Full-service Restaurants Could Decline 2 Percent in 2017
U.S. restaurant industry traffic will remain stalled in 2017 in much the same manner it did in 2016, reports The NPD Group, a leading global information company. The New Year will bring little to no traffic growth for the total U.S. foodservice market. Quick service restaurants, however, will increase visits by an estimated 1 percent, faring better than the flat growth achieved in 2016. The modest gain for quick serves will offset the anticipated 2 percent decline for full-service restaurants, resulting in no-growth traffic for the industry overall, according to NPD Group’s daily tracking of U.S. consumers’ use foodservice.
“Restaurant operators are in a position to alter the current forecast, but will need to differentiate themselves from the competition,” says Bonnie Riggs, NPD Group’s restaurant industry analyst. “In the year ahead, it will be critical for them to stay relevant in consumers’ minds, focusing on innovative products, unique promotions, competitive pricing, stating the benefits of eating at restaurants vs. home, and delivering an enjoyable experience.”
Other trends for 2017 include:
The Future Is Now: The importance of millennials and Gen Zs will accelerate the foodservice industry’s need to be more innovative, as these cohorts are always looking for that “experience,” something new and different. Without innovation, operators will fall out of the consideration set and risk being overlooked by a large portion of the U.S. population.
Personal Choice Reigns: To stay current and relevant in this overcrowded restaurant marketplace, operators need to serve the foods people crave and be willing to customize according to consumers’ personal choices. In 2017, more restaurant operators will offer digital menu options, which will enable consumers to customize their orders.
Home Sweet Home: For several years now, more than 80 percent of meals have been sourced from home; fewer than 20 percent have been sourced from foodservice, and dollars are evenly split between the two. Commodity costs are expected to continue their decline and this may help restaurant operators in terms of offsetting higher prices for labor and medical insurance costs. However, as the gap widens between away-from-home and at-home food costs, it will make for a more challenging environment for operators to get a greater share of consumers’ wallet.
Technology: Mobile ordering will grow exponentially. Domino’s is a prime example of the opportunity that exists with this technology. The chain has been on the leading edge of creating ways for customers to place their orders using numerous platforms. This is convenience at its best. Look for many restaurant operators to follow suit and capitalize on this growth opportunity.
Delivery: Third-party providers will continue on a growth path. These third-party delivery services, like Grubhub, Amazon, and DoorDash, are becoming competitors to traditional delivery options. Taking advantage of the increasing popularity of delivery will provide restaurant operators with another avenue to drive traffic.
Restaurant Loyalty Programs: More restaurant operators are likely to develop loyalty programs in the new year to entice customers to visit their restaurants. Historically, these types of programs have been targeted to existing customers, but in 2017 there will be more emphasis placed on attracting visits from consumers who visit restaurants less frequently. NPD’s recently released report, Losing Our Appetites For Restaurants, finds lighter buyers would respond to these programs.