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NPD: Deals, Promos, Breakfast and Lunch Keep Many Chains Alive in

NPD's Consumer Reports on Eating Share Trends, which tracks consumer use of restaurants, reported that consumer spending grew by 2 percent during the same period to $390 billion.

"Despite this past year's extremely weak economic conditions, the restaurant industry as a whole managed to keep its head above water for most of the year," said Harry Balzer, NPD's chief food industry analyst. "Strong promotional activity on the part of chains and growth in breakfast and lunch visits to quick-service restaurants contributed to the slight gains the industry experienced this past year," he said.

NPD said promotion-related visits supported restaurant traffic gains, as deal visits increased 6 percent and non-deal visits slipped 1 percent.

For the annual period ended November 2008, 23 percent of all restaurant traffic involved some type of consumer-recognized deal. Over 90 percent of the increase in deal visits came from quick-service, or fast-food, restaurants.

Traffic growth for fast-food restaurants, which have 77 percent market share, slowed in 2008, according to NPD. Still, the segment fared better than full-service restaurants.
The 1 percent rise in traffic to fast-food restaurants like McDonald's Corp offset a 2 percent decline in traffic to mid-scale eateries such as Denny's and DineEquity Inc's IHOP and Golden Corral.

Casual-dining traffic was flat, but trends weakened in the back half of the year with a 2 percent decline in traffic from September through November. Casual-dining chains include operators like the Cheesecake Factory Inc.

Lunch traffic was up from 2007, dinner visits continued to slow and breakfast and snack-related visits rose at a slower pace than in 2007.

"I don't believe consumers, no matter the state of the economy, will abandon restaurants entirely, they will just use them differently -- more cost-consciously," said Balzer. "The restaurants that deliver value and make it easy to get food cheaper, in new and compelling ways, will win," he said.

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