restaurants

NPD: 76% Still Cutting Back on Dining Out

Restaurant

While the restaurant industry continues to see signs of slow recovery, more than two-thirds (76%) of U.S. consumers continue to report that they are reducing restaurant visits -- and that when they do dine out, they're trading down and ordering fewer items.

This finding has broad and long-term implications, according to its source, a new report from The NPD Group, "The Changing Consumer Mindset: What It Means to the Restaurant Industry."

While this cautious, "controlled spender" group skews toward the unemployed, less affluent and retirees, it obviously spans all demographic groups -- except the 24% who have been relatively unaffected by the recession.

"Rather than age largely defining frequency and type of restaurant visited" -- which has traditionally been the case -- "lingering effects of prolonged unemployment and loss of wealth by many will carry forward in years to come, regardless of age," sums up Bonnie Riggs, NPD restaurant industry analyst and author of the report.

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While this overriding majority of controlled spenders say they expect to be less restrictive about dining out when the economy recovers, they don't expect that to happen anytime soon, reports NPD.

Those within the minority who are relatively unaffected by the economy also span all demographic groups, but -- not surprisingly -- are more likely to be employed, to live in affluent households, and to be generally more optimistic than those hurt by the recession. Consumers in this group have also shown some signs of trading down by restaurant segment since 2007, but have been notably less inclined to change their dining-out behaviors.

Again, not surprisingly, "there is considerable disparity between the views of optimists and controlled spenders regarding enticement to visit restaurants more often," reports Riggs. "Optimists place much more importance on service and a relaxing atmosphere than controlled spenders, who are more concerned with price and value."

Message for restaurant operators? "Recovery and growth for the industry will mean understanding the shift in consumer behavior and realigning strategies with what may be the new normal," concludes Riggs.

For the year ending February 2011, total industry traffic was flat -- still better than the 3% decline experienced during the same period a year ago, according to NPD's CREST service, which tracks consumers' use of restaurants and other foodservice outlets. However, NPD forecasts growth of less than 1% for the industry through 2019.

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