Spending for Corporate Diners on the Rise
Dinova LLC reported that corporate spending in restaurants increased 9.7 percent year-over-year in the third quarter of 2015, with a 5.8 percent growth in transactions and average checks up 3.75 percent over the same period last year.
The strong corporate spending in restaurants is in contrast to the limited growth of the restaurant industry as a whole. A recent TDn2K Black Box Intelligence Report showed that overall restaurant sales grew only 1.5 percent and traffic declined by 1.3 percent in third quarter (compared to second quarter).
“The healthy business segment is not only outperforming the overall market, but clearly compensating for lackluster results in consumer dining segments. In the current business climate, corporate restaurant traffic drives profits and keeps most metrics positive,” says Vic Macchio, founder and CEO of Dinova. “Corporate guests are increasing average check sizes and delivering high margin business to restaurants.”
Dinova influences more than $3 billion annually in meals and entertainment expenses through its corporate client network, which includes more than one-third of America’s 100 highest-travel-spending companies. Dinova’s 13,000-plus nationwide restaurant network includes local independents as well as national full-service and limited-service restaurant chains, encompassing all price levels and cuisines.
Third quarter statistics revealed by several travel-focused companies offer foundational elements supporting the healthy corporate dining figures Dinova reported. Sabre, a leading travel distribution service provider that supports the majority of corporate travel agencies in the U.S., reported a 6 percent increase in North American bookings, driven primarily by business travel. Hyatt Hotels also reported strong third quarter corporate sales, echoing reports from other leading hotel chains that the third quarter had an increased number of hotel bookings from business travelers. The Global Business Travel Association also cited a growing number of day and group trips by business travelers in recent months.
“Companies are putting their people on the road to service existing customers and win new business,” Macchio says. “The current climate serves restaurant owners and marketers well, particularly those that have invested in building relationships with corporations that are increasingly steering their employees and event planners to preferred restaurants.”
The momentum from the third quarter also bodes well for a lucrative fourth quarter for restaurants that host or cater corporate holiday events. “All signs indicate that companies are likely to book more events to celebrate customers and bring employees together this December. We project December spending by corporations on meals and entertainment to increase eight to eleven percent over last year,” Macchio adds. In December 2014, corporate spending increased nine percent over the prior year.
“We are taking a number of steps to engage with corporate event planners this holiday season,” says Dan Drummond, chief marketing officer of Bar Louie, a Dinova network restaurant partner. “Beyond on-site collateral, we’ve leveraged the access Dinova provides to event planners to increase awareness that we have great locations and can easily accommodate groups of all sizes.” Bar Louie, which recently opened its 102nd location in the U.S., reports that guests from Dinova’s client network spend 68 percent more on average than regular guests.