Return of the Deal: Restaurants See More Discount-Driven Traffic
Restaurant goers are hungry – for deals, that is.
The number of restaurant visits prompted by a deal or discount increased in 2013 after declining in 2012, according to a report by The NPD Group.
According to the new report, restaurant traffic on a deal or discount increased by 2 percent in the year ending August 2013, a turnaround from the 1 percent decrease in deal-driven traffic a year ago. Restaurant visits based on "buy some, get some" or "two-for-one"-type offers had the highest gain, with a 14 percent increase over last year.
The results suggest restaurants can't afford to turn away from promotions as consumers continue to remain cautious about spending. “In my view the industry tried to move away from heavy discounting last year but found it was just not feasible with consumers still closely watching their spending,” Bonnie Riggs, NPD restaurant industry analyst, said in a statement. “It is deal related traffic that is keeping the industry from registering traffic losses.”
Casual dining restaurants in particular focused on deals as a means to attempt to reverse steady traffic declines. While they helped offset losses, visits to casual dining restaurants were down 1 percent for the year. “Casual dining has really ramped up with its deals, but, unfortunately, it hasn’t stopped traffic declines, which may mean that its deal offers aren’t resonating with cost conscious consumers,” said Riggs.
Meanwhile, visits tied to value-meal items rose 6 percent, helping push deal visits at quick-service restaurants up by 2 percent overall and keeping total quick-service traffic stable. With increased attention to value menus, chains such as McDonald’s have been tweaking prices for the key to success, rolling out the pricier Dollar Menu & More.
In the past, when industry traffic has been down, deals and special offers have driven industry restaurant visits. In 2008, deal visits increased by 5 percent and non-deal traffic was down 1 percent. In 2009, deal traffic was up 3 percent and non-deal traffic was down 4 percent.
Kate Taylor is a reporter at Business Insider. She was previously a reporter at Entrepreneur. Get in touch with tips and feedback on Twitter at @Kate_H_Taylor.