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Restaurant Industry Mostly Stable in 2008, Dips in Q4

The restaurant industry remained stable for most of 2008, with visits and dollars up over the previous year, but traffic dipped in the fourth quarter, yielding the industry’s slowest traffic and dollar growth since the recession of 2002-2003, according to The NPD Group (via Retailer Daily).

Foodservice traffic advanced 0.2% year over year in the 12 months ended November 2008, and consumer spending grew 2%, according to NPD’s Consumer Reports on Eating Share Trends (CREST), which tracks consumer usage of commercial foodservice.

Visits to quick-service restaurants (QSR) and deal promotions bolstered the industry, NPD found.

“Despite this past year’s extremely weak economic conditions, the restaurant industry as a whole managed to keep its head above water for most of the year,” said Harry Balzer, chief industry analyst and VP, and author of Eating Patterns in America.

“Strong promotional activity on the part of chains, and growth in breakfast and lunch visits to quick-service restaurants, contributed to the slight gains the industry experienced this past year.”

Promotion-related visits supported all commercial foodservice gains, as deal visits increased 6% and non-deal visits slipped by 1%, according to NPD.

For the annual period ending November 2008, 23% of all traffic involved some type of consumer-recognized deal. Over 90% of the increase in deal visits came from QSRs.

While QSR traffic growth slowed in 2008, the segment fared better than full-service restaurants. The modest growth at QSR offset losses at midscale restaurants. Deal-related traffic kept QSRs in a positive position. Casual dining traffic was stable for the year; however, trends weakened n the latter half of the year with a 2% decline in traffic for the fall quarter.

As consumers took advantage of discounts at lunch, lunch traffic increased after realizing no growth in 2007. However, visits to restaurants for supper continued to trend down. Morning meal and snack-related occasions slowed over the previous years’ growth, but did experience positive growth in 2008.

“There will be no recession in eating; there will just be winners and losers. The restaurants that deliver value and make it easy to get food cheaper, in new and compelling ways, will win,” said Balzer, who has been observing how American eat for 30 years.

The number of restaurants opening was balanced out by the number of restaurants closing, resulting in no growth in total restaurant units in 2008, according to NPD .