More People Are Bringing Lunch to Work. That’s a Bad Economic Indicator.

The trend of more people bringing lunch to work is a subtle yet significant indicator of broader economic conditions and consumer sentiment. As the restaurant industry continues to grow, with sales forecast to top $1 trillion for the first time in history, the shift in consumer behavior towards more frugal dining habits suggests a cautious approach to spending. This trend is not just about convenience; it reflects a deeper economic reality that could have long-term implications for the industry and the economy as a whole.

The restaurant industry has been a bellwether for economic health, and the current trend of more people bringing lunch to work is a clear sign that consumers are becoming more value-conscious. Nearly half of consumers are taking a wait-and-see stance when it comes to spending, and operators who offer a solid value proposition for dining out can nudge customers out of their holding pattern. This is evident in the data showing that 37% of dine-in guests said that less expensive options and increased promotions and discounts would encourage them to go to restaurants more frequently. Additionally, 15% of takeout guests would be motivated to order more frequently if food quality was better. This suggests that consumers are looking for ways to save money and are more likely to opt for cheaper alternatives, such as bringing lunch from home.

The trend also reflects the impact of higher labor and food costs on the restaurant industry. 98% of operators say higher labor costs are an issue for their restaurant, and 97% cite higher food costs. This has led to a situation where 38% of restaurants were not profitable last year. As a result, restaurants may be increasing their prices, which could be driving consumers to bring their own lunch to work as a cost-saving measure.

The overall economic conditions also play a role in this trend. A healthy and expanding labor market is a key driver of restaurant sales, as it gives households the financial wherewithal to boost spending. However, the second half of 2024 saw moderating growth in both employment and wages, which are two key catalysts for household spending. This could be leading consumers to be more cautious with their spending and opt for cheaper alternatives, such as bringing lunch from home.

The potential long-term implications for the restaurant industry if this trend continues are significant. Restaurants will need to adapt to this shift in consumer behavior to remain competitive and profitable. Here are some key implications and adaptations:

1. Increased Focus on Value and Affordability: Consumers are increasingly value-conscious, with nearly half taking a wait-and-see stance on spending. This trend is likely to continue, as consumers seek to balance their desire to dine out with financial prudence. Restaurants should explore tools like personalization engines, increasingly diversified offerings, and channel-specific offers to create more value for customers. For example, 37% of dine-in guests said that less expensive options and increased promotions and discounts would encourage them to go to restaurants more frequently. This suggests that offering promotions and discounts can be an effective strategy to attract more customers.

2. Emphasis on Digital and Delivery Experiences: The rise of takeout and delivery has been a significant trend, with 40% of customers preferring to order directly from restaurant websites. This trend is likely to continue, as consumers value convenience and the ability to order from the comfort of their homes. Restaurants should continue to invest in improved digital and delivery experiences. This includes making their direct order channels the same cost, or less expensive, than third-party options. For instance, 55% of patrons still prefer to use the phone to address service concerns, indicating that while digital is important, traditional customer service channels remain relevant.

3. Increased Automation and Technology Integration: Automation is becoming more prevalent, with 47% of consumers comfortable with ordering from restaurants that use drones or driverless vehicles, and 62% willing to order from a cashier-less restaurant. This trend is likely to continue, as technology advances and consumers become more accustomed to automated services. Restaurants should consider integrating more automated capabilities, such as contactless delivery and voice-automated drive-thru ordering. This can help reduce labor costs and improve efficiency, which is crucial given that 98% of operators cite higher labor costs as an issue.

4. Adapting to Economic Uncertainty: Economic uncertainty, including inflation and higher interest rates, can impact consumer spending. For example, household savings rates have fallen off from their pandemic-era peaks, and total household debt in the U.S. reached a record high $17.5 trillion in the fourth quarter of 2023. Restaurants should be prepared to offer flexible pricing and promotions to attract price-sensitive customers. They should also consider diversifying their revenue streams, such as by offering meal kits or catering services, to mitigate the impact of economic fluctuations.

5. Focus on Quality and Experience: Despite the focus on value, consumers still crave human hospitality in their culinary experiences. 9 in 10 adults say they enjoy going to restaurants for the flavor and taste sensations they can’t easily replicate at home. Restaurants should continue to prioritize the quality of their food and the overall dining experience. This includes training staff to provide excellent customer service and creating a welcoming atmosphere that encourages repeat visits.

In summary, the restaurant industry will need to adapt to the shifting consumer behavior by focusing on value, convenience, and technology integration. By doing so, restaurants can continue to thrive in an increasingly competitive and value-conscious market. The trend of more people bringing lunch to work is a clear indicator of broader economic conditions and consumer sentiment, and it serves as a reminder that the restaurant industry must remain agile and responsive to changing market dynamics.