restaurants

NPD: Restaurant Traffic Down 1% In Q3

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Continued high employment suppressed overall restaurant industry traffic recovery in the third quarter, with traffic showing a 1% decline, according to NPD Group.

However, there were positive signs during the quarter, and the researcher expects traffic to grow by 1% in both Q4 2010 and first-quarter 2011.

While Q3 traffic for midscale restaurants was down 3% in the third quarter, and traffic for casual dining formats was down 2%, QSRs -- which represent the industry's largest traffic share -- saw a 1% increase, according to NPD's Crest, which tracks consumer use of commercial and noncommercial foodservice outlets.

Also, consumer spending in commercial outlets gained 2%, nearly recovering from a 2% decline seen in last year's third quarter and reaching about the same level as third-quarter 2008.

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"Some of the areas most affected by the recession have stopped declining or are starting to edge back up, like families with kids and non-deal visits," says NPD restaurant analyst Bonnie Riggs. "These are positive signs that the industry is beginning to return to normalcy. But high unemployment will keep the industry from full recovery."

Unemployment has been highest among young adults 18 to 34, historically the most frequent restaurant users. Since September 2008, per capita restaurant visits for those 18 to 24 have declined from 236 to 215, and visits among those 25 to 34 have declined from 256 to 235.

Unemployment is also still affecting noncommercial foodservice traffic. Total traffic in the noncommercial sector -- which includes businesses, schools, hospitals, military installations and other locations -- declined 6% in the third quarter versus same period in 2009.

However, traffic losses have softened, and the hardest-hit sectors continue to be those most affected by the economy and high unemployment, such as business/industry, vending and recreational facilities, according to NPD's Crest OnSite noncommercial tracking data.

"In spite of the visit declines, U.S. consumers still made 67 billion visits to commercial and non-commercial restaurants over the past year," notes Riggs. The winners in the months ahead will be those that "draw consumers out of their homes or away from competitors" with innovative offerings, she adds.

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