Why Restaurant Customers Are Pulling Back Spending
Is the economic slowdown responsible for slumping restaurant traffic, or is something else to blame?
By David Farkas, Senior Editor -- Chain Leader, 10/22/2008 3:26:00 PM
As the economy tanks, shrinking the job market and submerging 401(k) plans in the process, consumers are pulling back spending, according to three recent surveys. Yet when it comes to explaining the drop in restaurant visits, the reasons are less clear.
Under the heading “Top 20 Changes Consumers Have Made,” a report from Booz & Company, New York -based management consultants, shows that slightly more than four of 10 respondents (43 percent) were eating outside the home less than six months ago due to worsening economic conditions. Roughly the same number (39 percent) said they were now choosing less expensive restaurants. About 35 percent noted they had trimmed their visits to fast feeders.
Another survey blames the financial market meltdown for likely causing a high number of consumers (74 percent) to visit both quick- and full-service restaurants less often. Technomic Inc., a Chicago-based foodservice consultancy, also found that over 50 percent of consumers--and over 70 percent of higher-income consumers--intended to spend less when they do visit either type of restaurant.
Maybe It’s Not the Economy
NPD research shows that restaurant usage has been declining since 2001, when Americans purchased an average 211 meals in restaurants. NPD predicts the meal number will hit 207 in 2008, level with last year. Conversely, the number of per-capita meals on average consumed at home has climbed since 2001, to 242 from 235. NPD says this is “one of the biggest changes in consumer eating behavior during the 23 years [of the study].”
The culprit of the drop off, however, hasn’t been precipitated by a worsening economy. NPD contends it’s simply that consumers have more choice when it comes to buying food and beverages--and that has hurt restaurants.
Consumers are buying more prepared meals at convenience and grocery stores, NPD researchers say. Spending at “foodservice outlets,” i.e., restaurants, has crept up just 1.2 percent, to 48.8 percent, since 2001, according to the study.
Grilling at home, apparently, is also a contributing factor. In ’01, NPD says, 31 percent of households prepared a meal on a grill two or three times weekly; today the figure has climbed to 39 percent.
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Annual Casual Dining Dinners and Meals Grilled-At-Home per Person Casual dining and fast-food dinner have both been losing share to dinner at home, and home grilling data from NPD CREST seems to support this. |
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