Spending Conscious Low- And Middle-Income Consumers Keep Visits From Growing
Chicago, July 23, 2014 — U.S. consumers made some 61 billion visits to restaurants in the year ending May 2014. No question that’s a lot of visits, the issue is that they have been making that same amount of visits for quite a while now and it’s still below the pre-recession traffic volume levels by almost 1.3 billion visits, reports The NPD Group, a leading global information company. Spending conscious consumers kept visits to total U.S. restaurants and foodservice outlets flat in the year ending May 2014 compared to same period last year, and NPD’s long-range forecast shows little traffic growth (less than 1 percent annually) over the next several years.
There are a variety of problem areas keeping restaurant industry traffic from growing. Visits to midscale/family dining and casual dining restaurants have been in decline since prior to the recession, according to NPD foodservice market research. Lunch and dinner meal times, which represent two-thirds of all industry visits, have experienced traffic declines over the past several years. Consumers, ages 25-49, have dropped a total of 44 annual visits per person over the last three years. And, more recently, visits to hamburger quick service restaurants have slowed down (down 2 percent in year ending May 2014).
“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. ”
There are areas of the industry that are doing well and in many cases it’s a result of being a less expensive option, saves consumers money, or offers more perceived value for the money , reports NPD. Visits at breakfast, the least expensive foodservice main meal, have been up for the last three years. Traffic based on a deal or discount was up 5 percent in the year ending May 2014 period compared to non-deal visits, which were down 2 percent. 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,” says Riggs. “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.”If you have any questions about this article, contact us.