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Following a busy week of Q1 2024 updates several restaurant chains, the key question facing operators is whether menu price increases the past several years have forced consumers into alternative food retail channels. Several restaurant chains--most notably McDonald’s–highlighted a more “discriminating” consumer during their quarterly updates. According McDonald’s CEO Chris Kempczinski on the company’s Q1 2024 update this week: “U.S. consumers continued to be even more discriminating with every dollar that they spend as they faced elevated prices in their day-to-day spending which is putting pressure on the QSR industry.” In turn, this has resulted in flat-to-declining industry traffic in the U.S. during the quarter. Looking at year-to-date visitation trends across the different restaurant categories, we see a weak start to the year due to inclement weather, followed by a rebound to low-single-digit growth for the limited-service categories (QSR and fast casual) and low-single-digit declines for the full-service restaurant chains.
As we discuss throughout this week’s Anchor report, consumers will likely remain discriminating over the next several quarters. As such, we expect a continuation of the channel shifts we’ve been witnessing across the broader food retail sector. According to our data, the QSR category saw a +5% increase in visits from 2019-2023, while the full-service restaurant category saw a -8% decrease in visits (partly explained by the permanent closure of many smaller, regional full-service dining chains). Conversely, the grocery, superstore, convenience store, and dollar/discount stores have all seen meaningfully higher visit growth over the same period (as our friends at Restaurant Business have also called out), indicating these channels are taking share from the restaurant industry.
Looking at McDonald’s cross-visitation trends during the quarter, we see further evidence of this shift. We’ve compared the favorite grocery chains of McDonald’s visitors in Q1 2024 to Q1 2023 below. We see a material increase in the percentage of McDonald’s visitors that visited an Aldi location year-over-year–24% versus 17% in the year ago period. We also see a decrease in percentage of visits to most conventional grocery chains.
Not surprisingly, McDonald’s plans to accentuate its value offerings in the coming quarters. On its update call, management noted that 90% of its U.S. locations offer meal bundles for $4 or less and that it has been running several promotions through its digital app. The company also noted the need to align around a strong national value proposition so that the company can use its tremendous media scale to drive high consumer awareness. It will likely take time for McDonald’s to organize around its value platform, but once it does start to promote its value offerings on a nationwide basis, we would expect much of the rest of the QSR category to follow suit.
This weekend, Formula 1 is once again ready to take the track in the United States, this time at the Miami Grand Prix on Sunday. The Miami Grand Prix is the first U.S. race in the 2024 calendar, followed by the U.S. Grand Prix in Austin, Texas and the Las Vegas Grand Prix in the fall.
America has grown into the new epicenter of the sport and is the only country besides Italy to host multiple races in a singular season. Not only does the U.S. host races, but countless American retail, tech, CPG and hospitality brands serve as team sponsors, including Marriott, Rokt, Tommy Hilfiger, Google, eBay, Coca Cola and more. For brands looking at the consumption habits of younger, more affluent consumers, the rise of Formula 1 in the U.S. can help unlock insights on this group. Credit for Formula 1’s exponential growth in popularity is largely due to the Netflix docuseries, Drive to Survive, which just released its sixth season in the first quarter of 2024. According to Netflix, over 90 million hours of the program were watched throughout the first half of last year. The immense popularity of the show and its behind the scenes access to the luxurious world of F1 generated a large demand for the sport by Americans, and the appetite for home grown F1 races where U.S. based fans can participate is palpable.
2024 is the third running of the Miami Grand Prix, held around Hard Rock Stadium, with the event debuting in 2022. According to Placer.ai data, traffic at the event, which usually runs Thursday-Sunday, in 2023 increased 3% compared to 2022. Usually during grand prix weekends, visitors have the option to purchase single or multi-day passes, and our data (as shown below) indicates that there were fewer repeat visits in 2023 compared to 2022; consumers may have chosen single day passes more often or made the event a part of a larger weekend in Miami. The highest number of visits occurred on Sunday each year, which aligns with the fact that the actual race takes place that day, with practice sessions and qualifying taking place on Friday and Saturday respectively.
Despite slightly fewer loyal visits during the weekend, the time spent at the event increased, with an average of 179 minutes, up 4% year-over-year. With consumers spending around three hours at the venue, there is a huge opportunity for American CPG and retail companies to engage with this captive audience.
