NPD: Traffic improved for restaurants in spring

After four quarters of sales declines, spending turned positive, report finds

While restaurants have yet to fully recover from the lingering sales and traffic losses of the past few years, some signs indicate that the business downturn might be easing, according to The NPD Group.

The Chicago-based market research firm found that foodservice outlets narrowed their declines in guest counts in the quarter ended in June 2010, compared with the year-earlier period. Traffic declined 1 percent in those three months, compared with a 3-percent decrease a year ago.

And, after four straight quarters of sales declines, total spending at restaurants turned positive, NPD found, as sales grew 1 percent at foodservice establishments in the quarter compared with a year earlier.

Bonnie Riggs, NPD’s restaurant industry analyst, said the improving traffic trends, particularly for breakfast occasions, showed increasing competition for consumers who remain cautious with their discretionary dollars.

“Although the traffic declines moderated this past spring, restaurant operators continued to battle for market share,” Riggs said. “Throughout the recession, selected chains have been successful at increasing traffic by aggressively marketing new offers while also providing some low-priced options. One area that showed growth this past quarter came from the value menu, generally a very low price point option for consumers.”

NPD’s forecasts indicated further improvement in restaurant traffic, calling for guest counts to stabilize in the third quarter and grow slightly in the fourth quarter of 2010. Some positive trends already are underway, including a rise in breakfast traffic.

Total morning meal visits rose 1 percent compared with a year earlier, which included a 2-percent gain at quick-service restaurants — likely benefiting from McDonald’s Breakfast Dollar Menu and the launch of Subway’s breakfast platform with Seattle’s Best Coffee. Recently, Burger King also said it made a significant investment in breakfast, introducing nine new items, while Wendy’s and Taco Bell continue to test menus for the morning daypart.

However, lunch and dinner traffic have yet to rebound, with both dayparts suffering a 2-percent decline in guest counts for all restaurants.

Particular weakness at those times of the day have led to total traffic declines of 2 percent at casual-dining restaurants and 3 percent at midscale chains, NPD reported.

Guest counts were flat at quick-service brands, the marketing firm found. However, on-site restaurants are continuing to feel the brunt of the slow recovery from recession, registering a 6-percent decline in guest counts, as high unemployment continues to ravage business and industry, vending, and recreation accounts in particular.

Contact Mark Brandau at [email protected] [3].