The NPD Group Reports the Restaurant Industry is Gaining Momentum

Major Restaurant Chains are Leading the Growth

PORT WASHINGTON, NEW YORK, February 25, 2004- Fast food hamburger outlets are leading the recovery in the restaurant industry, after the weakest year in more than a decade. The brightest spots for the industry came in the last quarter, with November, the last month in the seasonal year, being the strongest month of the restaurant year. Traffic at fast food hamburger restaurants was up six percent from September-November vs. the year earlier, and dollars were up seven percent for the same period. The year ended with overall consumer spending for the industry up one percent for the 12 months ending November vs. the same time a year ago, but traffic still declined by one percent for the total industry.

The NPD Group reported gains in the last quarter of the restaurant year, September-November, for the first time in five quarters. Consumer spending for that quarter (Sept-Nov 2003) was up two percent vs. the same time a year ago and traffic was up half of one percent. "The industry still has yet to show strong growth. We had an uptick, driven by market leaders, but it's not enough to get customers out of their homes in droves," said Harry Balzer, vice president of The NPD Group.

Major Chains Are Market Leaders
Major chains are fueling the growth and getting Americans back to restaurants. The big chains account for about 50 percent of the total restaurant industry and they saw a four percent increase in traffic for the year ending November compared to the same time a year ago. Quick Service Restaurant (QSR) chains and Casual Dining chains led the way with an increase in traffic by five percent.

Let's Do Breakfast and Lunch
Americans are doing breakfast and lunch at restaurants. New product introductions and marketing support led to increases in the cheaper dayparts of the restaurant industry. For the last seasonal quarter, September to November, fast food restaurants saw an increase in traffic of three percent for breakfast and four percent for lunch, with dinner coming in flat. Traffic at Casual Dining restaurants was up six percent for lunch and for Midscale restaurants it was up one percent.

People are spending more, but not much more. Average eater checks at restaurants were up just over one percent, slower than the 2 percent inflation rate. This slow growth rate partially reflects consumers' shifts towards visiting more often for breakfast and lunch, which are less expensive than dinner.

"This is our first indication in over a year that Americans are going out and buying meals at restaurants again. There was some concern in the last year that maybe we're moving back to our homes for more meals…that restaurant usage had peaked. While the trend is not clear, this is a good sign for the industry," said Balzer.

About The NPD Group, Inc.
Since 1967, The NPD Group has provided reliable and comprehensive sales and marketing information for a wide range of industries. NPD provides critical knowledge on what is selling, where, to whom and why. Today more than 1,300 manufacturers and retailers rely on NPD to help them better understand their customers, product categories, distribution channels and competition. Information from The NPD Group is available for the following major vertical sectors: apparel, appliances, automotive, beauty, cellular, consumer electronics, food and beverage, foodservice, footwear, home improvement, housewares, imaging, information technology, music, software, travel, toys and video games.

NPD Foodworld®, a division of The NPD Group, provides sales and marketing information for manufacturers, operators and retailers in the food, beverage and foodservice industries. Only NPD Foodworld® provides a complete picture of what Americans are actually eating - both at home and in restaurants. Today a host of market-leading companies in the industry rely on NPD Foodworld® for the knowledge they need to drive better, more fact-based decision making.

For more information:
Cristina Hilsenrath
cristina_hilsenrath@npd.com
516-625-2443