Foodservice survey finds consumers eating out more, but spending less

Americans are eating out more now than at the beginning of the year, but they’re spending less at each visit, according to a new study published by AlixPartners in October. The study surveyed 1,000 consumers to evaluate their eating trends and compare the results to surveys conducted earlier in the 2009.

In the fourth quarter of 2009, 63 percent of consumers reported that they dined out at least once a week, an increase over 2008. On a monthly basis, the study found consumers ate at fast food restaurants slightly more than six times a month on average, about three times a month at fast casual restaurants, three times a month at casual dining restaurants and once a month and once a month at a fine dining restaurants. The numbers for 2009 were comparable to 2008 except for fine dining, which dropped from an average of 1.6 meals per month, a 36 percent decline.

In the next 12 months, the majority of consumers are expecting to dine out about the same number of times and spend about the same amount, according to the AlixPartners study. Only 33 percent in the survey said they would dine out less frequently – compared to 48 percent in the first quarter of 2009 that said they would dine out less. More than half of the respondents said they would spend about the same amount, while 34 percent said they would spend less – also an improvement from the first quarter.

The restaurant industry is typically the first in and the first out of a recession, and the economy may be turning the corner as consumer expectations improve over the first quarter of 2009. But U.S. consumers’ memory may be longer from this recession than in the past, so recovery may be slower – more comparable to the mindset of those that lived through the Great Depression, said Adam Fless, director for AlixPartners.

“There really is a structural reconstruction of what people are willing to spend,” Fless said.

At the beginning of the year, the average check size was $14. That figure has now fallen to $11.50 for each check. Chains and independent operators have been able to stay profitable because commodity prices have been low. But they’re beginning to rise and there’s no indication that consumers are willing to spend more.

“Going forward in 2010, companies won’t be able to ride the wave of low commodity prices,” said Adam Werner, director for AlixPartners.

Werner said restaurant operators are going to have to re-engineer menus to remain profitable, without relying on inexpensive inputs. Companies that are succeeding are lowering costs across the board, including food inputs, labor costs and less expensive restaurant décor.

The biggest increase in sales has been in the $5 and under spread – the “Subway Effect,” the study calls it, due to the popularity of Subway’s $5 Footlong promotion. At fast casual restaurants, the $10 price point has been well-received.

“For fast casual, that is their price point, and there’s money to be made at that price point,” Werner said.

The fine dining segment has been hit hardest by the economic downturn, with surveys earlier in the year indicating that consumers trading down to less expensive options. But the trade-down effect seems to have stopped, Werner said, in exchange for consumers trading out of the restaurant segment altogether. The ready-to-eat market at grocery stores is seeing a significant upward trend, and consumers also are eating more meals at convenience stores, Werner said.

There are some bright spots in the study. There is a trend for more healthful items, which bodes well for the produce industry. Younger consumers, specifically the 18-24 age group, want to eat better. That segment is affected more by the economy, so although their spending may not increase immediately, there will be an effect in three to five years, Werner said. And with fast food restaurants offering more salads and healthful fare, quick service restaurants (QSRs) may take market share from up-market dining.

“If demographics keep that trend for wanting to eat healthier, then there will be a real battlefront between fast casual and QSRs,” Fless said.

Quality is still important to consumers, despite spending less at restaurants. They’re expecting the same quality at lower price points, Werner said.



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