How America lost its taste for the middle

It’s been a difficult year for the kind of restaurant that could have served as the backdrop for an awkward lunchtime scene The office: the places you can find in malls and suburban shopping areas that serve burgers or huge bowls of pasta and sugary drinks.

The “casual dining” sector — what the restaurant world calls sit-down establishments in the mid-price segment of the restaurant market — has lost some of its heroes this year. Seafood chain Red Lobster filed for bankruptcy in May (though a new owner has since emerged to try to save it). Another family-friendly giant, TGI Fridays, filed for bankruptcy last month, and Italian grocery chain Buca di Beppo filed for bankruptcy in August. Denny’s announced in October that it would close 150 locations. Applebee’s is in the process of closing dozens of locations. Adjusted for inflation, spending at casual dining chains is expected to decline about 9 percent this year compared to a decade ago, according to data shared with me by Technomic, an industry research firm. And while total restaurant spending has increased by about 4.5 percent over the past decade, that growth has come primarily from limited-service fast-food and fast-casual chains.

After a painful few years of pandemic-era inflation, Americans looking to save money have turned to cheaper, sit-down meals. But many consumers are also choosing to use their disposable income on upscale dining experiences that are worth spending, Alex Susskind, a professor of food and beverage management at Cornell University, told me. Because of these patterns, the middle class – which is neither the cheapest nor the highest quality on the market – is struggling to keep up.

Restaurants across the board have had a chaotic few years as consumers stayed home in the early days of the pandemic and then food inflation exploded (it has eased a bit recently). The pandemic has also solidified the shift toward takeout and delivery: According to data shared with me by the National Restaurant Association, nearly three-quarters of restaurant meals are now eaten away from home, up from about 60 percent in 2019. About two-thirds of Americans have done so have used a food ordering app at least once, a Purdue survey found earlier this year — and about half of those who use such apps do so at least once a week.

And younger consumers prefer fast-casual restaurants when dining out: Between summers 2021 and 2022, Gen Zers visited more than 4 billion quick-service restaurants and fewer than 1 billion full-service restaurants, according to data from NPD Circana, a market research firm. While their casual dining brethren suffer, some fast-casual restaurants have expanded. (It’s not just in the catering industry that the middle is under pressure: in the food retail sector, too, many consumers choose either upscale goods or discount brands.)

Casual dining chains have tried to adapt to the times. Some now offer elaborate meal deals and steep discounts (see: the Endless Shrimp promotion that Red Lobster made permanent last year in a doomed attempt to revive its struggling business). But an affordable combo plate only goes so far when people are looking for a completely different experience: If you want to enjoy a Chipotle burrito in your car, you can spend an hour eating a chip burger and soda. Special to eat in the booth of a Chili’s I’m not talking to you, even though both cost about $11. Some of those restaurants have begun offering takeout — Olive Garden, which had long avoided such an arrangement, struck a deal with Uber Eats in September. But that’s not an ideal fit: Casual restaurants are sprawling, many with dining rooms large enough to accommodate 200 guests. The rental agreements become a burden when no one is sitting in them – and the expense of alcohol, which is a significant source of income for these places.

Will we soon live in an America without the casual dining rooms where families gather for special occasions, without waiters in matching polo shirts and without bars serving fluorescent cocktails? It’s unlikely, experts told me. The casual dining sector will likely evolve to meet Americans’ changing desires, but it won’t change. There were also a few bright spots: Major chains like Texas Roadhouse and Chili’s posted solid sales this year. Still, the decline of many of these casual chains represents the loss of a third place for socializing in American life, Susskind said. Going to a Panera restaurant to grab a salad might be more efficient than sharing large plates of appetizers with friends at Applebee’s. But the opportunity to spend time with other people — breaking bread with loved ones or watching a game at the bar — is lost.

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