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Economy

How Olive Garden and IHOP build relationships across income classes

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If U.S. communities want to encourage integration among economic classes, it turns out they should be investing in pancakes, not public parks.

A study by MIT Sloan associate professor finds that people in the richest and poorest U.S. neighborhoods are the most isolated when it comes to their social interactions with each other. When these two groups do mix, it’s likely to be at casual restaurants like IHOP, Olive Garden, Applebee’s, and Chili’s.

“Our results demonstrate that the places that contribute most to mixing by economic class are not civic spaces like churches or schools, but large, affordable chain restaurants and stores,” write Wilmers and the Naval Postgraduate School’s Maxim Massenkoff in a research paper. The results suggest that policymakers “should pay attention to the role of firms in shaping class mixing.”

For their study, Wilmers and Massenkoff used anonymized cellphone location data from all but a few counties in the United States December 2021 to July 2022. They determined where someone lived based on where their phone was located for most of the night. For this study, the researchers looked at the top and bottom 20% of neighborhoods by income: The top included neighborhoods with a median household income of $85,000 while the neighborhoods in the bottom range had median household incomes of $37,000.

The researchers then organized the billions of movements of those cellphones into visits to essential and nonessential retail, full-service and limited-service dining, and entertainment locations — in other words, “where people shop, eat, and socialize,” according to the paper.

Wilmers and Massenkoff found that high-income neighborhoods were more likely to be exposed to visitors from equally high-income neighborhoods: Forty-one percent of visitors that high-income residents encountered also came from high-income neighborhoods. Thirty-one percent of low-income people’s encounters were with low-income visitors.

“In contrast, middle-income neighborhoods are exposed to a fairly representative sample of other Americans,” the researchers write. “This suggests that establishments frequented by the rich are mainly composed of the rich, whereas the places that residents of middle-income neighborhoods patronize are a more representative mix of income levels.”

The casual restaurants promoting economic diversity

Wilmers and Massenkoff looked at salons, libraries, museums, and a range of other “third places” that aren’t a home or work location.

What they learned was that businesses that served lower-income households, like Family Dollar and Dollar General, reduced the chances that people from different economic classes would mix. Businesses such as CVS and McDonald’s also reduced the chances of visitors from different income levels mixing, because they don’t encourage longer, more meaningful interactions and tend to be visited by people from the neighborhoods in which they’re located. Gyms and churches also increased isolation among income levels because they typically serve people in their local communities.

So where do people from different economic levels come together?

“Specifically, low-price full-service restaurants are frequented by a diverse range of residents: the rich and poor rub shoulders at Olive Garden and Applebee’s,” the researchers write. “Indeed, the most socioeconomically diverse places in America are not public institutions, like schools and parks, but affordable chain restaurants.”

While that doesn’t mean economic development offices need to be putting a Chili’s on every corner, Wilmers said the results should give policymakers pause when considering initiatives that seek to block chain expansions, since they contribute to so much socioeconomic class mixing.

“For people in general, I hope there’s at least a reminder of how easy it is to fall into activity patterns that keep you encountering others who are very similar to you,” Wilmers said. “This paper gives some ideas for places to go if you want to get out of some of that narrowing.”

For more info Meredith Somers News Writer (617) 715-4216