Tough Summer for Foodservice

    Industry News | October 27, 2009
    Summer is historically a peak season for the foodservice industry, but this past summer the industry experienced its fourth consecutive quarter of traffic declines versus the same quarter a year ago, according to the market research company NPD Group.

    NPD’s CREST, which continually tracks consumer usage of foodservice, reports that total restaurant industry traffic declined by 3.6 percent in the summer quarter (June, July, and August) versus the summer quarter last year. Total consumer spending at foodservice contracted by 1.6 percent over a year ago due to the weakness in customer traffic, marking two consecutive quarters of spending decline.

    According to CREST, traffic declined across all restaurant segments and dayparts. This summer, visits to quick-service/fast-food restaurants declined by 3 percent. Casual dining declined 4 percent, and mid-scale was down 5 percent. Visits at the supper daypart fell for the seventh consecutive quarter, declining in the summer quarter (June, July, and August) by 6 percent versus a year ago. Lunch visits contracted by 4 percent, morning meal traffic fell by 2 percent, and PM snack, which showed positive growth (1 percent) in the spring quarter, declined by 2 percent this past summer.

    “There are a variety of factors contributing to the declines in restaurant visits and spending, including high unemployment, and another is the difference between food prices at home and food prices away from home,” says Harry Balzer, chief industry analyst and vice president at NPD. “Food prices at supermarkets are less than a year ago, while restaurant prices are higher than a year ago.”

    To appeal to the price-conscious consumers, restaurants have been aggressive in offering deals over the past year. Deal-related visits to restaurants remained the only area of increase in the summer quarter, despite a tough year-ago comparison of 9 percent growth, NPD reports. Deal-related visits increased by 2 percent and non-deal visits fell by 5 percent in the summer quarter ending August. The increase in dealing this summer traced to coupons, especially internet coupons, “buy some/get some free,” and discounted price. Over half of the increase in dealing came from casual dining chains.

    NPD’s CREST OnSite, which tracks usage of foodservice at business and industry, secondary schools, colleges and universities, hospitals, lodging, senior care, military segments, and vending, reports that for the year ending June 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 12 percent decline for the year ending June 2009 versus a year ago. Foodservice traffic increased at colleges and universities (+4 percent), senior care (+1 percent), and military segments (+1 percent). Traffic at secondary schools was down 1 percent for the year, driven by a reduction in a la carte visits. Greater participation in the national school lunch and breakfast programs offered at secondary schools resulted in an increase in cafeteria meal visits.
    News and information presented in this release has not been corroborated by WTWH Media LLC.