Persistent high unemployment will continue to affect the restaurant industry,

Current economic indicators point to recovery, but persistent high unemployment will continue to plague the restaurant industry several months after the recovery is underway, according to The NPD Group, a leading market research company. A recent NPD report provides insights and analysis on what the restaurant industry can expect once the recovery begins, including what enticements consumers say will get them to visit restaurants more often.

According to NPD’s CREST® service, which continuously tracks consumer usage of foodservice, all segments of the U.S. restaurant industry including quick service restaurants/fast food, casual dining, midscale, and fine dining, experienced traffic declines in the first half of 2009. For the seasonal quarter ending May 2009, total industry traffic experienced its steepest decline in 28 years when it declined by -3 percent. The quick service segment, which makes up the largest portion of total industry traffic, declined -2 percent, casual dining declined -4 percent, and midscale was down -6 percent. Fine dining/upscale hotel dining experienced double digit declines. Onsite foodservice traffic, which includes foodservice operations at business and industry, lodging, hospitals, colleges and universities, senior care, and military segments, declined by -9 percent for the quarter ending June.

“The majority of the industry’s challenges are related to unemployment, which isn’t expected to improve quickly,” says Bonnie Riggs, NPD restaurant industry analyst and author of the What to Expect When Economic Recovery Begins report. “If you’re unemployed, you’re not going to be picking up a quick breakfast on the way to work or eating out at lunch. Dining out, overall, is a luxury you can’t afford.”

Affordability is top-of-mind with most consumers, employed or unemployed. When NPD asked consumers, who claimed that they have cut back on restaurant visits, what would entice them to visit restaurants more often, they listed discounts, something free, more dollar menu items, choice of price offerings, and other cost management options were there top responses.

What Would Entice Consumers to Visit Restaurants More Often
Among Consumers Claiming Cut Back Restaurant Visits

Respondents

Source: The NPD Group/Online Custom Study, conducted June 8-11, 2009
Restaurants have heeded the call of these cost-conscious consumers by being aggressive in offering discounts, giveaways, and other incentives. Restaurant visits that came as a result of deal represent a quarter of industry traffic.
“It’s going to be awhile before the industry can move away from deals and other customer incentives,” says Riggs. “But the industry has been in this place before, and always finds innovative and creative ways to bring itself out of it.”