Economy Continues to Take Toll on Restaurant Industry

    Industry News | July 20, 2009
    Restaurant traffic, still feeling the impact of rising unemployment and cost-saving consumers, declined in the spring quarter ending May 2009, according to the NPD Group, a market research company. NPD’s Consumer Reports on Eating Share Trends (CREST) reported that total restaurant industry traffic declined by 2.6 percent over the same quarter last year. It is the sharpest decline in industry traffic since 1981.

    According to CREST, consumers—especially households with children—cut back their visits to all segments of restaurants. Parties including children—which represent a third of industry traffic—and adults from households with children have been cutting back on restaurant visits for the last three quarters. Over half of the industry’s decline this past quarter traced to fewer supper visits from parties with kids. Visits by adults in households without children were stable in the spring quarter.

    Traffic was down 2 percent at quick-service restaurants, marking seven of the last nine months with declining customer counts. Casual dining declined 4 percent, and midscale was down 6 percent. While checks rose 2% in the quarter, the rate of increase failed to offset the decline in traffic, yielding a 1 percent decline in consumer spending at commercial foodservice locations this quarter.

    “The commercial foodservice industry has been struggling since last fall, and it appears that as unemployment increases the struggle is increasing,” says Arnie Schwartz, president of U.S. foodservice at NPD. “Dealing, value menus, and attractive price points seem to be supporting some operators who are holding on. Menu innovations in the fast casual and [quick-serve] segments have also helped to capture occasions.”

    Consumers cut back on their foodservice visits for each daypart. Supper continued to absorb the steepest decline as consumers pulled back on such visits at both quick-serve and full-service restaurants and both on-premises and off-premises visits. Morning and lunch dayparts also declined across all three segments this spring, as each contributed about a fourth of the industry’s loss. Quick-serves fared a little better with the morning and lunch daypart visits than full-service restaurants, but were still weak.

    "It is going to take continued innovation, creativity, and perseverance to capture share in a market where the pie may not be growing in the near term," Schwartz says.
    News and information presented in this release has not been corroborated by WTWH Media LLC.