NPD: Restaurant Deals Trigger Modest Gains

Discounted prices, dollar menus and other promotions are driving customer traffic and keeping the restaurant industry in the black, according to Chicago-based market research company The NPD Group.

NPD said total restaurant industry traffic was up 1% for the quarter ending August 2008, with the modest gain driven almost entirely by deals and discounts.

As consumers are looking for ways to moderate their overall food budget without cooking more, restaurant operators have been offering more deals, including value menus, coupons, discounted prices and buy-one-get-one-free promotions. It’s all an effort to increase traffic, according to data from NPD’s CREST service, which tracks restaurant usage.

“More so than we’ve seen in many years, consumers are looking for savings and ways to stretch their dollar,” said Bonnie Riggs, restaurant industry analyst at NPD. “Restaurant operators are responding to economic concerns with enticing value offers and deals.”

In the quarter ending August 2008, 23% of all visits to restaurants were prompted by consumer-perceived deals, which represented an increase of 9% compared to the same quarter a year ago. Non-deal restaurant traffic was down by 1%.

The quick-service segment accounts for 78% of all restaurant visits and is largely driving deal activity, NPD said. Quick-service deal traffic is up 10%, driven by hamburger and other sandwich restaurants. Thirty percent of all visits to these outlets were prompted by deals, an increase of 20% over a year ago. Value menus and discounted price offers found the most favor with consumers.

While deal traffic is up at breakfast and dinner, consumers use deals most often at lunch, NPD said, adding that it’s research found 38% of all deal visits to quick-service restaurants occurred at lunch.

Dollar or value menus tend to drive lunch traffic, coupons are used most at dinner and discounted prices are used at both lunch and dinner.

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