Customers are visiting casual dining restaurants less frequently, according to a new report from The NPD Group, a leading global information company.
Visits to casual dining restaurants reached a six-year low, according to the report. Since 2009, casual dining traffic declined at a rate of 2% each year, totaling a loss of 7.1 million visits.
NPD says the main factors that have contributed to the casual dining segments declines are:
- Price sensitivity
- The customer experience
- Increased competition from fast casual outlets
- Rampant industry promotion
“It appears casual dining operators’ promotional offers have been in place for too long,” Bonnie Riggs, NPD restaurant industry analyst, said in the report. “For example, the two for $20 craze is now available in some variation at nearly every casual dining chain. Some liken it to an echo chamber because there’s no competitive differentiation. Relying on existing promotional tactics may no longer be a viable option.”
What’s more, Riggs said that casual dining concepts have been pigeonholed into a less frequent, more special meal occasion destination. Consumers are visiting less expensive restaurants and casual dining competition is both lower- and higher-priced restaurant alternatives. Price concerns are also affecting ordering behavior at casual dining restaurants, and menu offerings aren’t meeting the customer expectations, she said.
“Casual dining operators must reinvent offerings that have lost their luster and introduce new promotions and menu items to attract customers and encourage repeat visits,” Riggs added. “Consumers will wait you out once you have shown your willingness to provide regular discounts. Until you reach the price point that delivers the value they have come to expect, they will stay away or find other restaurants that meet their value expectations.”
Visits to major casual dining chains have been flat for the past five years compared to visit declines of 3% for small chains and independents, according to NPD’s food service market research.
The offering of incentives/deals has been an important visit driver for the major casual dining chains for several years, the report says, as these promotions helped to stem traffic losses during and subsequent to the recession of 2008/2009.
In the past six years, major casual dining chains ramped up their promotional offers, reaching an all-time high of 29% of all visits in 2013. This is higher than that noted for the major quick service restaurant chains (27%), which historically have been the most aggressive in the deal arena. The deal rate at casual dining independents has held relatively steady at 17% since 2006. There have been short-term improvements in the traffic, but casual dining traffic has not improved overall, the report says.