Continued trepidation. In 2024, restaurant traffic slowed while price sensitivity grew. While October showed signs of hope (YOY quick-service restaurant (QSR) traffic was positive for the first time in two years), we expect consumers will be cautious in 2025. Revenue Management Solutions’ (RMS) Q3 survey revealed that 36 percent of respondents said they plan to dine out less, and a higher percentage reported a decline in dining out across all restaurant segments. Moreover, three out of four respondents believe restaurant prices are higher and high prices are the primary reason for cutting back on restaurant spending.
Recurring customers. Promotions and discounts attract customers, but they’re often short-lived. As seen during the 2024 summer of value, customers quickly move on to other restaurant brands in search of the next deal. Sustained loyalty is the goal in this highly competitive, price-driven market. Nearly 80 percent of our survey respondents are more likely to return to the same QSR versus switching brands.
Go digital for increased loyalty and sales. Winning restaurant brands have two things in common in this environment: digital transactions account for a majority of overall sales and they’ve won over the still-buying younger generations. Top brands drive up to 70 percent of all transactions through digital, while just 20% of checks are digital across the industry.
In short, success in 2025 will depend on balancing quality, value, and experience.
This spread can mean a big difference in profitability, as RMS has seen that digital orders tend to be 25-30 percent higher. Digital also attracts Gen Z, the generation most likely to increase their restaurant usage, according to our Q3 Consumer Survey. They expect seamless digital experiences and are most turned off by wait times and order inaccuracies.
Keep an eye on the competition. Thanks to their expanding range of ready-to-eat options, convenience stores and grocery stores are becoming more attractive to young adults and families. Nearly one-third of Gen Z and millennials have increased meal purchases from convenience stores, according to our Q4 survey. Restaurants can appeal to the desire for convenience while offering “something special” that elevates their offerings. Premium menu items have a lower price sensitivity, and Gen Zers are wild about specialty beverages and innovative flavors.
Hope in the hybrid (worker). Some customer segments will continue to dine out. Gen Z and millennials are increasing their visits, and hybrid workers are spending more. Tailored promotions positioning QSRs as the go-to destination for office-day meals can attract the hybrid crowd. Personalization will also be key, especially for Gen Z, who love mix-and-match value meals and chicken, especially tenders and wings.
Balance the value equation. At the recent Restaurant Finance & Development Conference, RMS stressed the importance of the value equation. To attract customers, brands must offer compelling reasons to visit and clear ROI on their spend.
What is value? Our research shows that top spenders value promotions that offer the most quantity for the price, but quantity alone isn’t enough. RMS’s Customer Pain Points Consumer Report found that quality is the #1 driver of restaurant choice, followed by budget-friendliness and location/atmosphere. Gen Z is also keen on a seamless customer journey, citing wait times and order accuracy as their main pet peeves.
In short, success in 2025 will depend on balancing quality, value, and experience.
