customers.

However, it’s difficult to look away from The Cheesecake Factory in the second spot and near the top once again. 

It's clear that observing consumers' household income provides us with good indicators as to how casual dining organizations may currently be performing. Combining that data with consumer feedback around relevant customer touchpoints can also provide to us good future indicators of performance and potential areas for improvement.