NPD: Lingering unemployment will delay restaurant industry recovery

Sept. 21, 2009
Current economic indicators point to recovery, but persistent high unemployment will continue to plague the restaurant industry several months after the recovery is underway, according to market research firm The NPD Group. A recent NPD report provides insights and analysis on what the restaurant industry can expect once the recovery begins, including what enticements consumers say will get them to visit restaurants more often.
According to NPD's CREST service, which tracks consumer usage of foodservice, all segments of the U.S. restaurant industry experienced traffic declines in the first half of 2009. For the seasonal quarter ending May 2009, total industry traffic experienced its steepest decline in 28 years at -3 percent. The quick-service segment, which makes up the largest portion of total industry traffic, declined -2 percent, casual dining declined -4 percent, and midscale was down -6 percent.
"The majority of the industry's challenges are related to unemployment, which isn't expected to improve quickly," said Bonnie Riggs, NPD restaurant industry analyst and author of the report, "What to Expect When Economic Recovery Begins."
Affordability is top-of-mind with most consumers, employed or unemployed. When NPD asked consumers who claimed that they have cut back on restaurant visits what would entice them to visit restaurants more often, they listed discounts, something free, more dollar menu items, choice of price offerings, and other cost management options. The breakdown is as follows:
  • 31%  of consumers said price discounts on regular menu items
  • 24% of consumers said coupons for a free item, no purchase necessary
  • 23% of consumers said dollar/99 cent offerings
  • 17% of consumers said variety of price offerings
  • 10% of consumers said smaller portions at lower price
The NPD Group/Online Custom Study was conducted between June 8-11, 2009.
"It's going to be awhile before the industry can move away from deals and other customer incentives," said Riggs. "But the industry has been in this place before, and always finds innovative and creative ways to bring itself out of it."

Topics: Operations Management , Trends / Statistics

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