NPD data shows weak restaurant traffic in 2009

by Eric Schroeder
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CHICAGO — Slower restaurant traffic in all four quarters of 2009 contributed to a 3% decline in overall traffic for the year, according to The NPD Group, a Chicago-based market research company. The decline marked the first time consumer spending at restaurants has fallen since NPD began tracking the food service industry in 1976.

According to NPD, the decline began in the summer of 2008 and accelerated in mid-2009. In the fourth quarter of 2009, traffic declines slowed from the steep loss in the third quarter, but were still down 2.9%. All segments of the industry ─ quick-service restaurants, midscale, casual dining, non-commercial, and fine dining ─ posted traffic declines, NPD said.

“In 2008, consumers appeared to trade down some full-service visits for fast-food visits,” said Bonnie Riggs, restaurant industry analyst for NPD. “In 2009 they made fewer visits to restaurants overall. When consumers did visit restaurants, they favored lower priced options.”

NPD traced the industry weakness to the weak state of the economy, especially in terms of high unemployment and low consumer confidence. Nearly half of the traffic losses related to fewer visits made by people picking up something from a food service outlet to eat at work, NPD said, while visit cutbacks by families with children and young adults also contributed to the traffic declines.

In addition, lower food commodity prices, while easing margin pressure for some restaurant operators, made grocery store prices more appealing for consumers, NPD said.

NPD said the non-commercial food service sector also experienced declines in 2009, with traffic falling 9%.
Looking ahead, Ms. Riggs said the outlook for 2010 remains difficult for the food service industry until unemployment gets under control. Food service demand is expected to be weak through the first three quarters of the year, she said.
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