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NPD: Limited-service restaurants staying afloat while full-service restaurants struggle

August 22, 2017

Customer visits to U.S. restaurants and foodservice outlets remained negative in the quarter ending in June resulting in six consecutive quarters of weak traffic performance, according to  The NPD Group, a leading global information company.

The average check at foodservice outlets rose by 2.6 percent — the largest increase in several years — reflecting higher menu prices. The U.S. foodservice industry has not experienced six quarters in a row of no traffic growth since the recession of 2008-09, Bonnie Riggs, NPD Group restaurant industry analyst, said in a company press release.

"No doubt the rising cost of a restaurant meal is weighing heavily on industry traffic performance," she said. "The vast majority of consumers give restaurants fairly low ratings on affordability compared to other customer satisfaction attributes."

The good news for QSRs and fast casuals

The good news for the limited-service sector, however, was that the slowdown in restaurant and foodservice visits was most prevalent at midscale, family dining and casual dining concepts. Midscale registered a 4 percent decline in traffic in the quarter compared to the same quarter one year ago. Casual dining visits dropped by 3 percent in the quarter, according to NPD’s CREST, which daily tracks all aspects of how consumers use restaurants.

Visits also softened for quick-ervice restaurants, which represent the lion’s share (83 percent) of industry traffic and has driven industry traffic growth for several years. QSR customer visits were flat in the quarter compared to last year, but a steeper decline was offset by traffic growth at QSR hamburger and fast casual restaurants.

Burger brands and fast casuals seeing steady growth

The QSR hamburger category realized nearly 13 million more visits in the quarter than last year, and fast casual grew traffic by 77 million incremental visits. 

In addition to QSR hamburger and fast casual restaurants, other industry bright spots in the quarter included the continued growth of morning meal visits, up 1 percent in the quarter over one year ago, and foodservice delivery, up 2 percent. The quick service segment was primarily responsible for the uptick in morning meal visits. Delivery growth was entirely derived from four restaurant categories: QSR sandwich, QSR burger, midscale and Asian.

"Although there were a few performance bright spots this quarter, these visit occasions are not large enough to move the industry in a positive direction," Riggs said. "Operators will need to be critical in increasing prices and make sure that when they do raise prices the quality of the food and experience is commensurate with their customer’s cost."