Major casual dining chains have held up better than smaller chains long-term because of their ability to advertise and deal more than the smaller chains and independents. Visits to major casual dining chains have been flat for the last five years compared to visit declines of 3% for small chains and independents, according to NPD’s foodservice market research. Major chain restaurant units increased by 1% in NPD’s Fall 2013 restaurant census and small chains and independents decreased units by 1%.
The offering of incentives/deals has been an important visit driver for the major casual dining chains for several years. These promotions helped to stem traffic losses during and subsequent to the recession of 2008/2009. Over the past six years, major casual dining chains ramped up their promotional offers, reaching an all-time high of 29% of all visits in 2013. This is higher than that noted for the major quick-service restaurant chains (27%), which historically have been the most aggressive in the deal arena. The deal rate at casual dining independents has held relatively steady at 17% since 2006. There have been short-term improvements in the traffic, but casual dining traffic has not improved overall.
“It appears casual dining operators’ promotional offers have been in place for too long. For example, the ‘two for $20’ craze is now available in some variation at nearly every casual dining chain,” said Bonnie Riggs, NPD Restaurant Industry Analyst. “Some liken it to an echo chamber because there’s no competitive differentiation. Relying on existing promotional tactics may no longer be a viable option.”
Riggs explains that casual dining concepts have been pigeon-holed into a less frequent, more special meal occasion destination. Consumers are visiting less expensive restaurants and casual dining’s competition is both lower- and higher-priced restaurant alternatives. Price concerns are also affecting ordering behavior at casual dining restaurants, or menu offerings aren’t meeting the customers’ needs.
Visits to casual dining restaurants were at a six-year low in the year ending February 2014, finds The NPD Group, a global information company. Since 2009, casual dining traffic has been declining at a rate of 2% each year, totaling a loss of 7.1 million visits. Price sensitivity, the customer experience, increased competition from fast-casual outlets, and rampant industry promotion contribute to the casual dining segment’s declines, says NPD.