Fast Food v. Fast Casual
The Wall Street Journal posts an interesting story, noting that “ultra-affluent” customers — who spend more than, gulp, $7,000 a month on their credit cards and meet other, unnamed income criteria — are spending more on both fast food and fine meals. The super-rich, the article says, are bifurcating their spending, shopping for cheap basics (Big Macs) and rich luxuries (first-class plane tickets), but not moderately priced goods.
A new American Express study found [the] consumers boosted their fast-food spending by 24% in the second quarter, compared with the year-earlier period, while fast-food spending among the rest of U.S. consumers rose 8%.
Wealthy consumers increased their spending on fine dining, too, but not by as much, suggesting that although the economy has shown signs of improvement, the wealthy are trying to hold down costs in certain areas.
“We’re seeing a bifurcated behavior pattern, with a lot of affluent consumers still trying to be frugal where they can by spending at quick-service restaurants and discount retailers, but we’re also seeing a return to higher-end spending on air travel and luxury items,” said Ed Jay, senior vice president of American Express Business Insights, which studied spending patterns among its cardholders. [...]
The ultra-affluent increased their spending on business-class plane tickets by 114% in the second quarter, compared with a year earlier. Rich consumers also boosted spending on cruises, car rentals and luxury hotels. They spent 12% more on fine dining.
And the story has this graph to go along.
The graph shows it isn’t just the ultra-rich doing this — it is regular folks, too. You can see in the yellow bars that average customers are spending a bit more on expensive food, taking away spending from moderately priced food, and adding spending to cheap food. In fact, businesses expect this skew. Spending on high-end products has taken a nosedive in the recession, but has started to come back. Places like Olive Garden, though, still aren’t expecting customers to come flocking in. But McDonald’s? Doing great.