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Study: Consumers to cut back

Dining out and spending may dip; operators should focus on value, convenience, menu quality to win customers

Consumers say they will likely cut back on restaurant visits in 2012, and spend less money on dining out, a new report by restaurant and foodservice consulting firm AlixPartners LLP finds.

Consumers overall expect their restaurant visits to decline by about 3 percent in 2012, according to the report, from 11.7 monthly visits in last year’s second quarter to 11.3 monthly visits this year.

Most consumers said they were cutting back on dining out for financial reasons, but many also named a desire to eat more healthfully. A desire for value and convenience also played heavily into their dining-out decisions.

After a tough 2011 marred by spikes in commodity costs, price competition and the general lack of consumer confidence, restaurant chains saw the dining public split into two categories: the 1 percent, or high-end diners who are spending again; and the 99 percent, who are searching for affordable meals that don’t sacrifice quality.

“The industry most certainly is rebounding, but slowly,” said Adam Werner, managing director and co-leader of the restaurant and foodservice practice for AlixPartners. “Companies are going to have to become more defensive. It’s more of a share game. In order for me to grow, I have to steal from you.”

Key trends for 2012: Value, convenience, health

While quality food remains the No. 1 factor influencing restaurant choice, value, convenience and healthfulness are also key trends for the year ahead, the report said.

Consumers said they plan to pay about 5 percent less in restaurants in 2012 compared with last year, in part because of promotions and dining deals that drive traffic.

The average amount spent per meal is expected to drop to $13.30 this year, compared with $14 last year, the report found.

“Discounting is here to stay,” Werner said, and restaurant chains will continue to use bundled meals to convey value.

Pricing, however, will also become more sophisticated, with many chains using tiered strategies, varying prices by region or based on consumer demographics, and raising prices only on select or non-core items.

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Digital and social media is expected to increasingly influence dining decisions, especially among 18- to 34-year-olds — although most say they use the Internet mainly to get directions to a restaurant (64 percent) or find discounts or coupons (52 percent).

“No one really has social media figured out in terms of impacting decisions. When someone does figure it out, it’ll be game changing,” said Eric Dzwonczyk, managing director and co-leader of AlixPartners’ restaurant and foodservice practice.

A growing number of consumers are also seeking convenience, and many are turning to convenience stores, many of which have invested significantly in their food offerings over the past year, Werner said.

Almost half of respondents, or 46 percent, said they expected to visit a C-store this year with the primary purpose of buying a meal.

“It’s not just a hot dog or Diet Coke anymore. It’s sushi or a sandwich prepared on site,” he said.

Dzwonczyk said consumers now expect to see healthful options on restaurant menus, and if they don’t, “there’s an adverse reaction.”

Although many consumers say they tend to order healthful options more often for their children than themselves, several restaurant chains are now seeing their healthful or low-calorie menu items become top sellers.

“Over the past 36 months or so, what was more of a fad is now a trend. It’s sticking,” Dzwonczyk said.

Strategies for the year ahead

Here are a few strategies the report recommended for the year ahead:

• Many operators should have simpler menus that focus on enhancing brand image. While many chains, particularly in casual dining, attempted to offer something for everyone, operators today should consider a more targeted approach.

Successful strategies for some have included using local or organic ingredients, offering low-calorie or gluten-free dishes, or highlighting environmental sustainability.

• Operators should continue to explore and expand non-traditional revenues streams, like stretching dayparts, adding catering or offering licensed products in grocery stores.

Breakfast is an attractive daypart for many, for example, a time of day when consumers place greater importance on convenience and speed of service than price.

• Beverages offer an opportunity, especially those focused on health and wellness, like teas and smoothies. Some quick-service and fast-casual players are looking to add beer and wine, and many chains are promoting local beverages, like craft beers, as well as signature cocktails and customizable selections.

Contact Lisa Jennings at [email protected].
Follow her on Twitter: @livetodineout

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