Find out how 2011 business challenges can help foodservice operators perform better in 2012.
It’s been a tough year. Restaurant visits grew by less than one per cent, and, for the most part, only chain eateries saw gains. On the whole, independent restaurants continued to struggle, a pattern that has held steady for the past three years. As it turns out, consumers cut back on supper and evening snacks, key dayparts for the full-service segment. The statistics are discouraging:
- The only traffic gains noted were in takeout, boosted by breakfast and lunch;
- consumer spending for commercial foodservice meals rose just 2.5 per cent, nearly keeping pace with menu inflation, which is running at 2.7 per cent;
- the number of parties with kids remained flat as families cut spending.
War of the worlds
Grocery-store operators had a strategy to deal with the new economy. The price of food at supermarkets rose slowly during the first half of 2011, widening the gap in the cost to feed a family at a restaurant compared to at home. Factor in skyrocketing costs for gasoline, and consumers were left with less to spend on discretionary purchases such as restaurant meals in 2011. In fact, it wasn’t until the latter half of the year that the Consumer Price Index for grocery purchases outpaced the inflation for restaurant meals. Coincidentally, that was also the time when restaurant visits picked up.
Bright side of the year
While bad economic news was widespread, breakfast items such as bagels, smoothies and breakfast sandwiches showed growth. Consumers appeared willing to respond to new concepts, new products and strong marketing or promotional messages. Below are some of the year’s victories.
- Breakfast sandwiches and wraps continued to appeal to the customer call for a portable, affordable meal.
- Consumers dictated what was important in terms of value, and it was not all about the cheapest price — they wanted high-quality, good-tasting food at affordable prices.
- Healthy alternatives were embraced by more diners, especially young adults and seniors.
Looking ahead
Unfortunately, the economic problems affecting the foodservice industry aren’t going to go away anytime soon. Weak employment trends and low consumer confidence do not encourage consumer spending at restaurants. In fact, NPD’s industry forecasts show overall traffic growth is expected to remain modest during the next five years.
The good news is there are pockets of growth within the industry. NPD’s report “A Look into the Future of Foodservice” shows how consumer restaurant visit behaviour is expected to evolve during the next five years. For example, morning visits are predicted to gain nearly four per cent annually.
The secret to success
- Stay top of mind by introducing innovative products, unique promotions and competitive pricing.
- Embrace tactics that feed into the customer appetite for value by offering fresh, healthy food, affordable prices, convenience and/or an outstanding customer experience.
- Monitor economic markers as they relate to foodservice demand trends.
In short, tap into growth by feeding consumer needs.
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