The U.S. Grand Prix, held annually in Austin, has seen similar success from the influx of American F1 fans. Traffic at the 2023 event weekend grew by 38% compared to 2019. 2022 saw peak event attendance, most likely due to a competitive and exhilarating end to the 2021 season that bled into the next year. 2023 also saw the highest percentage of three-day visits during the weekend, highlighting that most U.S. Grand Prix attendees visit the track multiple days for the various race weekend events.
While the growth of the event itself is impressive, the change in visitor demographics provides an even more striking opportunity for American retailers and brands. 2023 brought the highest percentage of visits from young professionals and young urban singles compared to all other segments in 2023. Young professionals also grew to 36% of visits in 2023 from less than 30% in 2019, showcasing the rise in younger and more affluent visitors. Both the popularity of Netflix coupled with the increase in influencer marketing brand trips to races may both have contributed to this shift over time.
It’s clear that Formula 1’s growing popularity has no doubt fueled race expansion stateside and that has been able to capture the attention of the elusive younger consumer, especially those with disposable income. Brands, licensees and retailers have all jumped on the opportunity to collaborate with drivers, teams and race weekends to tap into this growth market. Sporting events are a highly competitive landscape, excuse the pun, but the intersection of sports and content have paved the way for Formula 1’s success in the U.S.
Last week, Chipotle’s Q1 2024 update featured a number of positives, including visitation trends that outperformed the broader restaurant category and strong contribution from new store openings. More than 5% of the company’s 7% comparable sales growth during the quarter was driven by transaction growth, and year-over-year visitation trends have accelerated thus far in April. (Recall that our year-over-year visitation data includes contribution from stores opened during the past year as well as improvements in visits per location).
Impressively, there were multiple sources driving Chipotle’s transaction growth during the quarter. The company’s strong track record for menu innovation under CEO Brian Niccol continued during the most recent quarter, with the company spotlighting Barbacoa and the return of Chicken Al Pastor as a limited time offer. Management will continue to explore new menu additions, and is currently developing a new product pipeline for the next 18-24 months.
While menu innovation is important, it’s clear that throughput (the amount of customers that can be served with Chipotle’s assembly line process) is becoming a major factor in visitation traffic outperformance. We believe this has been driven by lower employee turnover rates—the company noted that it is experiencing the lowest turnover rates since Niccol joined the company in March 2018. According to management, throughput reached the highest levels in four years because of more consistent staffing, which aligns with our visit per location data for the past five years (below).
Chipotle noted that its throughput improved by nearly 2 entrees in its peak 15 minutes compared to last year with each month showing an acceleration. According to the company, “the restaurants run more smoothly as our teams are properly trained and deployed, which allows them to keep up with demand without stress. This leads to more stability and therefore more experienced teams that execute better every day, and this can be seen in our latest turnover data which is at historically low levels.” Our data also shows that visitation trends are improving during its peak hours, but that its peak hours are also changing. Historically, the hours between 12:00 PM-2:00 PM have represented Chipotle’s most frequently visited hours, but post-pandemic, we’ve seen visits shift to the 6:00 PM-8:00 PM timeframe (below). Return-to-office trends partly explain these trends, as do Chipotle’s push into smaller, more suburban/rural markets.
When we look at visit per location trends by hour, we see that most of the improvement during the Q1 2024 compared to Q1 2023 took place during the later afternoon and evening dayparts.
Looking ahead, Chipotle sees an opportunity to improve peak hour throughput, including adjusting the cadence of digital orders to better balance the deployment of labor (thus eliminating the need to pull a crew member from the front makeline to help the digital makeline during peak periods). The company also plans to bring back a coaching tool for its associates that it had in place prior to the pandemic. With more and more retailers embracing generative AI to help educate and train their employees-–a trend we heard consistently at this week’s Analytics Unite conference–we would expect Chipotle to also adopt generative AI with its updated coaching tool, potentially unlocking greater throughput improvements in the process.
The widespread adoption of hybrid work continues to be one of the most significant paradigm shifts since the COVID pandemic. As employees visit offices less frequently, or not at all, corporate users are opting for less but better space which is driving office vacancy rates to record highs.
