Foodservice Equipment Reports

Consumers More Cautious This Spring, Says Technomic Study

One of the reasons Technomic cut its forecast for operator sales in May is because its consumer research showed a distinct deterioration of consumer confidence and expectations in April, as well as dining out intentions, as compared with last December. The firm presented those findings at its annual Restaurant Trends & Directions Conference, held June 22 at the Rosemont Convention Center, Rosemont, Ill.

Sara Monnette, who directs Technomic’s consumer and market research, and Melissa Wilson, a principal at the firm, detailed that rising gasoline and food prices, plus continuing concern about employment and the general economy, had consumers in April feeling much less positive than in the tracking study last December. A full 50% reported they expected the economy to worsen this year, compared with only 29% in the December survey. Only 12% of those surveyed said their financial situation improved during the past six months while 31% reported deterioration. Monnette and Wilson also cited the continuing fall of home prices as a factor in consumers’ darkening mood.

But surging gasoline and food prices are clearly the main culprits. Asked to choose their main concerns from a list of 25 choices, 53% cited gas prices, up a whopping 35 points from the August 2010 survey. Grocery prices were cited as the second top concern at 28%, the same as personal finances. Significantly, at the bottom of the list was the price of restaurant meals, at 1%.

The result is 70% of those surveyed in April said they would spend less at restaurants because of the rise in gasoline prices. They indicated they are returning to the coping mechanisms that became commonplace during the Great Foodservice Recession: trading down to quick service or fast casual concepts, spending less on appetizers, desserts, alcohol and other “extras,” and paying attention to deals.

Foodservice operators were hoping the improving economy would change some of these behaviors, especially the reliance on dealing, said Monnette and Wilson. But the rise in so-called “daily deal” services such as Groupon are in fact making “deal” shopping even more prevalent. The only good news is that participation in such services can actually drive incremental business from both new trials and existing customers. Interestingly, participation in such services cuts across demographic and income groups.

The bottom line is the Technomic analysts expect consumers to continue to be cautious about foodservice use and for dealing and focus on value and price to continue to be issues for months to come. Of course, the recent decline in gasoline and food prices could also help.

Information on Technomic research products is available at technomic.com.

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