CHICAGO -- The foodservice industry won't be celebrating its economic recovery any time soon, although some restaurant operators are faring better than others. After five consecutive quarters of traffic declines through September 2009, the industry will remain weak at least through the first half of 2010, according to a forecast by NPD Group, a market research company. NPD forecasts that the rate of visit declines will slow in the first half of the year, then turn slightly positive in the second half of 2010.
"Historically, the restaurant industry neither leads the economy into or out of periods of economic downturns," said Bonnie Riggs, NPD's restaurant industry analyst and author of the report. "This recession is generally believed to be more severe than those in recent history, and this time the industry not only realized traffic losses, consumer spending declined as well. This is first time since NPD began tracking that the industry realized a falloff in dollars spent at restaurants."
High unemployment, low consumer confidence, tightened credit, lower grocery store prices and other factors have taken their toll on consumers and their ability to increase spending, resulting in fewer visits to restaurants and related dollar growth. According to NPD, for the quarter ending September 2009, traffic declined across all restaurant segments. Total industry traffic declined by 4% compared with the same time a year ago. Visits to quick service/fast food restaurants, which represent the largest share of the industry, declined by 4%, casual dining was down 5%, and midscale visits were down 4%. Total consumer spending for restaurants declined by 2%.
The "noncommercial" foodservice sector has also experienced declines, especially in sectors most affected by high unemployment, such as business and industry, vending and lodging. Business and industry posted a 16% traffic decline for the year ending September 2009 versus a year ago.
There are still signs of improvement. While consumers may be worried about the future of their jobs and falling incomes, their attitudes about the economy are slowly changing, NPD found. According to a recent NPD foodservice survey, consumers believe the economy is beginning to improve or, at least, is not going to get any worse.