Recession May Be Abating, but Restaurants Still Slammed
While business leaders anticipate sales increases in 2010, restaurants experience the steepest traffic declines in 28 years.
By David Farkas, Senior Editor -- Chain Leader, 7/20/2009 9:27:00 AM
The economy remains anyone's guess, according to two reports out today.
A quarterly survey of 102 business leaders who work in the private sector, including foodservice, shows the recession is abating, though signs of a robust recovery are few and far between.
And a Port Washington, N.Y.-based market research firm reports the steepest decline in restaurant customer counts in 28 years.
One hopeful sign to the business community overall is the end of falling sales. "The vast majority of [respondents] expect their companies' sales to be rising in 2010. Some 45 percent reported that sales had hit their cyclical low in the first half of 2009 or earlier, while 41 percent put the trough in the second half of 2009," said Sara Johnston, a spokeswoman for the National Association of Business Economists, which conducted the quarterly survey of private sector business leaders.
Only 14 percent expect that sales will reach their low point in 2010 or later, she added.
Still, merely 18 percent of the respondents planned to boost payrolls in the coming year, and 28 percent anticipated reductions. Only 8 percent reported raising raising? capital spending in the last quarter, the lowest proportion in the history of the survey, which began in 1982. The survey also noted more firms are willing to undertake capital expenditures in the year ahead, but cuts still outnumber increases.
Big Drop for Restaurants
NPD's Consumer Reports on Eating Share Trends (CREST) data showed a decline in traffic of 2.6 percent in the spring quarter. The figure ranks as the largest drop since 1981.
| Segment Traffic Declines at Restaurants | |
| Quick service | -2 percent |
| Casual dining | -4 percent |
| Midscale | -6 percent |
| Source: NPD Group | |
The report blamed job losses and "households with children" for the falloff at quick-service, casual-dining and midscale restaurants. "Parties including children, which represent a third of industry traffic, and adults from households with children have been cutting back on restaurant visits for the last three quarters," the report noted. It traced more than half of the quarter's decline to fewer dinner visits from parties with kids.
Menu prices rose 2 percent in the same period, failing to offset traffic. "The commercial foodservice industry has been struggling since last fall, and it appears that as unemployment increases the struggle is increasing," said Arnie Schwartz, president of U.S. foodservice at NPD. "Dealing, value menus and attractive price points seem to be supporting some operators who are holding on. Menu innovations in the fast-casual and QSR segments have also helped to capture occasions."
