Restaurants Starved for Business

By Paul Carton

The economy at large has certainly been experiencing the "worst of times," and nowhere is this more evident than in the restaurant industry.

Our latest ChangeWave restaurant spending surveys, which were conducted in September, show consumers continue to cut back on their restaurant expenditures.

But in these extraordinarily tough times, which types of restaurant chains are being hit the hardest? And are there any areas showing signs of improvement?

---

Let the ChangeWave Alliance take some of the guesswork out of investing and help you grow rich. Make sure you're riding the next wave to amazing profits!

---

Next 90 Days -- Restaurant Spending Cutbacks Continue

Restaurant spending has fallen sharply since our previous survey in August. Forty-four percent of respondents said they'll be spending less on restaurants during the next 90 days. Only 6% said they'll be spending more.



Importantly, the year-over-year decline (September 2008 versus September 2007) now stands at an unprecedented negative 29 points.

1  |  2  |  3  |  4

next >>

Consumers Going on a Diet

Twenty-eight percent of respondents reported they'll dine at less expensive restaurants during the next 90 days, while only 3% said they'll dine at more expensive restaurants.

Thirty-three percent said they expect to dine out less frequently during the next 90 days -- four times the percentage who said they'll dine out more frequently (8%).

---

Let the ChangeWave Alliance take some of the guesswork out of investing and help you grow rich. Make sure you're riding the next wave to amazing profits!

---

What reasons are they giving?

Forty-six percent of respondents who said they are dining out less frequently cited a general increase in the cost of living as the primary reason why. Higher energy costs (29%) and rising food costs (28%) also ranked among the top reasons given.



Thirty-eight percent of consumer respondents said they are eating more meals at home.

Among those respondents who do eat out, 28% said they're skipping beverages like soft drinks and alcohol, and 28% said they're ordering less-expensive items from the menu.

<< previous

1  |   2  |  3  |  4

next >>

Tables Are Emptiest At …

For the third-consecutive survey, it's upscale/fine dining restaurants that are taking the biggest hit in terms of the restaurant spending slowdown.

Only 3% of respondents said they'll dine at these establishments more often during the next 90 days, while 36% said less often.

High-end casual restaurants are also being severely hit.



If there's a glimmer of hope currently, it may lie in quick casual/family restaurants -- 14% of respondents said they'll dine at them more often, and just 12% said less often.

---

Let the ChangeWave Alliance take some of the guesswork out of investing and help you grow rich. Make sure you're riding the next wave to amazing profits!

---

While it's difficult to pick winners right now, there are a handful of chains that do appear best-positioned once consumers start to pick up their spending again.

We asked our respondents which individual restaurant chains they'll be spending more and less money at during the next 90 days, and when we compared our results with the findings from our previous survey, three chains stood out from the pack.

<< previous

1  |  2  |   3  |  4

next >>

In the high-end/casual category, Carrabba's Italian Grill is showing initial signs of improvement going forward.

In the quick casual/family category, Chipotle Mexican Grill (CMG) and Panera Bread (PNRA) are also showing early signs of positive movement.



And when we asked respondents to name their overall favorite restaurant, Chipotle and Carrabba's both showed gains since our previous survey.

On the downside, Red Lobster is showing the biggest decline going forward of any chain in the high-end/casual space. Similarly, when we asked respondents which restaurants they're least likely to go back to, Red Lobster showed a change to the negative.

In the moderate/casual category, Applebee's has also taken a decided turn for the worse.

As the economic gloom deepens, more and more consumers are thinking twice before they dine out. And when they do, they're paying extremely close attention to their spending decisions.

Our current restaurant spending survey results show the downward trend continuing for the restaurant industry -- with no immediate relief in sight.

---

Paul Carton is the Director of Research for the ChangeWave Alliance Research Network. The Research Network is a group of 20,000 highly qualified business, technology and medical professionals -- as well as early adopter consumers -- who work in leading companies of select industries. ChangeWave surveys its Network members weekly on a range of business and consumer topics, and converts the information into a series of proprietary quantitative and qualitative reports.

<< previous

1  |  2  |  3  |   4