Restaurateurs reveal the small changes in diners' habits that suggest U.S. may be in big economic trouble

Americans are beginning to tighten their purse strings and dine out less, raising alarm bells with restaurant owners that the U.S. economy may be teetering on the brink.

Research firm Circana found the number of people visiting restaurants was down 2.6 percent for the first half of the year, the Boston Globe reported, a trend brought on by years of high inflation and rising consumer debt.

An April survey by the Conference Board showed that nearly 45 percent of consumers planned to reduce or entirely cut out spending on 'food away from home' over the next six months.

Less than four months later, the economy was shocked by a weaker-than-expected jobs report that had economists questioning whether the US would careen into a recession.

The downstream effect of the slow cooldown for restaurants is a definite 'softening' in demand, according to Steve Clark, the CEO of the Massachusetts Restaurant Association.

Smoke Shop BBQ, which has several locations in the Boston area, has reported a major slowdown in sales as customers pull back on dining out

Andy Husbands, a chef who owns several locations of Smoke Shop BBQ, said he thinks people aren't eating out as much because they're nervous about the election, the economy and rising prices

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Allie Duncan, a 28-year-old marketing manager, told the Globe she used to eat out two to three times a week, something she has cut back on.

'In recent months, it feels like the cost of eating out has gotten more expensive,' she said. 'I really only go out to eat with people if it's like an occasion, like a catch up, or something like that.'

The cost of eating out has indeed gotten more expensive, with even fast food restaurants hiking prices by 33 percent since 2019.

In response, chains like McDonald's, Wendy's and Burger King have all rolled out discounted meal deals in a bid to appeal to cash-strapped Americans this summer. 

Andy Husbands, a chef who owns several locations of the Boston-based Smoke Shop BBQ, said his customers are closely watching what they spend for the first time in years.

Husbands tracks the performance of his various restaurants by the number of aluminum trays that are used to serve ribs, brisket and other meats.

Last year, the number of trays used jumped 3 percent. This year, it's down 1 percent. 

'People are nervous about the election, they are nervous about the economy, and everything is expensive,' he said.

Brine in Newburyport, Massachusetts, had to yank scallops off its menu entirely because of how expensive they got

Brine owner Nancy Caswell said she would have needed to charge $50 for an entrée featuring four scallops

At Brine in Newburyport, Massachusetts, a small town just south of the New Hampshire border, the situation is even more dire.

The seafood restaurant had to yank scallops from the menu entirely because their cost surged so much that owner Nancy Caswell said she would have had to charge $50 for an entrée featuring just four scallops.

'I have a seafood restaurant. I should have scallops,' Caswell told the Globe, adding, 'where's the value for the diner?' 

She expected July's business to easily surpass that of last July's. Instead, revenue was down 3 percent from the same period a year earlier.

Caswell also noticed that when customers do come in, they often pick cheaper bottles of wine, while others just get drinks and an appetizer rather than a full meal.

Shanti, an Indian restaurant in Boston, is trying to lure budget customers by participating a semi-annual city program that offers prix-fixe lunch and dinner menus.

Shanti, an Indian restaurant in Boston, has cut goat from its menu, a meat that's become much more costly

Rokeya Chowdhury, left, runs the Indian restaurant with her husband. Despite rising food costs, the couple has managed to keep their most popular entrée, chicken tikka masala, at just under $18

Until August 17, Shanti is offering a five-course meal for $46. Many of the other participating restaurants are doing three-course dinners for $36.

Rokeya Chowdhury, who operates the eatery with her husband, said running offers and discounts like this have become crucial to getting enough business to survive.

To keep from raising prices, Shanti had to stop serving goat because it got so expensive. The restaurant was also able to keep its chicken tikka masala entrée at just under $18 by hiking the price of a side dish instead.

'Everyone is seeing that sticker shock,' Chowdhury said. 'That is why we are being so mindful about raising prices.' 

Even large chains are struggling under the pressure of high food prices and weakening demand.

Most recently, the popular Italian restaurant chain Buca di Beppo closed 13 of its underperforming locations and filed for bankruptcy. 

Red Lobster is one of the most high-profile chains to run into trouble, filing for bankruptcy in May and shuttering almost 100 restaurants. 

A month later, Mexican chain Rubio's shut 48 locations in California and also filed for bankruptcy. 

Also in June, BurgerFi - which touts itself as an upmarket McDonald's - sparked concerns of mass closures after revealing it is considering bankruptcy.

Hooters has also shut dozens of its restaurants in recent months, blaming the rising cost of rent and food.