Consumer Nation

Restaurant Recovery: Not This Year, Not Next, NPD Says

Darden Restaurants cut its fiscal 2012 earnings and sales forecast earlier Tuesday, hurt as deep discounts at its Olive Garden chain failed to bring in new guests.

Family having Taco Bell

But Darden , which also operates Red Lobster and LongHorn Steakhouse, isn’t the only restaurant suffering these days.

It’s been a rough year all around for restaurant operators, with consumers eating out less often. Market researcher NPD Groupsaid Tuesday it doesn’t expects 2012 will be much better.

NPD issued its forecast for next year and said it expects the number of diners going to restaurants to be flat in the first half of 2012, but to end the year with visits up by 1 percent.

That’s pretty much the opposite of what happened in 2011. This year, the industry started off hopeful after ending 2010with two consecutive quarters of 1 percent traffic increases, but the vision did not materialize.

The first blow came from high food costs and gasoline prices, which drove up restaurant costs and drained consumer pocketbooks. Restaurant traffic struggled to stay positive, and posted a 0.2 percent gain in the quarter ending March, according to NPD.

Then, in the second and third quarters, restaurant traffic fell 0.4 percent during each period, according to NPD’s CREST service, which continually tracks consumer use of U.S. restaurants.

NPD, which expects industry traffic will be flat for the rest of this year, blames the trend on high unemployment and low consumer confidence.

“Consumers held tight to their foodservice dollars this year. Even the deals that helped drive traffic over the past few years weren’t as effective this year,” said Bonnie Riggs, NPD restaurant industry analyst, in a press release.

Digging into the numbers a little deeper, it seems that quick-service and fast-food restaurants, which represent 78 percent of the industry’s visits, helped buoy up the overall results with a 1 percent gain in the first quarter and flat traffic in the second and third quarters. Meanwhile, visits to midscale/family restaurants and casual dining restaurants declined in all three quarters.

One bright spot for restaurant operators, however, has been the check. Despite the weak traffic, consumer spending at restaurants was up 1.3 percent in the third quarter, 2 percent in the second quarter, and 1 percent in the first quarter, while the average per-person check rose 1 percent in the first quarter, and 2 percent in each of the last two quarters.

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