Jefferies said restaurant traffic moved lower in March, with the drop concentrated among middle-income consumers. The investment bank recorded a 0.5% decline in restaurant frequency for the month, reversing a 0.5% increase in February and trailing a 0.4% gain in the same month a year earlier.
The pullback was centered on households reporting annual incomes between $50,000 and $100,000, who cut restaurant visits by 1.0% in March. Jefferies noted that lower- and higher-income cohorts were essentially flat over the month, indicating the change in demand was narrowly focused.
Delivery behavior also cooled. Delivery frequency rose 0.2% in March, but that uptick was smaller than the prior month and far below the 4.8% growth recorded a year earlier. Jefferies identified the $50,000-to-$100,000 income bracket as the primary contributor to the weakness in delivery trends as well.
Measures of consumer sentiment moved down across the board in March. The firm highlighted the steepest deterioration in 12-month forward expectations for personal finances. Across nearly all surveyed indices, the middle-income cohort registered the largest month-over-month declines.
In explaining the softness, Jefferies pointed to a mix of macro and geopolitical factors. The bank cited corporate layoffs, a partial government shutdown, the conflict in the Middle East, and rising gasoline prices as contributors to weaker sentiment, and said these conditions could continue to weigh on consumer attitudes in the near term.
Jefferies noted that the patterns it observed were consistent with third-party industry data. Specifically, Black Box same-store sales for March showed industry same-store sales down 0.8 percentage points month-over-month, a result that aligns with the broader decline in visits and spending in the sector.
Summary
Restaurant visits fell 0.5% in March, driven chiefly by a 1.0% reduction in visits from households earning $50,000 to $100,000. Delivery growth slowed to 0.2% and consumer sentiment indices weakened, with the middle-income group showing the largest declines. Jefferies linked the softness to several near-term headwinds, and noted consistency with Black Box same-store sales data.
Key points
- Restaurant frequency declined 0.5% in March, after a 0.5% rise in February and a 0.4% gain a year earlier.
- Middle-income households ($50,000 to $100,000) reduced restaurant visits by 1.0%; lower- and higher-income cohorts were roughly flat.
- Delivery frequency rose 0.2% in March, down from the prior month and well under last year’s 4.8% growth; the middle-income bracket was the primary driver of this slowdown.
Risks and uncertainties
- Ongoing corporate layoffs could continue to depress discretionary spending in the restaurant and foodservice sector.
- Escalations in geopolitical conflict and the impacts of a partial government shutdown may further weaken consumer sentiment and demand.
- Rising gasoline prices represent an additional headwind that could reduce out-of-home dining and delivery frequency among sensitive income cohorts.