Inflation’s grip on consumers is tightening
Yelp searches for cheaper grocery stores and restaurants are on the rise. / Photography: Shutterstock
Americans are increasingly noticing higher grocery and restaurant prices and are responding by lowering prices.
That’s according to a new Yelp study that analyzed search and user reviews in Q3 and found that more people were looking for affordable dining and dining options as their anxiety about vis prices rose.
Year-over-year inflation actually eased slightly in the quarter after peaking at 9.5% in June, according to the U.S. Bureau of Labor Statistics, and gasoline prices rose. decrease. But inflation of 8.2% in September was higher than expected, and complaints from Yelp users about prices increased over the period.
Instances of “inflationary language” in reviews were up 4% from the prior quarter and 22% year over year. The biggest boost came from food companies and restaurants: mentions of inflation in reviews of these companies were up 7% and 5% quarter over quarter, respectively.
Food companies include grocery stores, which have increased their prices at a much faster rate than restaurants. In September, for example, food-at-home prices rose 13% year-over-year, while food-out-of-home prices rose 8.5%, according to the BLS.
Even so, customers may overestimate the price increase. A Technomic’s recent survey found that diners believed restaurant prices had risen 22% over the past six months, when the actual increase was only about 8%.
Of course, what customers think only matters insofar as it affects what they do, and they continue to vote with their feet.
On Yelp, users frantically searched for inexpensive grocery options in the third quarter, with searches for affordable groceries up 67% from the previous quarter, per Yelp.
Searches for low-cost dining options like fast food and fast casual, meanwhile, increased 10% quarter-over-quarter.
This follows a recent report from Placer.ai which found customers flocked to McDonald’s during the summer. Foot traffic to the burger giant was up 4.7% year-over-year in July and 3.1% in August.
Across all restaurants, traffic fell 7.6% in July and 13.7% in August, according to Placer.ai.
The news likely comes as no surprise to restaurants, which are scrambling to dial in prices that will increase traffic without hurting margins. There have been an increase in value offersfor example, although they were not as extreme as in past recessions.
Members help make our journalism possible. Become a Restaurant Business member today and unlock exclusive benefits, including unlimited access to all our content. Register here.