News

Growing income gap affecting restaurant industry traffic

September 23, 2014

The income gap between the wealthiest and poorest Americans is the widest its been in 100 years, according to the Pew Research Center. Those who identify as "middle class" has also never been lower.

This macroeconomic trend is having a direct effect on the restaurant industry, according to new research from The NPD Group.

According to a news release from the market research firm, one of the effects of income bifurcation is that visits to QSRs, which have an average check size of about $5, were flat in the year ending June 2014 compared to same period last year, and visits to fine dining restaurants, which have an average check size of $40, were up 3 percent.

Total restaurant industry traffic was flat for the period. 

The challenge is that about 80 percent of restaurant visits are at QSRs and the growth in fine dining visits, which holds only a single-digit traffic share, isn't enough to increase overall traffic, according to NPD's CREST foodservice market research. 

Low-income consumers, who are heavier QSR users, were most adversely affected by the recession and have less discretionary income to spend on dining out. With low-income visit cutbacks and not enough fine dining traffic to make-up for traffic declines, restaurant operators will need to appeal to the middle-class to fill the gap, says NPD. 

"Although the percentage of consumers identifying themselves with the middle class is shrinking, this group still represents a large segment of the population and shouldn't be ignored," NPD Analyst  said in the release."However, offering a good product at a fair price is no longer good enough. To attract them will take a deeper understanding of what they want when dining out."   

She adds that consumer behaviors have changed because of the recession and maybe for good. And, although consumers continue to make billions of visits to restaurants annually, they are more spend-conscious.

"(They) want to be certain that the return on their investment in a restaurant meal is a pleasurable dining experience that meets their needs and expectations," she said.