Casual dining segment still struggling
May 20, 2014
by Keith Nunes
CHICAGO — Consumer traffic to casual-dining restaurants reached a six-year low for the year ended Feb. 28, 2014, according to The NPD Group. The market research firm noted that price sensitivity, customer experience, increased competition from the fast casual category and a focus on promotions and value deals contributed to the decline.
Focusing in on the value trend, The NPD Group said promotions have been a major consumer driver since 2008, when they helped stem traffic declines due to the economic recession.
“It appears casual-dining operators’ promotional offers have been in place for too long,” said Bonnie Riggs, NPD restaurant analyst. “For example, the ‘two for $20’ craze is now available in some variation at nearly every casual-dining chain. Some liken it to an echo chamber because there’s no competitive differentiation. Relying on existing promotional tactics may no longer be a viable option.”
Riggs explained that casual dining concepts have been pigeon-holed into a less-frequent, more-special meal occasion destination. Consumers are visiting less-expensive restaurants and casual dining’s competition is both lower- and higher-priced restaurant alternatives.
“Casual dining operators must reinvent offerings that have lost their luster and introduce new promotions and menu items to attract customers and encourage repeat visits,” Riggs said. “Consumers will wait you out once you have shown your willingness to provide regular discounts. Until you reach the price point that delivers the value they have come to expect, they will stay away or find other restaurants that meet their value expectations.”