Consumers are of two different mindsets when it comes to spending—those that cannot spend freely and those that can—and the dichotomy between these two mindsets will shape the restaurant industry now and into the future, according to new foodservice market research by The NPD Group, a leading market research company.
The recently-released report entitled, The Changing Consumer Mindset: What it Means to the Restaurant Industry, shows the broad reaching effects the recession has had on consumer behavior and thinking and the difference between consumers who are more cautious and control their spending and those who are optimistic and feel economically stable.
Three-quarters (76 percent) of the consumers surveyed for the study fall into the cautious, controlled spender group, which include adults in all demographic groups but skew toward the unemployed, less affluent, and retirees. These consumers are still reducing restaurant visits, trading down, and ordering fewer items. While these consumers anticipate that they will be less restrictive with their restaurant visits when the economy recovers, they do not expect the economy to recover any time soon.
A smaller group of the respondents (24 percent) appear relatively unaffected by the recession. They are optimistic in general and have been less inclined to moderate their restaurant behavior, although this group has traded down in segment visits since 2007. They cross all demographic groups but are more likely to be employed and live in affluent households.
“There is considerable disparity between the views of optimists and controlled spenders regarding enticement to visit restaurants more often,” says Bonnie Riggs, NPD restaurant industry analyst and author of the report. “Optimists place much more importance on service and a relaxing atmosphere than controlled spenders, who are more concerned with price and value.”
According to NPD’s CREST service, which continually tracks consumers’ use of restaurants and other foodservice outlets, the restaurant industry is slowly recovering from two years of traffic declines. For the year ending February 2011, total industry traffic was flat compared to the 3 percent decline the industry experienced in the same period the year before. NPD’s A Look into the Future of Foodservice report forecasts the industry to grow less than one percent a year through 2019.
“Recovery and growth for the restaurant industry will mean understanding the shift in consumer behavior and realigning strategies with what may be the new normal,” says Riggs. “Rather than age largely defining frequency and type of restaurant visited, lingering effects of prolonged unemployment and loss of wealth by many will carry forward in years to come, regardless of age.”