The foodservice industry won’t be celebrating its economic recovery anytime soon, according to market research company The NPD Group, although some restaurant operators are faring better than others. After five consecutive quarters of traffic declines through September 2009, the industry will remain weak at least through the first half of 2010, NPD says.
NPD forecasts that the rate of visit declines will slow in the first half of the year and turn slightly positive in the second half of 2010.
“Historically, the restaurant industry neither leads the economy into or out of periods of economic downturns,” says Bonnie Riggs, NPD’s restaurant industry analyst and author of the report Restaurant Industry…What To Expect When Economic Recovery Begins. “This recession is generally believed to be more severe than those in recent history, and this time the industry not only realized traffic losses, consumer spending declined as well. This is first time since NPD began tracking that the industry realized a fall off in dollars spent at restaurants.”
High unemployment, low consumer confidence, tightened credit, lower grocery store prices, and other factors have taken their toll on consumers and their ability to increase spending, resulting in fewer visits to restaurants and related dollar growth. According to NPD’s CREST, which tracks consumer usage of the foodservice industry, for the quarter ending September 2009, traffic declined across all restaurant segments. Total industry traffic declined by 4 percent during the quarter compared to the same time a year ago. Visits to quick-service restaurants, which represent the largest share of the industry, declined by 4 percent, casual dining was down 5 percent, and midscale visits were down 4 percent. Consumer spending for total restaurants declined by 2 percent.
The non-commercial foodservice sector has also experienced declines. NPD’s CREST OnSite, which tracks usage of foodservice at business and industry, secondary schools, colleges and universities, hospitals, lodging, senior care, military, and vending segments, reports that for the year ending September 2009, non-commercial foodservice traffic experienced declines in sectors most affected by high unemployment, such as business and industry, vending, and lodging. Business and industry posted a 16 percent traffic decline for the year ending September 2009 versus a year ago.
Still, there are signs of improvement. While consumers may be worried about the future of their jobs and falling incomes, their attitudes about the economy are slowly changing, NPD found. According to a recent NPD foodservice survey, consumers believe the economy is beginning to improve or, at the very least, is not going to get any worse.
“Consumers have been hurt worse financially in this recession,” Riggs says. “It’s just going to take awhile before they feel comfortable spending again.”