Article

Value meal visits up 6 percent in the past year

Deal-related traffic is keeping the industry from registering traffic losses.

October 29, 2013

As the competitive environment heats up in QSR and many brands scramble to tweak their value menus, customers seem to be responding favorably.

According to The NPD Group, value menu visits were up 6 percent in the year ending August 2013, compared to the same period last year. This helped push QSR deal visits up 2 percent and kept visits to traditional QSRs stable in the period.

"In my view the industry tried to move away from heavy discounting last year but found it was just not feasible with consumers still closely watching their spending," said Bonnie Riggs, NPD restaurant industry analyst. "It is deal-related traffic that is keeping the industry from registering traffic losses."

Brands that have focused on the value menu this year include Taco Bell, which has been testing a new $1 Cravings Menu featuring 12 items. 

Dairy Queen added a value meal in the spring — the $5 Buck Lunch features a choice of a ¼ lb. GrillBurger with cheese, 3-piece Chicken Strip Lunch or a Chili Cheese Dog, which are all served with fries, a beverage and choice of a sundae. Wendy's launched its Right Price, Right Size menu in the beginning of the year, and earlier this month, McDonald's hinted at shifting its Dollar Menu to the Dollar Menu and More. McDonald's CEO Don Thompson said the transition is designed to "provide value beyond the $1 price point... based on customers' discretionary spending."

Deal visits up across all segments

Restaurant visits on a deal or discount increased across all segments in the first nine months of 2013 after declining in 2012, according to NPD Group. Restaurant visits on a deal were up 2 percent in the year ending August 2013 compared to same period year ago, when deal visits were down by 1 percent.

Against a backdrop of flat consumer visits across the total industry, restaurant visits based on a "buy some, get some" or "two- for- a-deal-type" offers had the highest gain among all offers with a 14 percent increase over last year, according to NPD's CREST research, which continually tracks how consumers use restaurants.

Casual dining restaurants hoping to reverse steady traffic declines aggressively offered these types of deals throughout the year; and although they were able to offset losses, visits to casual dining were down 1 percent in the year ending August 2013.

"Casual Dining has really ramped up with its deals, but, unfortunately, it hasn't stopped traffic declines, which may mean that its deal offers aren't resonating with cost conscious consumers," Riggs said.

Discounted price traffic was up 4 percent across all restaurant segments and visits on a coupon increased by 2 percent.

Recession kicked deals into high gear

At the height of the recession, when industry traffic was down, deals and special offers drove industry restaurant visits. In 2008, visits on a deal were up 5 percent and non-deal traffic was down 1 percent, and in 2009 deal traffic was up 3 percent and non-deal traffic down 4 percent, reports NPD.

In 2012, after many of the promotions that emerged during the recession had been in existence a few years, restaurant deal visits declined by 3 percent and non-deal traffic was up 2 percent.

Read more about trends and statistics.

Cover photo courtesy of Wikipedia.