Consumer deals not driving restaurant traffic
Consumer deals such as combined item specials and dollar/value meals are no longer a motivation for driving traffic growth at restaurants, according to The NPD Group.
“In 2008 when economic concerns caused many consumers to stop some of their discretionary restaurant visits, many restaurant operators turned to offering consumers more deals to drive traffic,” says Bonnie Riggs, restaurant industry analyst. “As has been historically the case, when deals are in the marketplace for an extended period of time, consumers tend to expect them or see them as everyday price and not as a deal. What should restaurant operators do? Examine their value proposition, not just in terms of prices but in quality and service; leverage the convenience factor of restaurants; and offer variety, all three of which consumers have consistently told us are important to them.”
According to NPD for the year ended August 2012, non-deal restaurant visits increased by 1% for each of the two previous years. At the same time, visits for a deal also were declining during that time frame. This is in contrast from three years ago when consumer perceived deals were up 3% for three years in a row and non-deal visits were trending down.
There has been a decline in combined item specials and dollar/value menus, each of which represents about 20% of deal traffic, according to NPD. The total number of combo meals ordered is up, but the per cent of consumers saying they ordered a combo meal “on deal” is down, indicating consumers no longer believe combo meals to be a deal or combo meals have become everyday price and the way to order a full meal. The decline in dollar/value deal traffic is likely related to a move away from 99c items and the types of foods offered on those menus.
Despite this, coupons, discounted price and senior citizen deals are increasing.