Restaurant Competition Stifles Customer Counts

 

Consumers are not eating less.  Restaurant customers are eating somewhere else, at your competitor, at home, in the car, a grocery store deli / restaurant / coffee shop, or convenience store according to Steven Johnson Grocerant Guru® at Tacoma, WA based Foodservice Solutions®.

Recently the NPD Group reported that restaurant visits in the U.S. have gone down in the second calendar quarter of 2022 due to inflation and rising menu prices. That is part of it for sure.

NPD reported that, physical and online restaurant traffic declined by 2% in the quarter versus a year ago, -6% below the pre-pandemic level in the same quarter in 2019. Consumer restaurant spending, which reflects higher costs in contrast to increased visits, was up 2% in the quarter compared to the same quarter a year ago and increased by 3% versus the pre-pandemic second quarter in 2019.

Thus, a conundrum; raise your prices and lose customers, or hold prices and lose money. You can’t sustain losing money for ever according to Johnson.  So, raise your prices and elevate your food offering to include mix and match grocerant niche meal offerings.

You Are In A Battle for 

SHARE OF STOMACH

In NPD’s recent report they noted, “Visits to quick service restaurants (QSRs), representing 82% of total restaurant traffic, declined by 2% in the second quarter compared to last year’s quarter, 3% below the pre-pandemic level for the same period in 2019. QSR fast casual restaurant traffic was down 1% in the second quarter of this year compared to a year ago and was up 8% versus the same quarter in 2019.

Full-service restaurant (FSR) visits, representing 18% of restaurant visits, were down 3% in the quarter versus a year ago and declined by 20% compared to the second quarter of 2019, according to NPD’s daily tracking of the U.S. foodservice industry.”

Regular readers of this blog know that the team at Foodservice Solutions® reported that 83.6% of all restaurant meals in 2022 are purchased from a fast-food outlet or drive-thru, we included in the number virtual restaurant delivery.

The team at Foodservice Solutions® found it very interesting that NPD found, “At the dinner daypart, which holds the largest traffic share among dayparts at 34%, traffic declined by 2% in the quarter versus a year ago. Lunch visits, representing a 30% share, decreased by 3% from a year ago.

The morning meal daypart — which includes breakfast and a.m. snack and represents 20% of daypart traffic share — fared best out of all dayparts, ending the quarter flat to a year ago. Visits at p.m. snack, representing 16% of daypart share, declined by 6% in the second quarter compared to a year ago.”  We found that very interesting and think you should take note of it as well.

David Portalatin, NPD food industry expert and author of Eating Patterns in America, stated, “Consumers continue to deal with rising inflation and higher prices. We see three ways consumers respond to higher menu prices: they trade down to lower-priced items, cut back on the number of items ordered or reduce restaurant visits altogether,” …“Operators and manufacturers can win in this environment by differentiating value, understanding that value doesn’t always translate to the lowest price. Quality and value become a critical differentiator when consumers spend on a restaurant meal during these challenging times.”

NPD’s Eating Patterns in America is well worth a read, we recommend it!

Looking for success clues of your own? Foodservice Solutions® specializes in outsourced food marketing and business development ideations. We can help you identify, quantify and qualify additional food retail segment opportunities, technology, or a new menu product segment.  Foodservice Solutions® of Tacoma WA is the global leader in the Grocerant niche visit us on our social media sites by clicking one of the following links: Facebook,  LinkedIn, or Twitter