Little Appetite for Restaurants

By Paul Carton and Jim Woods

It's been a rough ride lately for the U.S. economy, and nowhere has this been more evident than at your favorite restaurant.

According to ChangeWave's December consumer survey, it looks like more belt-tightening went on last month when it came to dining out. The survey of 1,308 consumers focused on dining habits and found a further weakening in restaurant spending.

Fifty-one percent of respondents said they'll be spending less money at restaurants -- an all-time high in a ChangeWave survey. Only 7% said they'll be spending more -- unchanged from November.



The year-over-year decline (December 2008 versus November 2007) was an unprecedented 41 points.

Among those dining out less often, 47% said it's because they're saving more money -- 25 points higher than our September survey. At the same time, there has been a 10-point increase in the percentage of consumers who said they're eating more meals at home (48%).

But which types of restaurant chains are getting hit the hardest? And are there any categories showing signs of improvement?

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The Consumer Dining Revolution

Not surprisingly, for the fourth consecutive survey upscale/fine dining restaurants have taken the biggest hit in terms of dining frequency. Only 2% of respondents said they'll dine at them more often during the next 90 days, while 42% said less often (net difference score = -40 points).



High-end casual restaurants are also taking a big hit (-33).

Fast-food restaurants (-3), on the other hand, have actually managed to improve, ever so slightly, since our last survey in September (when the category registered a -4). That's a notable achievement these days.

Winning and Losing Restaurant Chains

We also asked respondents which individual chains they'd be spending more and less money at, and then compared the current results with the findings from our previous survey. We looked at 124 restaurant chains in the survey.

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Best Positioned

Among fast-food restaurants, McDonald's (MCD) (change in net difference score = +3) is showing clear signs of momentum.

And in the moderate casual category, the percentage of consumers saying they'll spend more money at California Pizza Kitchen (CPKI) experienced a surprising move upward (+3).



Worst Positioned

On the down side, Outback Steakhouse (-5) showed the biggest decline of any chain in the survey, followed by P.F. Chang's China Bistro (PFCB) (-4) and Red Lobster (-4), which is owned by Darden Restaurants (DRI).

These restaurant spending trends reflect the current recessionary environment. But, historically, restaurant spending is also one of the first areas to improve when the economy begins to recover.

We'll be keeping a close eye on restaurant spending this month. In fact, next week you'll be receiving our January consumer spending results, including an update on overall restaurant spending going forward.

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Paul Carton is the Director of Research for the ChangeWave Alliance Research Network. Jim Woods is a Senior Editor for ChangeWave. 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.

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