News

Restaurant business stagnates in first half of 2016

August 30, 2016

The NPD group today released data showing that growth for the restaurant industry for the first half of this year has remained flat, and growth in the fast casual sector is slowing. 

Eighty percent of the industry’s total traffic is to quick-service restaurants which, after slightly nudging up 1 percent the first three months of the year, has stalled, according to the research company’s food service market data, released today to the news media.
 
"Contributing to the stalled visit growth are consumers’ uncertainties about current and future economic conditions," said Bonnie Riggs, NPD Group’s restaurant industry analyst.  "These uncertainties have put a damper on overall consumer spending. Compounding the situation for the restaurant industry is the decline in food at home inflation while at the same time restaurant operators have been increasing menu prices."
 
Perhaps most concerning is that the breakneck speed of growth in the fast casual sector for the last few years is also slowing this year. Growth was flat this quarter in that sector, whereas this time last year overall fast casual traffic was up 2 percent (excluding the problems at Chipotle during that time, due to food safety issues). Additionally, the research found that casual and mid-scale full-service dining continued to lose traffic as it has for the last several years, according to NPD. 

The bright spot in the restaurant day remains centered around breakfast, which makes up nearly a quarter of all visits in the day. In the last quarter also, it increased 1 percent. According to NPD, the growth stagnation problems revolve around fewer lunch visits to restaurants this year. 

A news release on the study said that lunch visits, which represent 33 percent of average days’ visits, fell by 4 percent in the second quarter this year compared to same period last year. Dinner which represents 30 percent of the day, fell a percentage point, but that is actually an improvement over the same quarter last year when those visits fell 3 percent.
 
"The good news in all of this is that consumers made 61.3 billion restaurant visits this past year," said Riggs. "They are not giving up dining out at restaurants and other food service outlets. It’s true that in this flat market it’s a battle for visit share but there are restaurants that are winning. The winning operators focus on their customers’ needs and deliver on them."