Dining Options in a Down Economy

In an economic slump, as consumers begin to cut back on non-essentials, no industry is exempt from the impact of decreased spending. Still, restaurants tend to fare better than many other industries. The luxury of dining out is usually one of the last to be cut from the consumer's budget.

While this helps to make restaurants a more stable investment during hard times, not all types of dining establishment weather the storm the same. When consumers begin to tighten their belt, casual dining establishment seem to take the brunt of the impact, while fast-food and fast-casual establishment suffer less. There are a number of factors that may contribute to making fast-food and fast-casual franchises better able to survive in a down economy.

Affordability

One of the most likely factors that allow fast-food and fast-casual restaurants to thrive even when other restaurants are collapsing under the weight of a down economy is the fact that they are simply more affordable. As mentioned, consumers are hesitant to cut out dining out from their budget altogether. Budgeting dining out is easier for many to justify because food is an essential, and food preparation at home is viewed as a significant burden by many.

It is interesting to note that in the recent economic slump fast-casual restaurants have fared better than even fast-food establishments. The reason for this is likely due to the fact that fast-casual restaurants offer much of the atmosphere and quality of casual-dining establishments at costs more consistent with fast-food franchises. This makes them more appealing to a broader range of consumers and provides a practical alternative for casual business meetings and other semi-formal events that are traditionally held over lunch. Fast-casual dining offers affordability while sacrificing less quality.

Tipping

That affordable quality extends to more than just menu prices, which may contribute to why some fast-casual franchises are seeing and upswing in business while others fall behind. Because fast-casual establishments do not offer direct table service, there is no need to tip. In a faltering economy, customers are more inclined to forgo the convenience of being waited on at their table if they are able to get the same (or near same) quality product for less at a fast-casual franchise.

The elimination of the tip contributes to the success of both fast-food and fast-casual franchises in a weak economy. While 15-20% may not be much of a burden when times are good, when times are lean that 15-20% becomes more of a burden. Many begin to view it as money not equivocal to the service rendered and turn to fast-food and fast-casual establishments instead.

The Battle for the Dollar

In the contest for the consumer's dollar, the fast-casual franchises are the decisive winner. By combining the affordability and convenience of fast-food with the ambience and quality of casual dining, the fast-casual diner is able to offer a service that appeals to the hungry consumer on a budget. From an investment standpoint they are the smart buy as well, offering a greater chance for a solid return on investment in a struggling economy than any other type of dining establishment.