Price Hikes, Work Changes Push Foodservice Lunch Visits Down

CHICAGO — Foodservice lunch, which accounts for one third of all foodservice traffic, has posted consecutively steeper declines over the past six months, according to research from The NPD Group. Lunch visits declined by 4 percent in the quarter that ended June, compared to the same quarter one year ago. This marks the steepest decline of all main meal dayparts.

The rise of employees who work from home and increased online shopping, which cut down on foodservice meal and snack breaks, are contributors to the softening of lunch traffic. Recent menu price hikes have also steepened lunch visits declines, NPD found.

With the exception of traditional quick-service restaurants (QSRs), all restaurant segments are losing visits. This is particularly true of casual dining and fast casual restaurants, where traffic was down in the quarter that ended in June compared to one year ago by 6 percent and 9 percent respectively. Additionally, weekday foodservice lunch visits fell by 7 percent.

Foodservice lunch, particularly weekday visits, has already been negatively impacted by a 24-percent increase over the last decade in the number of people working from home, and by an 8-percent increase over the last year in online shopping.

Relatively recent menu price hikes have worsened the situation. A price analysis conducted by NPD found that the price point at which consumers are most satisfied and most likely to visit is when they feel it is "affordable to eat there often," and "good value for the money." Average lunch checks during the quarter that ended in June have increased by as much as 5 percent in some restaurant segments compared to the same quarter one year ago, moving beyond consumers' "sweet spot" price, therefore diminishing customer satisfaction and their intent to visit.

Aggressive dealing, such as combo and value meal offerings at QSR hamburger restaurants, has prevented steeper lunch visits declines, but NPD's foodservice market research found that only about a quarter of lunch customers took advantage of the deals. When deal traffic is removed from the lunch check, consumers are paying $8 for lunch on average, which is higher than most want to pay for a QSR lunch.

"Simply said, who can afford to go out lunch on a regular basis when checks have risen for some as much as they have recently?" asked Bonnie Riggs, restaurant industry analyst for The NPD Group. "Historically, foodservice lunch has been the occasion where consumers didn't want to invest a lot time, money, or energy into this meal. It's apparent by the drop in lunch traffic that the current value proposition isn't meeting these needs."