Restaurants Likely To Wean Customers Off of Steep Discounts/Deals with A Different Type of Offer As Economy Improves, Reports NPD

New higher priced menu items will work together with discounts to help restaurants transition into recovery.

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Restaurant traffic has been slipping since January 2009, and the decline in visits would have been worse had it not been for dealing

Chicago (Vocus) May 21, 2010

Restaurants offered a host of deals and discounts over the past two years to entice recession-ridden consumers to visit. With signs that the economy may be improving, restaurants will be trying to wean customers off of the now-expected deals with different types of offers, reports The NPD Group, a leading market research company.

According to recent NPD foodservice market research that examines consumer behavior patterns through past and current recessions, restaurant operators will likely move consumers away from steep discounting with deals like combo meals and value menus, which some chains have already begun offering. At the same time, operators are offering higher-priced product innovations to appeal to customers’ appetites for something new and offset the cost of discounts.    

In its recent study entitled, Light at the End of the Tunnel . . . What Can We Expect, NPD reports that during the current recession, “buy some/get some,” discounted price, coupons and daily specials largely supported deal traffic the past two years.

“Restaurant traffic has been slipping since January 2009, and the decline in visits would have been worse had it not been for dealing,” said Bonnie Riggs, NPD’s restaurant industry analyst and author of the study. “Visits using a deal now represent about a quarter of restaurant traffic.”

With restaurant traffic still down, dealing continues to be important, but according to the NPD study, consumers who claimed to have cut back on restaurant visits indicate that price discounts and other deals are less important motivators than last year. As consumer sentiment about the economy improves, operators could be expected to begin to ease consumers off of dealing as they’ve done in previous recessions.

Riggs said that a dual effort of combo meals and value menus is the strategy historically chosen to ease consumers off of steep discounts, and there have been combo meal promotions recently announced. From the standpoint of the operator, these two types of deals are an opportunity to build a check size.    

“We’re also seeing more product introductions on menus because consumers are always looking for the next new thing, especially recession-weary consumers,” says Riggs. “Typically, these new products have higher price points, which help offset the cost of the deals.”

About The NPD Group, Inc.
The NPD Group is the leading provider of reliable and comprehensive consumer and retail information for a wide range of industries. Today, more than 1,800 manufacturers, retailers, and service companies rely on NPD to help them drive critical business decisions at the global, national, and local market levels. NPD helps our clients to identify new business opportunities and guide product development, marketing, sales, merchandising, and other functions. Information is available for the following industry sectors: automotive, beauty, commercial technology, consumer technology, entertainment, fashion, food and beverage, foodservice, home, office supplies, software, sports, toys, and wireless. For more information, contact us, visit http://www.npd.com/, or follow us Twitter at https://twitter.com/npdfood

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