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Breaking down 30 years of restaurant traffic trends

In this special report on restaurant traffic, NRN explores the challenging traffic environment for operators, the consumer “need states” brands must target to succeed, and the strategies of chains winning in this market-share game.

Bonnie Riggs, restaurant analyst for market research firm The NPD Group, has been studying guest traffic trends for the past 30 years — and she has never seen business as sluggish as it is today.

Visits to restaurants fell by 3 percent during 2009, the heart of the “Great Recession,” and despite data indicating a broader macro-economic recovery, customers still are staying away from restaurants as we close out 2014.

There are bright spots — like the breakfast daypart, the fast-casual segment and higher-end restaurants offering middle class consumers an experience to remember. Riggs says operators looking to win won’t forget the Baby Boomers, while building a connection to the Millennials.   

Source: The NPD Group. Photo: Devon Yu/Thinkstock

In a conversation with Nation’s Restaurant News, Riggs discusses today’s industry challenges and tomorrow’s potential victories.

Never before have we ever seen anything like this recession. We just have not been able to recover. The recession officially ended in June of 2010, but consumers are still behaving like we haven’t come out of it. We are forecasting for the industry to grow less than half a percent per year out to 2022 in terms of traffic. That’s less than [the projected] population growth. There will be pockets of success, winners and losers.

What areas look particularly challenging?

If you look at the middle class, they’ve cut back drastically on going to restaurants. They’re not making as many visits on the lower end [quick service and midscale]. When they go out they are going to fast-casual and higher-end restaurants, and making it more of a special occasion. They’re looking for an experience. When they go out and spend their money they want to find the value in the money they’re spending.

Many restaurants are targeting the Millennial demographic. Is that a good idea?

They’re a big group, second only to Baby Boomers, and soon [the Millennials] will be bigger. But Millennials have cut way back on visits, by 50 fewer visits per person [annually] over the past six years. They used to be the heaviest users. They no longer are. Now it’s the Boomers and beyond whom are at least keeping the industry holding steady.

Is there any good news?

The only bright spot is the morning meal, and that’s just up 1 to 2 percent, depending on the quarter. In the last quarter it was closer to 3 percent, but that’s when Taco Bell entered the breakfast market.

Fast-casual has broad appeal … They score higher [with customers] than any other concepts on fresh ingredients, quality food, good-tasting food, reasonable and affordable prices, and order accuracy, as well as politeness of staff. [According to NPD’s CREST report.]

We hear about how Millennials support fast casual, and they do. But in 2014, on average, young Millennials — those aged 18 to 24 — visited a limited-service restaurant, including both quick service and fast casual, 164 times, with 151 to QSR and 13 to fast casual. Older Millennials — aged 25 to 34 — visited limited-service restaurants 171 times, with 160 QSR and 11 fast-casual [visits].

Consumers are looking for an experience

(Continued from page 1)

You did mention that, though traffic is down, when customers do go out they go out for more premium experiences, right?

The number of checks in the $0-to-$10 range has declined by 1 percent over the past three years, and that’s where 80 percent of all checks are. That’s where consumers have cut back.

Checks in the $10-to-$20 range are up 5 percent, checks in the $20-to $40 range are up 6 percent, but they only account for 3 percent of the total. And checks over $40, which only account for 1 percent of the total, are up 11 percent.

When we do go out, we’re looking for a really nice experience.

We know that one reason for sluggish traffic is lack of consumer confidence. Are there also long-term demographic issues we need to look at?

In the 1980’s and ‘90s all these women were entering the labor force and had kids and needed convenient home meal solutions. Takeout grew with that. Now more women are stay-at-home moms.

Also, technology has had a huge impact. So many people are working from home, and when you’re working from home it’s not likely that you’re going out to eat lunch.

All of that starts to add up.

What would you do right now if you were a restaurant operator?

I would make sure, for one thing, that I had a really good website, because social media is where it’s at. [Consumers] are not watching TV or reading papers. The first place they go to know about restaurants is the website. You have to keep that alive and exciting and make them want to come to your restaurant.

You also need a competitive point of difference. I want [customers] to come in and have a unique experience. Competition is no longer the restaurant down the street. It’s coming from retail and from the home.

Also, don’t just go after the Millennials. The Boomers are heavier users and [the industry] has not been paying attention to them. They feel like they’ve been neglected and they want to be rewarded for their loyalty. They want good, polite service, comfortable seating, good lighting, menus they can read and restaurants that aren’t so noisy.

Contact Bret Thorn at [email protected].
Follow him on Twitter: @foodwriterdiary

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