NPD: Restaurant Traffic Down 3% In '09

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Restaurant visits declined across all segments and in all four quarters of 2009, resulting in a total-year decline of 3% versus year-end 2008, according to The NPD Group.

In addition, NPD estimates that consumer spending in restaurants declined 1.2% last year -- the first decline recorded in such spending since the market research firm began tracking the foodservice industry in 1976. The sales decline reflected both the weak traffic and only modest growth in check size.

Among commercial restaurant segments, traffic declined last year by 3% for QSR's, 5% for midscale formats, 4% for casual dining formats and 13% for fine dining/upscale hotel restaurants.

Non-commercial venues' traffic also declined, by 9%. (Those include dining facilities in businesses, schools, hospitals and senior care, lodging, military and vending segments. Total foodservice industry traffic (commercial and non-commercial) declined by 4% for the year.



Looking at traffic in the four years preceding 2009, per NPD's CREST tracking service, formats that were already experiencing declines include fine dining (ranging between 1% and 4% per year) and midscale (1% to 2% per year). Casual dining traffic was up by 1% per year between 2005 and 2007, but dipped by 1% in 2008. Non-commercial venues gained 1% in '05 and '06, but declined by 1% in '07 and 2% in '08.

Only QSR's - reflecting the general consumer trading down/economizing trend -- managed to show slight traffic gains in all four years preceding 2009 (2% and 3% gains in '05 and '06, respectively, and 1% gains in '07 and '08).

Foodservice traffic started to turn soft in 2008's summer quarter, and declines accelerated in mid-2009, NPD reports. After steep declines in Q3 2009, Q4 losses moderated, but traffic was still down by 2.9%.

"In 2008, consumers appeared to trade down some full service visits for fast food visits," sums up NPD restaurant industry analyst Bonnie Riggs. "In 2009, they made fewer visits to restaurants overall -- and when consumers did visit restaurants, they favored lower priced options."

The overall traffic weakness of course reflects the economy, but in particular high unemployment and low consumer confidence, NPD reports. Nearly half of the traffic losses related to fewer visits made by people picking up something from a foodservice outlet to eat at work. Visit cutbacks by families with kids and young adults, who are the heaviest restaurant users, has also been a key factor in traffic declines.

In addition, lower food commodity prices, while easing margin pressures for some restaurant operators, also made grocery store prices more appealing to consumers. NPD's tracking of consumption behavior and attitudes in home and away from home finds consumers -- particularly those most concerned about their finances -- viewing in-home meals as more affordable.

As for this year, NPD is projecting continued weakness until unemployment begins to abate, with the first signs of modest growth not expected until the fourth quarter.

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