Restaurant Menu Pricing & Inflation: 35% Of Diners Say Price Is The Second Most Important Factor

When the check arrives at the end of a nice meal, there's nothing like an extra dollop of sticker shock to make diners avoid discussing who is paying. As inflation continues to rise, restaurants are feeling the pressure to adjust menu prices accordingly. However, if they raise prices too much, cost-conscious customers may get sticker-fright. But if establishments don't charge enough to cover their own rising expenses, their profitability can greatly decrease. It's a delicate balancing act that has restaurateurs in a predicament- all while hoping their patrons will still want to dine out.

Toast conducted a blind survey of 850 respondents on how restaurant-goers are feeling about menu price increases and inflation. This article delves into the data points behind what diners are thinking. 

Join us as we explore how these insights impact restaurateurs in 2024.

Quick insights:

• 79% of respondents said that going grocery shopping and cooking at home is where they get the most value for their time and spend.

• 35% of respondents said that price is the second most important factor when choosing a restaurant.

• 43% of respondents do not consider additional costs such as transportation, child care or gas when dining out.

• 57% of respondents claim to fully understand why restaurants are raising their prices.

• 41% of respondents think restaurants have increased their prices 10-20% as a result of COVID-19 and inflation. 

• 55% of respondents are dining out less frequently. 

• 70% of respondents prefer restaurants to communicate with them when they’re raising their prices (on social media or their website).

• 49% of respondents believe that restaurants raising their prices as a result of economic factors are somewhat justified. 

Restaurant Menu Pricing & Inflation Insights

Let’s dive into these insights a little deeper and provide some context.

35% of respondents say price is the second most important factor when choosing a restaurant.

What truly matters to restaurant guests? 35% of diners told us price is the second most important factor when choosing a restaurant. Furthermore, 20% answered that it’s the most important factor, 32% sometimes consider it, 8% rarely think about it, and 5% don’t consider it at all. According to a 2022 study, 68% of diners rank food quality as the most important factor when deciding where to dine. This comes as no surprise, but it’s a good reminder for industry professionals that serving up the highest quality of food will likely pay off in the long run. When it comes to price, around 64% of respondents who said price was the most important were female. The ladies aren’t playing with their money!

There have also been recent discussions on the “true cost of dining out”. This can include the Uber ride there and back, a babysitter, and more. To our surprise, 43% of respondents do not consider additional costs – such as transportation, child care, or gas – when dining out. Of course, these add-ons don’t apply to everyone, as some people can walk to restaurants and others don’t need child care. However, it turns out it’s the dads that are more likely to be looking for a babysitter. Of the respondents who answered that they take childcare into account when dining out, 52% were male. 

When looking into the data further, we found that 36% of respondents consider the price of gas when dining out. The average gas price in the U.S. as of April 25, 2024, is $3.658 per gallon, according to AAA. Gas prices have fluctuated heavily over the last few years, putting a strain on the wallets of Americans commuting to work or looking to treat themselves to a night out.  

49% of respondents believe that restaurants raising their prices as a result of economic factors are somewhat justified.

Although guests are concerned about prices, 49% agreed that restaurants raising their prices is somewhat justified. Approximately 41% answered that these price increases are completely justified, and only 10% said they’re not justified at all. Restaurant goers seem to understand what’s going on economically and aren’t surprised that restaurants have been increasing their prices. However, if you’re looking to cut costs in your restaurant before resorting to menu price increases, you do have other alternatives. Check out our Cost Control Guide to start exploring your options.

Furthermore, 57% of respondents claim to understand why restaurants are raising their prices. In fact, only 9% answered that they do not understand why restaurants are raising their prices at all. What do they consider the cause to be?  About 41% of respondents think restaurants have increased their prices 10-20% as a result of COVID-19 and inflation. According to The Bureau of Labor Statistics Consumer Price Index, restaurant prices are actually only up by 4.20%. Only 10% of respondents chose this correct range (0-10%). This shows that restaurant guests think prices have increased more than they actually have. 

55% of respondents are dining out less frequently.

Now that we’ve established that consumers understand why prices are increasing – though they feel they’re increasing more than they actually are – let’s discuss the effect. Unfortunately, 55% of respondents are dining out less frequently than they used to. Of that group, 59% of them were female. 

However, price isn’t the only contributor to this decrease, age might also be. Gen Z isn’t that into dining out. According to a recent survey from market research company NPD Group, people between the ages of 18 and 24 ordered from (or at) restaurants 218 times on average between February 2021 and February 2022. When Gen Xers were that age, in 2002, they frequented restaurants 284 times apiece in a year.

Don’t be discouraged here, there are ways to combat this problem, starting with communication. Approximately 70% of respondents prefer restaurants to communicate with them when they’re raising their prices (whether that be on social media or their website). Communication is key here. Tell your customers when you’re raising your prices and explain why. Being transparent goes a long way in 2024. A recent survey by Toast shows 32% of diners check restaurant websites before visiting, and 65% of diners go directly to a restaurant’s website to book a reservation. Therefore, updating your website is likely one of the most effective ways to keep your guests in the loop. 

We’ve seen this concept before as it relates to tipping. By clearly communicating where the tips are going, why tipping is allowed, and whether or not it's encouraged, restaurants can help customers make informed decisions about how they want to show their appreciation for excellent service. These types of communication can be made on social media and on your website, in your restaurant, and/or printed on the bottom of your menu. The same goes for price increases. Communication is key! 

Similarly, we know price isn’t the #1 factor when consumers are choosing a restaurant – the quality of food is top dog. If you work towards a combination of clear communication and food consistency, you’re bound to succeed. Check out our recipe card templates to help increase consistency in your kitchen. These templates can also help enhance your back-of-house training and stabilize your profits by cutting down on waste and incorrect portioning. 

79% of respondents said that going grocery shopping and cooking at home is where they get the most value for their time and spend.

It’s true. About 79% of respondents from this survey believe they get the most value for their time and spend when they grocery shop and cook at home. Only 10% of respondents said dining out is where they get the most value, and 11% answered take-out. And yet, people are still dining out. To better reach these prospective guests, focus on how to best market to the people who are dining out. This is where we can help.

Word-of-mouth can go a long way, but there’s a massive group of people who will never know about your restaurant without digital marketing efforts. Every time you post on your restaurant’s social media, send an email to a guest, or mail out your takeout menu, you’re marketing your restaurant and reaching new guests to turn into regulars. Check out the following resources to help market your restaurant and make it stand out against the competition in 2024:

• How to Do Restaurant Marketing

• Online Restaurant Marketing Ideas: From Beginner to Expert

• The Guide to Restaurant Social Media Marketing [+ 14 Examples]

• How To Use TikTok To Promote Your Restaurant [+ 9 Examples]

• How to Turn Your Menu Into a Marketing Tool

• The 12 Essential Elements of Marketing for Restaurants

• How To Create a Restaurant Marketing Plan For Any Size or Budget

Toast can help

The service industry is notorious for being tough. Running a restaurant requires a lot of hard work and when the economy’s not on your side things can get even more difficult. However, Toast is here to help. Making your day-to-day operations easier and using reliable, modern restaurant technology creates one less thing for managers to worry about. 106,000* restaurants like yours trust Toast with their technology. From POS to payroll, we take care of it all – so you can focus on what you do best. Schedule a demo today to get started.

Methodology

Toast conducted a blind survey on this topic of 850 U.S. adults ages 18 and older on April 23, 2024. Respondents were not made aware that Toast was fielding the study. Using a standard margin of error calculation, at a confidence interval of 95%, the margin of error on average is +/- 3 - 5%.