Foodservice industry hit hard in fourth quarter

by MEAT&POULTRY Staff
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CHICAGO – For most of 2008, traffic and sales throughout the U.S. restaurant industry remained stable over the previous year. But traffic dipped in the fourth quarter, yielding the industry’s slowest traffic and dollar growth since the recession of 2002-2003, according to The NPD Group, a leading market research company.

Foodservice traffic advanced +0.2% over a year ago for year ending November 2008, and consumer spending grew by 2%, according to NPD’s Consumer Reports on Eating Share Trends, which tracks consumer usage of commercial foodservice, reports.

"Despite this past year’s extremely weak economic conditions, the restaurant industry as a whole managed to keep its head above water for most of the year," said Harry Balzer, chief industry analyst and vice president and author of Eating Patterns in America. "Strong promotional activity on the part of chains, and growth in breakfast and lunch visits to quick-service restaurants, contributed to the slight gains the industry experienced this past year."

Promotion-related visits supported all commercial foodservice gains, as deal visits increased 6% and non-deal visits slipped by 1%, according to NPD. For the annual period ending November 2008, 23% of all traffic involved some type of consumer-recognized deal. More than 90% of the increase in deal visits came from quick-service restaurants.

Although Q.S.R. traffic growth slowed in 2008, the segment fared better than full-service restaurants. The modest growth at Q.S.R. offset losses at midscale restaurants. Deal-related traffic kept Q.S.R.s in a positive position. Casual dining traffic was stable for the year; however, trends weakened in the latter half of the year with a two percent decline in traffic for the fall quarter.

lunch traffic increased after realizing no growth in 2007 because consumers took advantage of lunch discounts. However, restaurants visits for supper continued to trend down. Morning meal and snack-related occasions slowed over the previous years’ growth, but did experience positive growth in 2008.

"I don’t believe consumers, no matter the state of the economy, will abandon restaurants entirely, they will just use them differently — more cost-consciously," Mr. Balzer said. "There will be no recession in eating; there will just be winners and losers. The restaurants that deliver value and make it easy to get food cheaper, in new and compelling ways, will win."

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