Unemployment continues to hamper foodservice

by Bryan Salvage
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CHICAGO — Although current economic indicators seem to be pointing to recovery, persistently high unemployment will likely continue to hinder sales and traffic in the foodservice industry, according to a recent survey from The NPD Group, a market research firm.

All segments of the U.S. restaurant industry, including quick-service restaurants/fast food, casual dining, mid-scale and fine dining, experienced traffic declines in the first half of 2009, according to NPD’s CREST service, which tracks consumer usage of foodservice. Total industry traffic experienced its steepest decline in 28 years when it declined by 3% for the seasonal quarter ending May 2009.

Making up the largest portion of total industry traffic, the quick-service segment declined 2%, casual dining declined 4% and mid-scale declined 6%. Fine dining/upscale hotel dining experienced double-digit declines.

Most of the industry’s challenges are related to unemployment, which isn’t expected to improve quickly, said Bonnie Riggs, NPD restaurant industry analyst and author of the "What to Expect When Economic Recovery Begins" report. "If you’re unemployed, you’re not going to be picking up a quick breakfast on the way to work or eating out at lunch," she added. "Dining out, overall, is a luxury you can’t afford."

Most consumers, employed or unemployed, said affordability is top-of-mind. When NPD asked consumers claiming they had reduced restaurant visits what would entice them to visit restaurants more often, they named discounts, something free, more dollar-menu items, choice of price offerings and other cost-management options as their top responses.

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