As economy improves, restaurant deals fade: NPD

by Bryan Salvage
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CHICAGO — During the past two years, restaurants offered deals and discounts to entice consumers to dine at their establishments. Now that there are signs the economy may be improving, expect restaurants to wean customers off of the now-expected deals with different types of offers, according to The NPD Group, a leading market research company.

Restaurant operators will likely move consumers away from steep discounting with deals like combo meals and value menus, which some chains have already begun offering. Simultaneously, operators are offering higher-priced product innovations to appeal to customers’ appetites for something new and offset the cost of discounts.

NPD states in its recent study titled Light at the End of the Tunnel . . . What Can We Expect that during the current recession, “buy some/get some,” discounted price, coupons and daily specials primarily supported deal traffic the past two years.

“Restaurant traffic has been slipping since January 2009, and the decline in visits would have been worse had it not been for dealing,” said Bonnie Riggs, NPD’s restaurant industry analyst and author of the study. “Visits using a deal now represent about one quarter of restaurant traffic.”

Dealing continues to be important since restaurant traffic is still down, but consumers who claimed to have cut back on restaurant visits indicate that price discounts and other deals are less important motivators than last year, according to the NPD study. Operators could be expected to begin to ease consumers off of dealing as they’ve done in previous recessions as consumer sentiment about the economy improves.

A dual effort of combo meals and value menus is the strategy historically chosen to ease consumers off of steep discounts, and there have been combo meal promotions recently announced, Ms. Riggs said. From the standpoint of the operator, these two types of deals are an opportunity to build a check size.

“We’re also seeing more product introductions on menus because consumers are always looking for the next new thing, especially recession-weary consumers,” Ms. Riggs said. “Typically, these new products have higher price points, which help offset the cost of the deals.”
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