Operators can drive spend this holiday season, despite the decline of in-store shopping.
From mall food courts to full-service chains, restaurants in high-traffic shopping areas have long served the needs of hungry holiday crowds. In 2019, the average holiday shopper spent hundreds of dollars throughout the season as they dined out dozens of times, according to our data. This year, as with everything else in 2020, the dining landscape will be different than in previous years, as consumers avoid stores in favor of online shopping.
As a native ad platform built in digital bank channels, Cardlytics view into $3 trillion in annual spend shows that during the 2019 holiday season, in-store shoppers spent an average of $562.39 per customer dining out. On average, they made 13 full-service, 12 fast casual, and six quick-service restaurant purchases in the last nine weeks of 2019. So, given the impact of the pandemic on retail foot traffic, the restaurant industry needs to be strategic on how to re-capture the 2019 spend.
Throughout the pandemic, retailers have seen a decline in foot-traffic that will continue to impact neighboring restaurants this holiday season. In October, spend with brick-and-mortar stores remained down 7 percent year-over-year (YOY), while online spend was up 40 percent in the same period. While restaurants may not see an influx of holiday foot traffic this year, consumers still need to eat. To appeal to the wearier shoppers this year, restaurants should bolster their services by promoting pick-up, curbside delivery and last-mile delivery. Cardlytics’ data shows a 115 percent YOY increase in delivery services through mid-October, representing a huge opportunity for brands to recapture the spend they may lose from the decline of in-store shopping.
Capturing the Cooking Fatigued
Additionally, although many dining rooms across the country are still closed or running at limited capacity, restaurants are seeing positive signs of recovery, while grocery spend is declining. After spend reached its peak, up 34 percent YOY in March, grocery spend continues to slow, up only 8 percent in September. We can attribute some of this to “cooking fatigue” with consumer exhaustion after months of home cooking, coupled with kids across the country returning to school.
As the holidays approach and responsibilities like shopping are added to consumers’ already full plates, we can expect this fatigue to intensify giving restaurants a huge opportunity to capture spend by connecting with this group. To reach the cooking fatigued, restaurants should look at customers whose grocery spend has dropped while they’ve increased their restaurant spend using purchase data. Leveraging consumer spend history—or “purchasegraphics” —is a much more reliable way of predicting what they’ll buy in the future than antiquated, demographic measures like age or gender.
Predicting Holiday Spend Differently
Holiday shoppers still represent a large opportunity for restaurants. With in-store retail spend slowly recovering week after week, it’s important that restaurants remain optimistic and focused on the segment, targeting those consumers that are likely to spend at nearby, physical retail locations. While in-store, brick-and-mortar spend is still down year-over-year, it’s on the road to recovery. September saw an increase in spend of nearly 2.5 percent over August, indicating that shoppers are slowly making their way back to stores.
While 2019 holiday spend may not help us predict spend this year, more recent data will. By looking at past purchase behavior and identifying shoppers who are still spending at specific in-store locations, restaurants can serve the right deals only to likely patrons, and hopefully incentivize a visit. Consumers may opt out of their big holiday shopping trips this year, but continuing to offer them convenience, value and a safe experience will help restaurants enjoy a lucrative holiday season.
Matt Drewes is Senior Vice President and Group Head of Restaurant Industry at Cardlytics, an advertising platform built within banks’ digital channels that helps marketers drive incremental sales using purchase insights from more than 160 million monthly active users. Before joining Cardlytics, Matt held various positions at Darden Restaurants, including SVP of Marketing for Red Lobster and Director of Marketing at Olive Garden. Prior to Darden, Matt worked in various CPG Brand Management positions at Campbell Soup Company and M&M/Mars including a year developing business in Russia. Matt holds a Bachelor of Science in Finance from Auburn University and an MBA from the Columbia Business School at Columbia University. He’s married with four children and an active volunteer coach at his YMCA.