NPD: Restaurants roll out promos as dinner daypart dips

NPD: Restaurants roll out promos as dinner daypart dips

The dinner rush is increasingly quiet as relentless economic pressures force more consumers to eat their evening meals at home.

According to new data from The NPD Group, the number of restaurant dinner meals purchased per person has fallen dramatically in the past two years, from 67 in 2005 to 64 in the year ended in August.

“In a two-year period, a three-meal-per-person decline is huge,” said Bonnie Riggs, an analyst for the Port Washington, N.Y.-based market research firm. “It’s occurring across all segments, not just full-service.”

The number of restaurant lunch meals purchased per person also fell from 70 in 2005 to 69 in the year ended in August, NPD found.

While the number of per-capita meals purchased during the morning meal and afternoon snack dayparts has grown, the increases have not made up for the loss at dinner because dinner check averages are nearly double that of morning meal and snack, Riggs said.

After years of increasing share in the dinner daypart, restaurants are losing share of the total number of dinner opportunities. According to NPD, restaurants captured 19 percent of all dinner opportunities in 2007, a nearly 1-percent decline from 2005.

The loss of dinner traffic is coming directly from an increase in meals prepared and consumed at home, according to NPD. In 2007, 241 dinner meals per person were prepared and eaten in the home, up from 232 in 2006.

There are many reasons consumers are staying home for dinner more often, Riggs said.

One major factor is the decline in women entering the workforce, Riggs noted. Since the 1950s, the growing number of women entering the workforce has been a big driver of away-from-home eating. However, according to a recent study by the U.S. Bureau of Labor Statistics, women’s participation in the workforce recently has leveled off, and even has begun to trend downward.

“The study reveals that the decision to stay at home is sparking radical changes in the family’s financial situation, ending discretionary purchases, investments and savings,” Riggs said. “Times get tough when consumers find themselves strapped for cash.… Can they justify eating supper out when they can so easily and economically prepare a meal at home?”

In addition, supermarkets and other retailers are making it more convenient for families to eat at home by offering a variety of prepared-food options, Riggs said.

Climbing gasoline prices also are informing consumers’ decisions to eat at home. While gas prices have been headed skyward since 2005, consumers had not cut back on their driving—until recently. According to new data from the U.S. Department of Commerce, in 2007 the number of consumer miles driven decreased for the first time since 1980.

That decline affects restaurants, Riggs said, because historically when consumers cut back on driving, they also cut back on restaurant visits.

Riggs also cited the subprime-mortgage crisis, falling real estate values and health concerns as reasons consumers are cutting back their visits to restaurants.

“With everything that’s going on, it’s really going to be a challenge to hold [onto] traffic, let alone grow it,” Riggs said.

To attract financially squeezed consumers, operators across the country are rolling out everything from discounted menu items and reduced parking promotions to new marketing campaigns.

“It’s just do everything you can to entice them to come back,” Riggs said.

Like many casual-dining chains, Culver City, Calif.-based Sizzler [3] has seen a noticeable decline in lunch and dinner traffic in the past few months, particularly during the weekends.

“It’s not that the customer doesn’t love you,” said Mike Branigan, vice president of marketing for Sizzler USA. “It’s that they literally don’t have the money to go out on the weekend.”

In late November, Sizzler, which has 232 domestic units, rolled out its limited-time Pacific Grill promotion in order to increase traffic and sales on weekends. The three-tiered offer features a teriyaki-glazed steak with two sides for $10.99. Customers then have the option to add on a choice of two shrimp dishes for $12.99 or $14.99.

“We’re trying to stay true [to our] pricing,” Branigan said. “When this economic turn comes around, they will be back.”

Similarly, Denver-based Vicorp, which operates the Baker’s Square and Village Inn [4] family-dining concepts, also is seeking to boost sluggish dinner traffic and sales without slashing prices.

“What we’re trying to do is weave in a level of value that’s not necessarily [about] price,” said Josh Kern, Vicorp’s vice president of marketing.

The company is offering combo meals at select Baker’s Square units. For example, customers at the chain’s Midwest units can order a steak dinner combo, complete with two sides for just $6.99. Once they come in, Kern said, the hope is that they’ll order additional sides, appetizers or dessert or come back another time to order one of the items from the chain’s new “Legendary Restaurants, Legendary Recipes” menu, which features award-winning entrées from well-known restaurants around the country priced at about $9.99.

Instead of modifying its menu, Pickwick and Frolic [5] in downtown Cleveland has been trying to increase traffic by defraying the high cost of parking and gasoline for its customers, the majority of whom drive to the 27,000-square-foot dining and entertainment complex from the surrounding suburbs.

“Everybody is feeling the pinch of energy prices,” said John Lorince, Pickwick’s marketing director. “We have to make some sort of concession to [attract customers].”

This summer Pickwick partnered with a local gas supplier and raffled off $25 gas cards to patrons attending its Wednesday night comedy showcase.

To help offset the high cost of parking in the area, which can be as much as $25 per car, Pickwick partnered with a local parking garage and now offers customers $2.50 parking. Lorince said these promotions, the discounted parking in particular, are really driving business.

While having some sort of value proposition is key, operators also need to broadcast that proposition, Riggs said.

“If [operators] are going to increase traffic, they’re going to have to communicate an exceptional value proposition,” said Riggs.

More operators recognize the need to retool their communications strategies. Among them is Cracker Barrel Old Country Store [6], which recently began testing its first TV ad campaign since 1998 in an effort to increase traffic and sales. Other family-style chains that have recently tweaked their marketing approach include 580-unit Bob Evans and 1,539-unit Denny’s [7].

Despite the high cost of marketing campaigns, even small chains such as Luna Park, an upscale concept with one unit in Los Angeles and another in San Francisco, are harnessing the power of marketing and public relations. To get customers interested in the four-year-old Los Angeles unit, owner A.J. Gilbert revamped the restaurant’s interior, added a brick pizza oven, brought in a new chef and then hired a public relations company to spread the word about it all.

“Faced with declining sales, I went back to what worked,” Gilbert said. “I went back to all the energy and investment of opening a new restaurant. PR is really expensive, but I think it helps a lot.”

Nation’s Restaurant News has an exclusive agreement to obtain the NPD Group data and research findings that appear on the Consumer Trends page.