How are restaurant leaders feeling about the election? Politics aside, many of them are simply eager to get through it.
A new CEO survey from Marcum and Hofstra University shows there are a plethora of concerns about the current unknown as it pertains to policy proposals from leading candidates Kamala Harris and Donald Trump, with over 90% indicating they are either “very” or “somewhat” concerned about the current state of the economy. Also weighing heavily on business leaders’ minds are regulatory positions, corporate tax rates, trade policies and tariffs, and immigration and labor markets.
A majority of CEOs believe political uncertainty is what is impacting their business the most right now, and that concern could likely fade a bit once a candidate is sworn in in January.
Indeed, it wouldn’t feel like an election year without a significant level of unpredictability. Restaurant executives have been navigating this uncertain environment for much of this year. In the second quarter, for instance, CAVA chief executive officer Brett Schulman noted that an adjusted low double-digit same-store sales guidance for the rest of the year reflects the current strength of the business while also “contemplating the macroeconomic and election uncertainty in the remainder of the year.”
Red Robin chief executive officer G.J. Hart believes restaurant consumer traffic will likely pick up after the election in November following a year-plus of industry-wide traffic declines.
“I think the consumer is scared. They’re worried about economic conditions,” he said during an interview in September. “The election is creating a bit of angst. I am optimistic once we get that behind us, it will create some stability and people can take a deep breath and settle back into a somewhat more normal environment, and that consumer sentiment should get better.”
Fat Brands’ CEO Andy Wiederhorn also said recently that he wants the election behind us.
“That would create some momentum, I think,” he said during his company’s Q2 earnings call.
How much of that momentum will come from the consumers is yet to be seen. But new data from consumer insights firm 84.51° finds that election-related dynamics are influencing consumer behavior and sentiment – nearly 20% of consumers are delaying big-ticket purchases until after the election, for instance, while 15% are holding off on investment decisions.
Still, don’t expect a rush of traffic on Nov. 6. A new report from Numerator states that the presidential election is unlikely to have immediate, widespread impacts on consumer behaviors.
“The more probable consumer impacts will be longer-term, stemming from the economic, social and environmental policies enacted by the new president and his or her administration,” according to the report.
Jonathan Gillespie, a partner at Chicago’s Adalina restaurant, agrees that the election won’t ease current pressures overnight.
“I do think once the election cycle ends, certain factors that cause uncertainty will dissipate. However, unless inflation and the perceived value of the dollar continues to improve, I feel higher wages and earnings alone won't drive more traffic to restaurants, as those increased wages really reflect less buying power,” he said.
Ascent Hospitality CEO James O’Reilly has a slightly different take, noting that “the consumer environment has the potential to normalize following the general election provided consumers experience higher levels of disposable income, which is the key in their discretionary purchase decision making.”
All of this said, personal spending data from the U.S. Bureau of Economic Analysis throughout the past 44 years shows month-over-month spending variances during general election years are largely unchanged versus other years, as reported by Nationwide Group. But, as Hart noted, this election is “out of the norm.”
“The country is at odds in a way it hasn’t been in a while,” he said. “That’s creating even more anxiety.”
Regardless of outcome, Kieran Donahue, chief marketing officer at IHOP, said getting through the election “from a macro perspective,” is a good thing.
“Lower interest rates, getting through the election – look, this stuff can’t hurt. And we’re paying attention, but at the end of the day, we have to focus on IHOP and what we’re seeing with our guests. If we take care of them, we’ll be O.K.,” she said. “Listening to our guest and keeping our focus there is what gives us confidence regardless of what else is going on.”
According to Brinker CEO Kevin Hochman, there is plenty else going on.
“I think consumers’ current anxiety is more of a math thing than an election thing,” he said. “They’ve run out of savings, and they don’t have enough money to go to restaurants as much.”
However, they want to go to restaurants, so brands that win in such an environment are those that provide the best overall value, Hochman adds.
“This is the time to go back to the basics, to double down on service, consistency, food, and experience,” he said. “That’s how we get through this cycle.”
Contact Alicia Kelso at [email protected]
