Restaurants are first to go in holiday spending cuts

For consumers looking to cut spending this holiday season as prices continue to rise, dining out is the indulgence they are most willing to cut back on.

In numbers

Research from PYMNTS’ recent study “New Reality Check: The Paycheck-To-Paycheck Report – The Holiday Shopping Edition,” created in conjunction with LendingClub, is based on a survey of more than 3,400 U.S. consumers about their holiday season expenses. This study reveals that 29% of consumers will spend less on restaurant purchases this season than last year.

Get the study: New Reality Check: The Paycheck-to-Paycheck Report – The Holiday Shopping Edition

This share is higher than that of any other type of purchase. Just under 27% said they would cut spending on entertainment and leisure, and 26% said the same about retail purchases. Meanwhile, just 22% said they would cut back on travel spending and only 17% expect to cut back on grocery shopping.

How restaurants are responding

Seeing consumers’ sensitivity to price, brands have turned to their rewards programs to maintain their commitment to these concerns.

For example, during a call on McDonald’s third quarter 2022 financial results last month, Chief Financial Officer Ian Borden noted that since the launch of the brand loyalty program, the frequency of digital customers has increased each trimester.

“Every reward a customer redeems and every preference customers share on our app helps build our personal touch,” added CEO Chris Kempczinski. “We use this deep understanding of our customers to create relevant content and offers through the channels they prefer. By personalizing messages, our customers feel more connected to McDonald’s, which ultimately drives engagement and increases frequency.

Similarly, fast-food giant (QSR) Starbucks boosted sales with its own awards and with cross-brand benefits.

“Starbucks Rewards continues to deliver value to our customers, enable customer connection and drive our business,” interim CEO Howard Schultz told analysts earlier this month. “And despite its global reach and growth, we have significant untapped opportunities to grow our rewards program in a very unique way. We recently launched our Reward Together program, enabling a select group of leading brands to partner with us by linking their loyalty program to Starbucks Rewards.

How consumers pay online with stored credentials
Convenience drives some consumers to store their payment credentials with merchants, while security concerns give other customers pause. For “How We Pay Digitally: Stored Credentials Edition,” a collaboration with Amazon Web Services, PYMNTS surveyed 2,102 US consumers to analyze the consumer dilemma and reveal how merchants can overcome holdouts.