The data: Restaurant spending is accelerating, as consumers shelled out 3.3% more YoY on dining out in July, and transactions increased 1.1%, per Bank of America Institute data based on aggregated credit and debit card data.

Gen Zers are driving that increase, as their spending at restaurants jumped nearly 7% YoY in July, per Bank of America Institute data based on the bank’s aggregated credit and debit card data. Gen Z was the only generational group to increase spending at each restaurant segment (pizza, quick-service restaurant, casual, fast casual, bars, and others).

Why is this happening? Higher prices explain some of the growth, as restaurant prices rose 3.4% YoY during the month, per the Bureau of Labor Statistics. But several other factors may be making dining out more appealing, particularly to Gen Z.

The delta between restaurant and grocery price inflation is narrowing. The difference between restaurant and grocery price growth has narrowed from 170 basis points last July to 80 basis points this year, making dining out feel relatively less expensive compared with cooking at home.

Restaurants are leaning into value. Some chains are finding ways to capitalize on rising grocery prices. For example, LongHorn Steakhouse is benefiting from higher beef prices, which were up 9.4% YoY in July, by offering steak at prices that compare favorably with buying beef at the grocery store. The chain grew quarterly same-restaurant sales 9.5% YoY in its most recent quarter.

Not all restaurants are benefiting equally. Overall restaurant spending growth is outpacing several major categories, including pizza, QSRs, casual dining, and fast casual. That suggests the “other” category, which includes regional and local chains, independent restaurants, and delivery services, may be capturing an outsize share of the growth.

Implications for marketers: Millennials still spend the most per household on restaurants, per Bank of America Institute, but Gen Z is closing the gap. Having grown up with on-demand services like Instacart and Uber, Gen Zers may simply put more value on the convenience of not having to cook.

Their growing restaurant spend also fits with the broader “little treat” economy. Gen Z has shown a willingness to splurge on smaller indulgences even as bigger financial milestones remain out of reach, and eating out may serve a similar purpose. But that doesn’t mean they spend indiscriminately. Gen Zers tend to be deliberate shoppers, putting pressure on restaurants to demonstrate why a meal or experience is worth the money.

Gen Z's restaurant spending stands out against a retreat in other discretionary categories. More than half of Gen Zers spend no money on dating, and nearly a quarter are delaying moving in with partners or marriage because of money, as financial instability reshapes their relationships, per Bank of America’s “Gen Z and the Cost of Adulting” report. That contrast points to a generation making calculated tradeoffs rather than cutting back across the board: They're protecting frequent, lower-cost indulgences like dining out while pulling back on costlier, less certain categories tied to long-term commitment. For restaurants, that's an opening, but also a warning. Gen Z's dollars are following a values-based calculus, and any brand that fails to justify its place in that calculus risks losing ground once the “little treat” budget tightens.

That gives restaurants an opportunity to sell more than a low price. For Gen Z, value can also mean saving time, trying something they discovered on social media, or having an experience that feels worth the money. Restaurants that can deliver some combination of convenience, novelty, and affordability may be able to capture more of Gen Z’s growing dining spend.