Industry News | November 9, 2009

Economic Optimism Abounds... Except in Restaurants

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A study released today from AlixPartners, a global business advisory firm, suggests restaurant customers might not be so optimistic for 2010, despite signs of a recovering economy.

The study, which surveyed 1,000 foodservice consumers on current and future spending habits, reported that the amount consumers expect to spend when dining out is 20 percent less than what it was when a similar study was conducted in March.

“Things have changed, people have gotten a little bit brighter in terms of their outlook” since the March study, says study co-author Adam Werner, a director in the Food Service Practice at AlixPartners. “We expected that to translate into this space as a whole.”

“What we didn’t necessarily think was that their outlook in terms of how much they would want to spend would go down so much.”

According to the study, customers now expect to spend an average of $11.49 per meal when dining out. However, the study also reported that 63 percent of respondents dine out weekly, up from 52 percent in the March study.

“Folks are actually starting to return to the restaurants a little bit more frequently, and we anticipated that,” Werner says.

Werner says that some trends observed by the study might be bad news for the quick-serve segment. One is that while some customers are trading down from casual dining to quick service, many are actually trading out of quick service altogether, choosing instead to shop at convenience stores or consume ready-to-eat meals at home.

Other bad signs he cited were high unemployment rates in traditional quick-serve strongholds, such as the Midwest; promotional “fatigue” from quick serves; and younger demographics switching to healthier eating options.

“The demographic between 18 and 24 years old [who are] notorious quick-serve consumers … you think about their economic buying power today, it’s relatively low,” Werner says. “However, that’s going to change and their sentiments aren’t.”

The study also found that consumers expect to spend an additional 3 percent less per meal in the next 12 months compared to what they expect to pay now.

Eric Dzwonczyk, a director in the New York office of AlixPartners, says that it could be a while before the restaurant industry rebounds with the optimism other industries are starting to show in the recession.

“I think some other consumer study sentiment … suggested that there was a new normal, that people were fundamentally scarred by what had happened in late 2008 and 2009, and that they were going to adjust spending habits accordingly over the long term,” he says.

“I think you’re starting to see some of that manifest itself in the back end of 2009 and perhaps into 2010 as well.”

By Sam Oches

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