NPD: Restaurants likely to wean customers off discounts/deals

 
May 19, 2010
Restaurants across all segments of the restaurant industry offered a host of deals and discounts over the past two years to entice recession-ridden consumers to visit. With signs that the economy may be improving, restaurants now will be trying to wean customers off of the expected deals with different types of offers, reports market research company The NPD Group.
 
According to recent NPD foodservice market research that examines consumer behavior patterns through past and current recessions, restaurant operators will likely move consumers away from steep discounting with deals like combo meals and value menus, which some chains have already started to offer. At the same time, operators are offering higher-priced product innovations to appeal to customers' appetites for something new and offset the cost of discounts.
 
In its recent study, "Light at the End of the Tunnel . . . What Can We Expect," NPD reports that during the current recession, "buy some/get some," discounted price, coupons and daily specials largely supported deal traffic the past two years.
 
"Restaurant traffic has been slipping since January 2009, and the decline in visits would have been worse had it not been for dealing," said Bonnie Riggs, NPD's restaurant industry analyst and author of the study. "Visits using a deal now represent about a quarter of restaurant traffic."
 
With restaurant traffic still down, dealing continues to be important, but according to the NPD study, consumers who claimed to have cut back on restaurant visits indicate that price discounts and other deals are less important motivators than last year. As consumer sentiment about the economy improves, operators could be expected to begin to ease consumers off of dealing as they've done in previous recessions.
 
Riggs said that a dual effort of combo meals and value menus is the strategy historically chosen to ease consumers off of steep discounts, and there have been combo meal promotions recently announced. From the standpoint of the operator, these two types of deals are an opportunity to build a check size.
 
"We're also seeing more product introductions on menus because consumers are always looking for the next new thing, especially recession-weary consumers," Riggs said. "Typically, these new products have higher price points, which help offset the cost of the deals."

Topics: Food & Beverage , Marketing / Branding / Promotion , Operations Management


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