Quick-Service Traffic Down for First Time in Five Years

Total foodservice visits dropped by 1% in the third quarter.

December 07, 2016

CHICAGO – A confluence of squeezed consumer wallets, the rising cost of dining out, and changing needs and wants has brought the U.S. restaurant industry traffic growth to a halt in the first two quarters of 2016 and into the negative in the third quarter, reports The NPD Group. Total foodservice visits declined by 1% in the third quarter compared to same quarter last year, and quick-service restaurant traffic, which represents 80% of total industry visits, dropped for the first time in five years, according to NPD’s ongoing foodservice market research.

“The term growing your business in a ‘1% world’ has become a popular mantra for the restaurant industry after six consecutive years of annual traffic gains of just 1%,” said Bonnie Riggs, restaurant industry analyst at NPD, in a press release. “However, over the past six months, restaurant industry traffic growth has come to a standstill and quick service restaurants, which have been the traffic growth drivers, are now experiencing a slowdown in visits.”

Riggs pointed out that there are multiple reasons why consumers have pulled back on visiting restaurants, and chief among them is cost. Rising health care costs and/or student debt have reduced the amount of disposable income consumers have in their wallets. According to another NPD survey, 75% of respondents who have decreased their visits to restaurants say they watch how they spend their money on most or all purchases, and a high percentage of these respondents think that restaurant prices are too high.

The average restaurant meal cost has risen 21% over the last decade. With lower grocery prices, the cost gap between eating at home and dining out is widening. Eighty-two percent of all meals are now consumed in-home.

“The marketplace is changing and despite improving economic indicators, the consumer landscape is fundamentally reshaped,” Riggs said. “What hasn’t changed and won’t change is the consumer’s need for foodservice; it saves them time and provides them with an experience. Restaurant operators will need to look for ways to differentiate themselves from the competition. They will need to find the means to stay relevant in consumers’ minds—innovative products, unique promotions, competitive pricing, stating the benefits of eating at restaurants compared to home—while delivering an enjoyable experience.”

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