||Report: Deals Not Driving Restaurant Traffic
Deals and discounts did not drive restaurant traffic in 2012 as much as they did in prior years, and operators need to re-engineer offers to appeal to younger diners, according to research released this week by The NPD Group.
Restaurant visits driven by a deal or discount declined 3 percent for the year ending in December 2012 compared with the prior year, according to Port Washington, N.Y.-based NPD's foodservice market research.
Researchers blamed the decrease in deal traffic on the increased reliance on bundled meals and value menu offerings, tactics that many restaurant chains used last year with the hope of weaning consumers off of straight discounts.
"Deals and special offers definitely influence restaurant visits, and if it weren't for deals during the recession, the industry would have fared much worse, but some of the deals being offered today aren't resonating with consumers," said Bonnie Riggs, restaurant industry analyst for NPD.
In 2008, when consumers were hit hardest by the recession, restaurant visits based on deals or discounts rose 5 percent, while non-deal traffic fell 1 percent, NPD said. That trend continued into 2009, when deal-related traffic rose 3 percent, while non-deal traffic declined by 4 percent.
By 2012, however, those trends were reversed. Deal-related restaurant traffic fell 3 percent last year, and non-deal traffic rose 2 percent.
One factor may be that many restaurant deals, such as "two for $20" lunch deals in casual dining, have been in place for several years now. "After certain deals have been in the marketplace for a while, they become the norm," Riggs explained. "It becomes no longer a deal to consumers."
In addition, in the quick-service world, in particular, the disparity between deal and non-deal pricing is shrinking, she added. That factor has hurt traffic among younger consumers specifically, an age group that continues to be very price sensitive.
Going into 2013, value remains top of mind for all consumers, especially as the payroll tax increase and rising gas prices take a toll on discretionary spending, said Riggs. NPD has projected that overall traffic will remain slightly negative in 2013, especially among full-service restaurants.
The NPD report, "Planning for Growth in the New Normal Marketplace," explores how restaurant operators can rethink their value message. "Considering current consumer sentiment and their continuing frugality, the deals that have historically appealed to restaurant customers need to be re-engineered and the next generation of deals introduced," Riggs said.
Restaurant operators are going to have to get more innovative and creative, she noted. "They're going to have to make deals seem like something new and different."
Coupons -- especially those available on restaurant company websites -- continue to be traffic drivers, Riggs said, while bundled meals and value menus are not as effective in getting diners through the door.
"People tend to want a discount on regular menu items, things they like," said Riggs, rather than targeted items with low prices. "You can have something that costs $1, but if it's not decent quality and doesn't taste good, it's not worth $1."
(Source: Nation's Restaurant News, 03/25/13)