UBS Finds Low-Income Confidence Rebounding As Dining Deferrals Diminish

The U.S. restaurant industry is entering the second half of the year with renewed momentum, supported by improving sales trends, easing headwinds, and a rebound in confidence among lower- and middle-income consumers, according to a new note from UBS. This comes after lower-income consumers saw their wallets squeezed and sentiment plunged in the wake of the inflation storm sparked by the previous administration.

A team of UBS analysts led by Dennis Geiger wrote that casual dining chains continue to outperform, thanks in part to growing price gaps with quick-service and fast-casual competitors, making the full-service experience relatively more attractive for budget-conscious consumers. They see further near-term upside for the segment, with easier year-over-year comparisons in July and positive traffic trends in May.