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Economic Perspective: Changes in the Eating Out Industry

NC State College of Agriculture and Life Sciences professor Dr. Mike Walden working in a recording studio.

Mary Walden:

“Today’s program looks at changes in eating out. Mike, the average person now spends as much eating out as they do on meals they prepare at home. However, I understand there are some big changes occurring in the eating out, or restaurant, market. What are they?”

Mike Walden:

“Well, these have come to the forefront because we’ve been watching earnings with some of the big fast food restaurants here in the U.S., and certainly one I had my first paying job at. Now almost 45 years ago at a dollar an hour. But some of these big fast food restaurants that’ve been here for decades, they’re actually having economic problems. Their earnings are going down, investors are shying away, share price is going down et cetera, and because we are seeing a shift in where, particularly millennials who are now 76 million strong are the dominant generation, where they’re eating.”

“Now during the recession these traditional fast food restaurants benefitted, and that was because during a recession incomes go down so if people are eating out, primarily they’re going to go to where prices are lower. Now that the economy has improved, not for everyone and everywhere, but generally improved people are saying, ‘Yeah, well I’m interested in price, but I also want quality. And maybe I want to go to a restaurant where I can sit down, here some nice music and maybe pay a little more but it’s going to be a better experience’.”

“And that’s really what’s happening in the eating out industry. And that’s hurting these traditional fast food restaurants because they’re quite frankly losing customers. And particularly the millennial generation, they’re interested not just in price, but they’re interested in variety, quality and healthy food. So we’re going to be watching a shake up in the eating out industry, and in years to come it’s going to be very, very interesting to follow.”