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Full Service Makes A Comeback. Really.

Full Service Makes A Comeback. Really.

Light at the end of the tunnel? Prosperity just around the corner? Been down so long it looks like up to you? Pick your cliché to describe the results of foodservice research firm NPD’s report showing a small increase in customer traffic and spending late last year. Hey, it’s a start.

It’s true that things were so bad in the restaurant business in 2008 and 2009 that positive year-over-year comparisons are easy to make right now. But it still qualifies as good news when NPD tells us that overall restaurant traffic was flat in the last quarter of 2010, compared to a three percent decline for the same quarter in 2009.
Before you celebrate, keep in mind that this number also confirms that customers collectively made fewer visits to U.S restaurants than they did six years ago.

But at least more of the customers showing up are paying full price. NPD reports that its CREST tracking service is showing that non-deal visits to commercial visits have stopped declining. As a result, consumer spending at restaurants has begun to pick up. Those numbers rose in the last three quarters of 2010, to the point where the dollar level of restaurant spending has returned to the level it reached in 2008.
Overall, NPD restaurant industry analyst Bonnie Riggs sees reason to be optimistic.
“I believe that the improvements we’re experiencing in the industry are a result of pent up demand,” she says. “Consumers are tired of pinching pennies. They are recession-weary, and going to a restaurant is an affordable way to get out and have fun.”

By segment, restaurant traffic in the last quarter of 2010 compared to the same quarter in 2009 improved one percent for midscale restaurants (from -4 percent in 2009 to -3 percent in 2010), one percent for casual dining restaurants (-3 percent to -2 percent) and a whopping 19 percent (-16 to +3) for fine dining and upscale hotel restaurants.

So is the restaurant market finally coming the operator’s way? Partially, Riggs says.
“We are beginning to see many encouraging signs. However, with unemployment still over nine percent and consumer confidence low, consumers continue to scrutinize every purchase.”

So you may not be done offering deals yet. “There’s no question value and promotion will continue to factor heavily in consumers’ restaurant selections,” she adds. “It will take a lot of creativity to drive more traffic in the coming year.”
But at least there should be more traffic out there to be driven, particularly in fine dining. This segment was written off for dead during the recession, but you can’t argue with a 19 percent boost in traffic. Let’s hope the fine dining comeback keeps on going, and that other restaurant segments start to bounce back in similar fashion, soon.

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