Stingy consumers impacting fast food chains’ revenue

Dutch consumers are increasingly cutting back on spending at cheaper dining options, including fast food outlets and meal delivery services, as rising prices make these services less appealing. The decline is particularly significant as consumers shift toward more expensive dining choices, such as traditional restaurants, according to the FoodService Institute of the Netherlands (FSIN).

FSIN reports that lower-cost food establishments have raised their prices to the point where the value no longer aligns with what consumers are willing to spend. "The price difference between cheaper fast food outlets and slightly more expensive restaurant options has become too small, prompting consumers to remain loyal to pricier restaurants," said FSIN Director Inga Blokker. Many consumers are opting for supermarkets and convenience stores instead of ordering meals.

The drop in revenue at fast food restaurants and meal delivery services was evident in 2024, according to FSIN data, while restaurants saw a 6 percent increase in revenue. The overall foodservice sector, which includes restaurants, catering services, fast food, and gas station eateries, also faced challenges due to frugality among consumers.

FSIN points out that the only growth in the sector was attributed to price hikes. The total revenue in the foodservice sector increased by 4.1 percent in 2024, reaching over 22 billion euros, compared to a 12.1 percent increase in 2023.

FSIN identified a marked decrease in the frequency of dining out in 2024. Poor weather in April and May led to reduced consumer spending on eating out. Restaurants, terraces, beach tents, and vacation parks all experienced fewer visitors. Despite an increase in purchasing power, consumers were still cutting back on spending, according to FSIN.

Blokker noted that consumers are responding to the significant price increases in the dining industry. "The effects of the price hikes from recent years have clearly settled in with consumers. A majority of Dutch people now consider eating out to be too expensive."

The younger generations, who typically spend the most on dining out, were particularly affected by these price hikes. FSIN reported that this demographic significantly reduced their spending in 2024.

Looking ahead, FSIN anticipates a 4 percent increase in restaurant sector revenue in 2025, with some recovery expected in fast food and delivery services through targeted pricing actions to attract consumers. However, there are concerns about the sector's profitability due to increased operational costs.