But even as utilization for many office buildings remains below capacity, some buildings are clearly prospering. So what sets these thriving properties apart from the pack? We looked at outperforming office buildings in four major metro areas – New York, Chicago, San Francisco, and Dallas – to find out.
The post-pandemic office recovery has been uneven across the country. As of February 2024, a significantly larger share of workers in the New York-Newark-Jersey City and Dallas-Fort Worth CBSAs were back in the office, while office visits in the Chicago-Naperville-Elgin and San Francisco-Oakland-Berkeley CBSAs remained subdued.
But throughout the country, the reality is much more nuanced as some office buildings struggle to maintain occupancy,others are thriving. We identified four office buildings in four major metropolitan areas where the recovery in utilization was significantly stronger than the respective metro:
What sets these buildings apart from the pack?
One factor that isn’t driving the office recovery at these high-occupancy office buildings is different weekly visitation patterns.
Location intelligence for offices nationwide indicates that hybrid workers appear to prefer coming to the office mid-week: The bulk of weekly visits occur on Tuesdays, Wednesdays, and Thursdays, with fewer visits taking place on Monday and even less visits on Fridays. And this was also the weekly visitation pattern in the four CBSAs analyzed as well as in the high-occupancy office buildings. In fact, the outperforming office buildings had even more of their visits concentrated mid-week compared to the visit patterns in the wider CBSA.
It seems, then, that the higher visits to these outperforming offices is not due to more employees coming in on typical WFH days. Instead, more workers are likely coming in mid-week to make up for the lull on Mondays and Fridays.
So who are these visitors? And could they hold the key to these buildings' strong recovery numbers?
Focusing on the period between March 2023 and February 2024 reveals that in all the labor catchment areas of the analyzed Office Indexes, the share of one-person households was larger than the nationwide share of 27.5%. And during the same period, the share of one-person households in the catchment areas of the high-performing office buildings was even greater – almost 50% of households in the captured market of 2010 Flora St. in Dallas consisted of one-person households.
On the other hand, families with children were underrepresented in the catchment areas of the office indexes relative to the nationwide average of 27.1% – and the share of households with children was even lower in the catchment areas of the high-occupancy office buildings.
This indicates that those with young children at home were generally less likely to go into the office – and so the office buildings seeing the strongest post-COVID recovery are those that serve a large contingent of single employees. On the flip side, there is often a motivation for young singles to visit the office more frequently, whether driven by the desire for training and mentorship or the prospect of meeting a significant other in or around the workplace.
Much has been written on the challenging impact that return-to-office mandates can have on working parents – and especially on working mothers – so it may not come as a surprise that employees from family households are underrepresented in office buildings in 2024.
But the fact that one-person households are even more prevalent in the labor markets of the overperforming buildings (as compared to the wider CBSA Office Index) indicates that businesses and office assets can thrive even without wooing working parents back to the office.
So who are these singles driving the return to the office? Some of this segment may be made up of Gen-Zers seeking the networking and mentorship opportunities provided by an in-person office setting. But it’s not just younger workers leading the return to the office – the data indicates that executives and managers also make up an outsized portion of the outperforming buildings’ catchment areas. In all four CBSAs analyzed, the catchment area of the high-occupancy building included a significantly larger share of people in a managerial or executive role compared to the average catchment area composition of the wider CBSA Office Index.
Many of these executives are likely choosing – rather than being forced – to work on-site. Some might be looking to encourage their staff to return to the office by leading by example, while many are likely leveraging their space to host clients, driving foot traffic to these locations higher. But whatever factors are driving the trend – it appears that office buildings looking to bounce back in the new normal need to make sure they are drawing back the managerial ranks.
Analyzing the popular industries and occupations in the catchment areas of the office buildings and industries also reveals that the overperforming buildings serve a much higher share of employees working in finance, insurance, and real estate. A larger share of the catchment area population of the high-occupancy office complexes also works in professional services – including high-tech jobs – compared to the office index in the wider CBSA.
Many financial institutions and tech companies have asked employees to return to the office at least three days a week, which could explain why these industries are overrepresented in the catchment area of the high-occupancy buildings. This data may indicate, then, that while some of the foot traffic is coming from executives choosing to return to their pre-COVID work habits, the return-to-office mandates – whether full or part-time – are likely also helping these buildings stay ahead of the curve.
