Consumers said they were going to dine out during the holidays, and recently released data indicates they did just that.

A National Restaurant Association survey from early December showed that 63% of adults planned to eat out during the subsequent weeks, while 48% planned to order takeout or delivery. As such, after experiencing a dip in traffic through much of September and part of October, business appears to have picked up in early November and continued through the end of the year. Master Card Spending Pulse data shows that restaurant sales were up 7.8% from Nov. 1 through Dec. 24 versus the same period last year – the highest gain among all sectors, and by far. By comparison, retail sales increased 3.1% year-over-year.

Further, Technomic Ignite’s Tindex indicates industry sales were up nearly 10% in November 2023 versus November 2019. Of course, a good chunk of this increase comes from elevated pricing, but it indicates consumers are still very much willing to pay those higher menu costs. Notably, wage growth has outpaced inflation growth.  

And, importantly, it appears as though traffic may be recovering as well. November data from Guest XM by Black Box Intelligence shows that traffic growth was the third strongest achieved by the industry since February 2022. However, the firm notes that the top two months – January and February 2023 – were outliers resulting from easy Omicron laps from early 2022, meaning that November 2023 could be considered the month with the strongest same-store traffic performance in nearly two years. Same-store traffic growth was -1.5% in November, an acceleration of 0.7% relative to October’s year-over-year traffic growth. Guest XM cites moderating menu prices and trade down opportunities within the industry as the drivers behind this momentum.

Companies across segments did their best to entice consumers with holiday menu items, promotions and deals, and some anecdotes from Q3 earnings calls unveiled optimism going into the season. Dine Brands CEO John Peyton said, for instance, restaurant visits increase during the holiday season at his company’s brands – Applebee’s and IHOP. Brinker CEO Kevin Hochman noted the holiday season is important for the Maggiano’s brand based on the sales and profits generated during that timeframe. Also, during ICR’s recent industry outlook webinar, Jefferies analyst Andy Barish said the holiday calendar was favorable for restaurants this year, with Christmas falling on a Monday.

That said, sales are expected to moderate, especially January and February given the tough comparisons. Indeed, all of 2024 could be a bit milder for the industry.

“Aside from normalization, which should take sales growth down, I think some level of incremental (consumer) pressure does make sense. Jobs look good, income growth looks good – two of the correlated data points with restaurant demand. But it’s hard to see a lot better than we’ve seen over the last 12 to 24 months. For us, we’re a bit more cautious from here. You hear it from McDonald’s and others – a slightly cautious tone as we head into (2024),” UBS analyst Dennis Geiger said during the ICR industry outlook event.

“Unemployment is sub 4%. If that kicks up, that will cause a trend change,” Piper Sandler analyst Brian Mullan added.

The December jobs report is set to be released Friday. A report released Wednesday from the U.S Bureau of Labor Statistics shows that there were 8.79 million job openings at the end of November, a slight decrease from 8.85 million in October. Additionally, 5.5 million hires were made in November, a slight decrease from 5.9 million in October, reflecting a cooling labor market.

Contact Alicia Kelso at [email protected]