It's bad enough that public health officials are pressuring the restaurant industry to be more forthcoming about the nutritional content of their menu items. Some communities, like Los Angeles, have gone so far as to ban construction of new eateries in certain neighborhoods.
Top that with the current economic downturn, and it's easy to see why foodservice operators feel glum. A recent consumer survey by Booz & Co. found that 43% of respondents stated they are eating out less, 39% are choosing less expensive restaurants and 35% are packing their own lunch for work, compared with six months ago.
“My headline would be: The industry continues to be in a recession that really started back in the third quarter of '07,” said Ron Paul, president of Technomic Inc., a Chicago-based consulting firm. “We're still seeing significant drops in same-store sales, which is the best hard data you can have in determining what's happening right now.”
Analysts note that the all-important casual dining segment — sit-down venues like Chili's, T.G.I. Fridays and the like — was getting most of its growth from takeout sales. With money tight, consumers are shifting their dollars to supermarket delis and fresh meals, which are experiencing something of a renaissance.
“Supermarket programs have grown more upscale, the menus are broader and the product quality is much better,” observed Paul. “Stores are putting out smaller batches, more frequently, so it's more fresh. It still can't compete with cook-to-order restaurant food, but it's getting pretty darn good.”
Restaurants are fighting back with meal deals. A report by NPD Group shows that in the latest quarter, ended in August, 23% of all restaurant visits were prompted by deals ranging from value menus to BOGO offers. That's a 9% increase from the same period a year ago.
Yet, if the economy worsens — and two-thirds of those polled by Booz & Co. said they believe it will remain the same or deteriorate in six months — consumers said they will make more aggressive changes in their behavior, beginning with even deeper cuts in dining out.