Although the proliferation of office vacancies across the country can make it seem like the return to office battle has already been lost, several buildings are bucking the trend. Location intelligence indicates that a combination of partial return-to-office mandates along with a larger-than-usual share of visitors from executives and non-parental households is helping these office complexes thrive.
Sweetgreen and First Watch both went public in 2021 and have since steadily increased in popularity – and in store count. So with 2024 well underway, we checked in with the two brands to see how they fared in Q1 and to explore some of the factors underlying their success.
Despite the dining challenges of much of 2023 and early 2024, sweetgreen posted impressive visits between April 2023 and March 2024, with the chain’s YoY traffic increases ranging from 21.4% to 51.6%.
The remarkable visit surge was partially driven by the sweetgreen’s significant expansion, which could explain the slight dips in average visits per location for much of 2023 while consumers around sweetgreen’s newer restaurantes familiarized themselves with the brand’s offerings. But since December 2023, YoY visits per location have been positive – with the exception of a weather-induced slump in January – indicating that the chain’s newer venues have established themselves within their community.
This narrowing of the gap between visits and visits per location may also signal the success of sweetgreen’s strategic shift towards prioritizing "quality over quantity” – slowing down expansion and investing in an enhanced customer experience.
As a salad and grain-bowl chain, sweetgreen holds special appeal for wellness-focused younger consumers, including singles and members of the coveted Gen Z demographic. But as the chain has expanded, it has also succeeded in reaching new audiences.
Sweetgreen has been explicit about its goal of reaching Gen Z consumers. And analyzing the demographic makeup of the chain’s captured market reveals that sweetgreen’s trade area includes a relatively large share of one-person households (that tend to be on the younger side) But analyzing shifts in the chain’s captured market composition over the past five years also reveals that the share of one-person households has been decreasing – while remaining above the nationwide average of 28.0% – and the share of households with children has increased. So even as sweetgreen continues serving its core consumers, the chain’s expansion has also allowed sweetgreen to reach new audiences.
First Watch is also in expansion mode, and with plans to open some 50 more restaurants this year the chain shows no signs of slowing down. And, like sweetgreen, First Watch’s expansion has driven significant growth to the chain’s overall visits – and the chain’s average visits per location numbers are up as well, indicating that the new venues are finding a receptive audience.
By staying nimble on its feet and continually changing up its menu offerings, First Watch has succeeded in differentiating itself from other breakfast chain giants – and appears poised to enjoy continued success throughout the year.
First Watch’s expansion has also helped the company reach new types of diners even as the chain continues catering to its core audience. The share of the Spatial.ai: PersonaLive’s “Upper Suburban Diverse Families” segment in First Watch’s captured market has held steady over the past five years, even as the share of the “Blue Collar Suburbs” and “Urban Low Income” segments increased. It seems, then, that First Watch has also succeeded in leveraging its store fleet expansion to reach new audience segments – without sacrificing its core patrons.
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Sweetgreen and First Watch’s expansions have helped the companies increase visits and reach new segments – without sacrificing their core audiences. What does the rest of 2024 have in store for the chains?
Visit our blog at placer.ai to find out.
Dining took a hit over the past few years, with major challenges from COVID to rising costs weighing on the category. And perhaps no food-away-from-home segment was more impacted than Full Service Restaurants (FSR) – which stagnated as consumers traded down and sought out more affordable ways to treat themselves.
But new years present new opportunities – and there are signs that sit-down restaurants may be springing back to life. So with 2024 underway, we dove into the data to explore the current state of FSR. Is cooling inflation prompting a rise in Full Service Restaurant activity? How did FSR leaders like Dine Brands (owner of casual dining favorites Applebee’s and IHOP), Bloomin’ Brands (owner of popular grill and steak chains like Outback Steakhouse and Carrabba’s Italian Grill along with high-end Fleming’s Prime Steakhouse & Wine Bar), and Texas Roadhouse fare in Q1?
