NPD: Restaurant Posted Gains Last Year; Major Chains are Leading Growth

PORT WASHINGTON, NY - The NPD Group here reported that fast-food hamburger outlets are leading the recovery in the restaurant industry, after the weakest year in more than a decade.

Statistics compiled by NPD confirmed recent foodservice distributors' observations about business growth last year and showed that the brightest spots for the industry, came in the last quarter, with November, the last month in the seasonal year, being the strongest month of the restaurant year. Traffic at fast food hamburger restaurants was up 6% from September-November vs. the year earlier, and dollars were up 7% for the same period. The year ended with overall consumer spending for the industry up 1% for the 12 months ending November vs. the same time a year ago, but traffic still declined by 1% for the total industry.

The NPD Group said gains in the last quarter of the restaurant year, September-November, for the first time in five quarters. Consumer spending for that quarter was up 2% compared with the same time a year ago and traffic was up half of 1%. "The industry still has yet to show strong growth. We had an up tick, driven by market leaders, but it's not enough to get customers out of their homes in droves," said Harry Balzer, vice president of The NPD Group.

Major Chains Are Market Leaders
Major chains are fueling the growth and getting Americans back to restaurants, NPD noted, supporting observations expressed to ID Access by distributor executives. The big chains account for about 50% of the total restaurant industry and they saw a four percent increase in traffic for the year ending November compared to the same time a year ago. Quick-service restaurant (QSR) chains and casual dining chains led the way with an increase in traffic by 5%.

Americans are eating breakfast and lunch at restaurants. New product introductions and marketing support led to increases in the cheaper dayparts of the restaurant industry. For the last seasonal quarter, September to November, fast food restaurants saw an increase in traffic of three percent for breakfast and four percent for lunch, with dinner coming in flat. Traffic at casual dining restaurants was up six percent for lunch and for midscalerestaurants it was up 1%.

Consumers are spending more, but not much more, noted the researcher. Average eater checks at restaurants were up just over 1%, slower than the 2% inflation rate. This slow growth rate partially reflects consumers' shifts towards visiting more often for breakfast and lunch, which are less expensive than dinner.

"This is our first indication in over a year that Americans are going out and buying meals at restaurants again. There was some concern in the last year that maybe we're moving back to our homes for more meals, that restaurant usage had peaked. While the trend is not clear, this is a good sign for the industry," said Balzer.

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