CHICAGO—The restaurant industry remained stable for most of 2008 with visits and dollars up over the previous year, but traffic dipped in the fourth quarter, yielding the industry’s slowest traffic and dollar growth since the recession of 2002 to 2003, according to The NPD Group.
NPD’s Consumer Reports on Eating Share Trends (CREST®), which tracks consumer usage of commercial foodservice, reports foodservice traffic advanced +0.2% over a year ago for the year ending Nov. 2008, and consumer spending grew by 2%.
“Despite this past year’s extremely weak economic conditions, the restaurant industry as a whole managed to keep its head above water for most of the year,” said Harry Balzer, chief industry analyst and vice president, NPD Group, and author of Eating Patterns in America. “Strong promotional activity on the part of chains, and growth in breakfast and lunch visits to quick-service restaurants, contributed to the slight gains the industry experienced this past year.”
According to NPD, promotion-related visits supported all commercial foodservice gains, as deal visits increased 6% and non-deal visits slipped by 1%. For the annual period ending Nov. 2008, 23% of all traffic involved some type of consumer-recognized deal. Over 90% of the increase in deal visits came from quick-service restaurants (QSR).
While QSR traffic growth slowed in 2008, the segment fared better than full-service restaurants. The modest growth at QSR offset losses at midscale restaurants. Deal-related traffic kept QSRs in a positive position. Casual dining traffic was stable for the year; however, trends weakened n the latter half of the year with a 2% decline in traffic for the fall quarter.
As consumers took advantage of discounts at lunch, lunch traffic increased after realizing no growth in 2007. However, visits to restaurants for supper continued to trend down. Morning meal and snack-related occasions slowed over the previous years’ growth, but did experience positive growth in 2008.
“I don’t believe consumers, no matter the state of the economy, will abandon restaurants entirely, they will just use them differently—more cost-consciously,” says Balzer. “There will be no recession in eating; there will just be winners and losers. The restaurants that deliver value and make it easy to get food cheaper, in new and compelling ways, will win.”