With some 1500 locations nationwide, Applebee’s has long been a mainstay of the American casual dining scene. Like other FSR chains, Applebee’s experienced a setback during the pandemic and has since faced industry-wide headwinds. But even though the brand’s store fleet shrunk by around 30 stores last year, overall YoY visits to Applebee’s declined just slightly between October 2023 and February 2024 (January’s weather-driven slump aside). And in March, the chain saw a promising 3.8% YoY visit uptick.
Breakfast leader IHOP also experienced negative YoY visits in October and November 2023, but in December – when the pancake chain traditionally enjoys a major holiday boost – visits jumped 2.8% YoY. Like Applebee’s, IHOP felt the effects of January’s Arctic blast, but saw its visits recover quickly in February and March 2024.
Bloomin’ Brands’ leading casual dining chains Outback Steakhouse, Carrabba’s Italian Grill, and Bonefish Grill appear to be following largely similar trajectories.
Though the brands experienced YoY visit gaps through most of Q3 2023 – and were whalloped by January’s inclement weather – all three chains experienced YoY visit increases in March 2024. Given the fact that the restaurants’ store counts didn’t change significantly last year, this visit growth appears to portend good things for Bloomin’s fast casual portfolio in the year ahead.
But it is Bloomin’ Brands’ fine dining concept, Fleming’s Prime Steakhouse & Wine Bar, that really seems to be hitting it out of the park. While Fleming’s also saw visit gaps between October 2023 and January 2024, the chain experienced 9.6% and 7.5% visit growth, respectively, in February and March 2024 – closing out Q1 with a bang.
Fleming’s particularly robust recent performance may be due in part to its relatively affluent customer base. Nearly one-third of households in Fleming’s captured market have an annual income of $150K or more – compared to just 18.6% to 23.7% for Bloomin’s casual dining concepts. Though a night out at the fine-dining steakhouse can be expensive, Fleming’s well-heeled visitor base is better positioned to absorb price increases than other consumers.
Appealing to affluent consumers, however, isn’t the only way to go. Texas Roadhouse is firmly in the casual dining space and tends to cater to average-income diners. (In Q1 2024, just 15.2% of its captured market had a household income ≥$150K.) But the steakhouse’s strategy of satisfying steak lovers with high-quality, affordable offerings is working: Throughout Q1, Texas Roadhouse experienced strongly positive YoY visit growth. And while some of this growth is attributable to the brand’s increasing unit count, the average number of visits per location is generally keeping pace – showing that Texas Roadhouse’s expansion continues to meet strong demand.
Though more affordable Dining segments like QSR and Fast Casual began to spring back to life last year, FSR has yet to fully recover from the double whammy of COVID and inflation. But if March 2024’s promising numbers are any indication, the category may be in for a turnaround. How will FSR continue to perform as 2024 progresses?
Follow Placer.ai’s Dining deep dives to find out.
This report leverages location intelligence data to analyze the auto dealership market in the United States. By looking at visit trends to branded showrooms, used car lots, and mixed inventory dealerships – and analyzing the types of visitors that visit each category – this white paper sheds light on the state of car dealership space in 2023.
Prior to the pandemic and throughout most of 2020, visits to both car brand and used-only dealerships followed relatively similar trends. But the two categories began to diverge in early 2021.
Visits to car brand dealerships briefly returned to pre-pandemic levels in mid-2021, but traffic fell consistently in the second half of the year as supply-chain issues drove consistent price increases. So despite the brief mid-year bump, 2021 ended with overall new car sales – as well as overall foot traffic to car brand dealerships – below 2019 levels. Visits continued falling in 2022 as low inventory and high prices hampered growth.
Meanwhile, although the price for used cars rose even more (the average price for a new and used car was up 12.1% and 27.1% YoY, respectively, in September 2021), used cars still remained, on average, more affordable than new ones. So with rising demand for alternatives to public transportation – and with new cars now beyond the reach of many consumers – the used car market took off and visits to used car dealerships skyrocketed for much of 2021 and into 2022. But in the second half of last year, as gas prices remained elevated – tacking an additional cost onto operating a vehicle – visits to used car dealerships began falling dramatically.
