Thursday, October 30, 2008

Cost-Conscious Consumers Responding to Restaurant Deals

"In the quarter ending August 2008, 23 percent of all visits to restaurants were prompted by consumer-perceived deals." Normally, I am not a huge believer in discounting. However, in the restaurant industry you do need to look at different ways to provide value. This could be as simple as a day with discounted or free pricing for children, or maybe a special partnership with local schools where you set a day and give a small portion of the profits to their PTA. Try to be creative with the consumer-perceived deals so that it doesn't hurt your restaurant's perceived quality.

Cost-Conscious Consumers Responding to Restaurant Deals

Restaurant industry's modest gain is driven by discount offers and deals

Discounted price, dollar menus, and other promotions are driving customer traffic and keeping the restaurant industry in the black, according to market research company The NPD Group. NPD reports total restaurant industry traffic is up 1 percent for the quarter ending August 2008, and the modest gain is driven entirely by deals.

As consumers look for ways to moderate their overall food budget without cooking more, restaurant operators have been offering 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," says Bonnie Riggs, restaurant industry analyst at NPD. "Restaurant operators are responding to economic concerns with enticing value offers and deals."

In the quarter ending August 2008, 23 percent 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 percent of all restaurant visits and is largely driving deal activity.

Quick-service deal traffic is up by 10 percent and is being driven by hamburger and other sandwich restaurants, according to NPD. Thirty percent of all visits to these outlets were prompted by deals, an increase of 20 percent over a year ago. Value menus and discounted price offers found the most favor with consumers.

Overall, while deal traffic is up at breakfast and dinner, consumers use deals most often at lunch. The latest NPD CREST data finds that 38 percent of all deal visits to quick service restaurants occurred at lunch. Dollar or value menus tend to drive 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," says Riggs. "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."
(Source: The NPD Group, 10/28/08)

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