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QSR Traffic Stalls for the First Time in Five Years

CHICAGO — Squeezed consumer wallets, the rising cost of dining out, and changing needs and wants have caused U.S. restaurant industry traffic to halt in the first two quarters of this year and decline during the third quarter, reported The NPD Group.

Total foodservice visits declined by 1 percent in the third quarter compared to the same quarter last year, and quick-service restaurant traffic, which represents 80 percent of total industry visits, dropped for the first time in five years.

"The term growing your business in a '1-percent world' has become a popular mantra for the restaurant industry after six consecutive years of annual traffic gains of just 1 percent," said Bonnie Riggs, restaurant industry analyst at NPD and author of the recent report Losing Our Appetites for Restaurants. "However, over the past six months restaurant industry traffic growth has come to a standstill and quick service restaurants, which have been the traffic growth drivers, are now experiencing a slowdown in visits."

There are multiple reasons why consumers have pulled back on visiting restaurants, but the primary one is cost, according to Riggs. Rising health care costs and/or student debt have reduced the amount of disposable income consumers have.

NPD's receipt mining service Checkout Tracking found that 75 percent of the respondents who have decreased their visits to restaurants said that they watch how they spend their money on most or all purchases, and a high percentage of these respondents think that restaurant prices are too high.

The cost of an average restaurant meal has risen 21 percent over the last decade, and lower grocery prices are causing the gap between eating at home and dining out to widen. Currently, 82 percent of all meals are consumed in-home, according to the research firm.

"The marketplace is changing and despite improving economic indicators, the consumer landscape is fundamentally reshaped," Riggs said. "What hasn't changed and won't change is the consumer's need for foodservice; it saves them time and provides them with an experience.

"Restaurant operators will need to look for ways to differentiate themselves from the competition. They will need to find the means to stay relevant in consumers' minds — innovative products, unique promotions, competitive pricing, stating the benefits of eating at restaurants compared to home — while delivering an enjoyable experience," she added.

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