Now, the price of both used and new cars has finally begun falling slightly. Foot traffic data indicates that the price drops appear to be impacting the two markets differently. So far this year, sales and visits to dealerships of pre-owned vehicles have slowed, while new car sales grew – perhaps due to the more significant pent-up demand in the new car market. The ongoing inflation, which has had a stronger impact on lower-income households, may also be somewhat inhibiting used-car dealership visit growth. At the same time, foot traffic to used car dealerships did remain close to or slightly above 2019 levels for most of 2023, while visits to branded dealerships were significantly lower year-over-four-years.
The situation remains dynamic – with some reports of prices creeping back up – so the auto dealership landscape may well continue to shift going into 2024.
With car prices soaring, the demand for pre-owned vehicles has grown substantially. Analyzing the trade area composition of leading dealerships that sell used cars reveals the wide spectrum of consumers in this market.
Dealerships carrying a mixed inventory of both new and used vehicles seem to attract relatively high-income consumers. Using the STI: Popstats 2022 data set to analyze the trade areas of Penske Automotive, AutoNation, and Lithia Auto Stores – which all sell used and new cars – reveals that the HHI in the three dealerships’ trade areas is higher than the nationwide median. Differences did emerge within the trade areas of the mixed inventory car dealerships, but the range was relatively narrow – between $77.5K to $84.5K trade area median HHI.
Meanwhile, the dealerships selling exclusively used cars – DriveTime, Carvana, and CarMax – exhibited a much wider range of trade area median HHIs. CarMax, the largest used-only car dealership in the United States, had a yearly median HHI of $75.9K in its trade area – just slightly below the median HHI for mixed inventory dealerships Lithia Auto Stores and AutoNation and above the nationwide median of $69.5K. Carvana, a used car dealership that operates according to a Buy Online, Pick Up in Store (BOPIS) model, served an audience with a median HHI of $69.1K – more or less in-line with the nationwide median. And DriveTime’s trade areas have a median HHI of $57.6K – significantly below the nationwide median.
The variance in HHI among the audiences of the different used-only car dealerships may reflect the wide variety of offerings within the used-car market – from virtually new luxury vehicles to basic sedans with 150k+ miles on the odometer.
Visits to car brands nationwide between January and September 2023 dipped 0.9% YoY, although several outliers reveal the potential for success in the space even during times of economic headwinds.
Visits to Tesla’s dealerships have skyrocketed recently, perhaps thanks to the company’s frequent price cuts over the past year – between September 2022 and 2023, the average price for a new Tesla fell by 24.7%. And with the company’s network of Superchargers gearing up to serve non-Tesla Electric Vehicles (EVs), Tesla is finding room for growth beyond its already successful core EV manufacturing business and positioning itself for a strong 2024.
Japan-based Mazda used the pandemic as an opportunity to strengthen its standing among U.S. consumers, and the company is now reaping the fruits of its labor as visits rise YoY. Porsche, the winner of U.S New & World Report Best Luxury Car Brand for 2023, also outperformed the wider car dealership sector. Kia – owned in part by Hyundai – and Hyundai both saw their foot traffic increase YoY as well, thanks in part to the popularity of their SUV models.
Analyzing dealerships on a national level can help car manufacturers make macro-level decisions on marketing, product design, and brick-and-mortar fleet configurations. But diving deeper into the unique characteristics of each dealership’s trade area on a state level reveals differences that can serve brands looking to optimize their offerings for their local audience.
For example, analyzing the share of households with children in the trade areas of four car brand dealership chains in four different states reveals significant variation across the regional markets.
Nationwide, Tesla served a larger share of households with children than Kia, Ford, or Land Rover. But focusing on California shows that in the Golden State, Kia’s trade area population included the largest share of this segment than the other three brands, while Land Rover led this segment in Illinois. Meanwhile, Ford served the smallest share of households with children on a nationwide basis – but although the trend held in Illinois and Pennsylvania, California Ford dealerships served more households with children than either Tesla or Land Rover.
Leveraging location intelligence to analyze car dealerships adds a layer of consumer insights to industry provided sales numbers. Visit patterns and audience demographics reveal how foot traffic to used-car lots, mixed inventory dealerships, and manufacturers’ showrooms change over time and who visits these businesses on a national or regional level. These insights allow auto industry stakeholders to assess current demand, predict future trends, and keep a finger on the pulse of car-purchasing habits in the United States.
