CHICAGO -- The U.S. restaurant industry, like other retail sectors, remains in a "snoozefest," otherwise known as the doldrums. Locally based research company The NPD Group recently reported that restaurant traffic remained at approximately 61 billion visits in the year ended May 2014, which was flat compared to the prior year.
While 61 billion is a lot of restaurant visits, NPD noted the traffic is still below pre-recession traffic volume levels by nearly 1.3 billion visits. Furthermore, NPD's long-range forecast shows little traffic growth -- less than 1 percent -- over the next several years.
“There are some fundamental shifts in how consumers, particularly low- and middle-income consumers, address their discretionary spending,” said Bonnie Riggs, NPD’s restaurant industry analyst. “Similar to the stalled growth other retail sectors are experiencing, restaurants are being negatively impacted by a large segment of the population who are watching their discretionary spending closely. Going to a restaurant is a nice-to-have and not a need-to-have. ”
Some specific problems with the restaurant industry identified by the NPD Group are:
- A decline in visits to mid-scale/family dining and casual dining restaurants.
- Lunch and dinner meal times, which represent two-thirds of all industry visits, have experienced traffic declines over the past several years.
- Consumers aged 25 to 49 are visiting restaurants less, on average dropping a total of 44 annual visits over the last three years.
- Visits to hamburger quick-service restaurants also declined by 2 percent compared to the year-ago period.
There is a silver lining to NPD's findings, however. There are areas of the industry that are doing well, particularly those that offer a less expensive option, provide a better value or otherwise save customers money. Traffic for breakfast, the least expensive daypart, has remained up for the last three years, similar to deal- or discount-based traffic up 5 percent in the year ended May 2014. In comparison, non-deal visits were down 2 percent from the year-ago period.
Additionally, the fast-casual quick service category, which consumers perceive to have enhanced service and higher quality food than traditional quick-service restaurants, continues to grow visits.
“The restaurant industry is not going to see the strong growth it did prior to the recession in the near future. Consumer attitudes and behaviors have changed and may have changed for good,” Riggs added. “Margins are being squeezed and it’s a battle for share, but the fact remains that U.S. consumers still make billions of visits to restaurants each year. It’s a matter of staying in touch with the reasons why they visit and providing them the experience they want when they do eat out.”