Article: https://finance.yahoo.com/news/consumers-are-still-spending-at-restaurants-despite-inflation-193806216.html
Tuesday, February 21, 2023
Despite Inflation, Consumers Continue to Dine Out
According to the Bureau of Labor Statistics' (BLS) January Consumer Price Index (CPI), the price of groceries increased 11.8%, while dining out increased 8.2%. As a result, consumers are spending more to eat out than they are for groceries. This trend began around the beginning of 2021 and has continued since. In January 2023, Americans spent approximately $86.6 billion at restaurants. This equates to an increase of 24% compared to January 2022. The current behavior of consumers is contradictive to economic theory. Specifically, as food prices increase, we would expect consumers to cut back on dining out and allocate more income to groceries. Part of the increase in restaurant spending can be attributed to more consumers are ordering take away. Another component driving restaurant spending is consumers sentiment after COVID. More individuals are willing to go out and pay the extra money because they were isolated for so long. Personally, I believe consumers may be using mental accounting, which could explain why they seem unresponsive to price changes.
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I like your point on consumers using mental accounting. It does seem surprising that consumers are continuing to eat out despite inflation and prices rising. However, as a college student I see first hand how spending money on eating out can be worth the extra price if it makes one that much happier with a fuller belly. Something that can't be overstated.
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