News

Q3 restaurant visits decline, fast casual is no exception

December 6, 2016

Although traffic growth at U.S. restaurants remained flat during the first half of 2016, Q3 results were even worse, according to The NPD Group, which found that total foodservice visits declined by 1 percent in the third quarter. The news was especially dismal for quick-service restaurant traffic, considering this is the first drop the industry has seen in five years, said Bonnie Riggs, restaurant industry analyst at NPD. QSRs represent 80 percent of total industry visits.

Fast casuals, which have been leading the restaurant sector in growth over the past several years, also dropped 1 percent.

"The term growing your business in a ‘one percent world' has become a popular mantra for the restaurant industry after six consecutive years of annual traffic gains of just one percent," she said. "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, who recently authored a report entitled, "Losing Our Appetites for Restaurants," said multiple reasons account for the decline, but the main reason is cost. Rising health-care costs and/or student debt have reduced the amount of disposable income consumers have in their wallets, and according to a survey of the longitudinal panelists participating in NPD's receipt mining service, "Checkout Tracking," 75 percent of the respondents who have decreased their visits to restaurants said they watch how they spend their money on most or all purchases. A high percentage of these respondents said restaurant prices were too high. The fact is the cost of the average restaurant meal has risen 21 percent over the last decade, and with lower grocery prices, the price 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."