American consumers responding to restaurant deals
Discounted price, dollar menus, and other promotions are driving customer traffic and keeping the American restaurant industry in the black, according to The NPD Group, a leading market research company. NPD figures suggest total restaurant industry traffic rose 1 per cent for the quarter ending August 2008, with the modest gain driven entirely by special offers.
As consumers look for ways to moderate their overall food budget without cooking more, restaurant operators have been promoting more deals – including value menus, coupons, discounted prices, and buy-one-get-one-free promotions – to increase traffic, according to new data from NPD’s CREST service – which tracks restaurant usage.
“More so than we’ve seen in many years, consumers are looking for savings and ways to stretch their dollar,” Bonnie Riggs, restaurant industry analyst at NPD, noted. “Restaurant operators are responding to economic concerns with enticing value offers and deals.”
In the quarter ending August 2008, 23 per cent of all visits to restaurants were prompted by consumer-perceived deals, which represented an increase of nine percent compared to the same quarter a year ago. Non-deal restaurant traffic was down by one percent.
The quick service segment accounts for 78 per cent of all restaurant visits and is largely driving promotional activity. Quick service deal traffic is up by ten per cent and is being driven by hamburger and other sandwich restaurants, according to NPD. Thirty per cent of all visits to these outlets were prompted by deals, an increase of 20 per cent on a year ago. Value menus and discounted price offers found the most favour with consumers.
Overall, while deal traffic is up at breakfast and dinner, consumers are most inclined to use deals at lunch. The latest NPD CREST data finds that 38 per cent of all deal visits to quick service restaurants occurred at lunch. Dollar or value menus tend to spur lunch traffic, coupons are used most at dinner and discounted prices are used at both lunch and dinner.
“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 added. “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.”