Consumers are responding to restaurant deals
October 28, 2008
by FoodBusinessNews.net Staff
CHICAGO — The restaurant industry has been using discounted prices, dollar menus and other promotions in order to stay profitable, according to The NPD Group. NPD said total restaurant industry traffic is up 1% for the quarter ended in August, and the slight growth is driven entirely by special deals.
"More so than we’ve seen in many years, consumers are looking for savings and ways to stretch their dollar," said Bonnie Riggs, restaurant industry analyst at NPD. "Restaurant operators are responding to economic concerns with enticing value offers and deals."
Value menus, coupons, discounted prices and buy-one-get-one-free promotions are all methods restaurants have used to drive traffic. For the quarter ended in August, 23% of all restaurant visits were promoted by consumer-perceived deals. This represented an increase of 9% compared with the same quarter of the previous year. Traffic not driven by deals was down 1%.
The quick-service segment represents 78% of all restaurant visits, and this segment is driving the deals. Quick-service deal activity is up 10% and is driven by hamburger and sandwich restaurants. Thirty per cent of all visits to quick-service outlets were driven by deals, an increase of 20% compared with the previous year.
"Deal offers are complex and risky for restaurant operators, and this is at the same time they are faced with rising food costs," Ms. Riggs said. "But operators understand that in order to get the customers in the door, they need to make them an offer they simply can’t refuse."
Consumers most often use deals at lunch, with 38% of all deals to quick-service restaurants occurring at lunch. Dollar or value menus drive lunch traffic, coupons are used most often at dinner and discounted prices are used at both lunch and dinner.