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Restaurant spending flat, but better days lie ahead

Restaurant spending flat, but better days lie ahead

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Are Americans spending more in restaurants? Not yet, but some experts are predicting they soon will be.

First, the bad news: The new National Eating Trends report from the NPD Group shows that while foodservice spending rose three percent in the 12 months ending in April, that figure did not necessarily equate to more restaurant visits, which, according to the group’s research, were just about flat for that period. (This surprised the researchers, who expected lower gas prices to drive up restaurant spending.) Consumer spending on food prepared at home and food eaten away from home has been split 50/50 over the last several years, and NPD says that with four out of every five meals being prepared at home, “the foodservice industry remains challenged to get people out of their homes to eat.”

On the other hand, some good news just emerged from Mintel. The market research firm sees evidence that U.S. consumers are returning to their pre-recession, save-less-spend-more mindset, based in part on an uptick in recreation and technology spending. In Mintel’s report, American Lifestyles 2015, a comprehensive look at American consumer markets. the firm credits increasing wages, lower unemployment and improved consumer confidence for the emerging turnaround. Restaurant operators will be happy to learn the firm’s latest prediction: Over the next five years, sales in consumer markets will increase by nearly 22 percent. While some of this is linked to a growing population, Mintel says per capita restaurant visits will increase as “nonessential categories—such as dining out—will see the greatest gains, with a projected five-year increase of 27 percent.”

What’s driving this trend? “Improving personal finances, shifting demographics and consumers balancing spending priorities by trading up or down rather than cutting spending entirely or splurging across the board,” says the group.

The challenge for individual operators is to get those splurges to happen in their restaurants. Annual per capita foodservice visits for the year ending in April averaged 190, down three visits per person compared to 2013. Particularly important is bringing young adults back into restaurants. While this group is historically the heaviest user of foodservice, Millennials have cut back dramatically on restaurants visits in recent years. According to NPD, consumers in that age group made 50 fewer visits per person per year last year than they did prior to the 2008 recession. What’s more, today’s youngest adults, ages 18 to 24, made 33 fewer visits per person per year in 2014 than they made in 2007.  

For restaurant operators, figuring out how to reach the under-35 crowd will be crucial as this group begins to feel better about spending more. “It’s a battle for share within the foodservice industry and a battle for food dollars between in-home and away-from-home dining,” says Bonnie Riggs, NPD restaurant industry analyst. “In order to grow, foodservice manufacturers and operators need to have a clear understanding of consumer expectations and then they need to meet those expectations. If they don’t, someone else will.”  

Contact Gina LaVecchia Ragone at [email protected].

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