Unemployment Still Hampers Restaurant Recovery

CHICAGO -- With continued high unemployment across the United States, restaurant traffic remains down, falling 1 percent in the third calendar quarter of 2010. But positive signs point to restaurant traffic growth in the last calendar quarter of 2010 and in 2011, according to foodservice market research by The NPD Group, which forecasts traffic to grow by 1 percent in the final quarter of 2010 and first quarter of 2011.

According to NPD’s CREST, which continually tracks consumer usage of commercial and non-commercial foodservice outlets, customer traffic to commercial foodservice outlets for the quarter matched the year-ago level, now about 4 percent below the third quarter (July, August, September) of 2008. Consumer spending at commercial foodservice nearly recovered from losses a year ago (up 2 percent versus a 2-percent decline) registering about the same volume level as the third quarter of 2008.

Visits to quick-service restaurants, which represent the largest traffic share in the industry, were up by 1 percent in the third quarter. Casual dining and midscale full service restaurants continued to experience traffic declines. Casual dining visits were down 2 percent and traffic to midscale restaurants was down 3 percent.

"Some of the areas most affected by the recession have stopped declining or are starting to edge back up, like families with kids and non-deal visits," said Bonnie Riggs, restaurant industry analyst at NPD. "These are positive signs that the industry is beginning to return to normalcy, but high unemployment and the loss of benefits for the long-term unemployed will keep the industry from full recovery."

Unemployment has been highest among young adults, ages 18 to 34, historically the most frequent restaurant users. Since September 2008, the per-capita restaurant visits for adults, ages 18 to 24, dropped from 236 to 215, and adults ages 25 to 34, declined from 256 to 235 visits. Consumers over age 50 tend to be lighter restaurant users, but they were more likely to hold onto their jobs during this recession and maintained their foodservice usage.

"In spite of the visit declines, U.S. consumers still made 67 billion visits to commercial and non-commercial restaurants over the past year, and the industry will continue to work hard to provide their customers with the best quality, value and convenience," Riggs said. "In the end, there will be winners and losers who capitalize on the situation with innovative offerings that draw consumers out of their homes or away from competitors."