NPD hints at better days in 2014

Consumers will remain a bit gun shy, but The NPD Group says forecasted growth in real disposable income, modest inflation and falling unemployment hint at better days ahead for the restaurant business compared to 2013.

The research firm projected a one-percent gain in visits and a three-percent rise in spending for 2014. That compares to 2013, when NPD found that while restaurant traffic stayed flat, spending in restaurants grew two percent year-over-year, thanks to higher averages. The numbers reflect struggles by casual and midscale/family full-service restaurants, which, despite aggressive deal offers, haven't seen traffic gains in several years.

The segments that did well in 2013—fast casual, donut and gourmet coffee concepts—as well as sub shops are positioned to remain robust next year as well, NPD says. Convenience stores and food retailers are also expected to grab more share from traditional restaurants, mainly from trading down by consumers hit hardest during the economic downturn.

At the top end, NPD also observes that fine dining “from our view, has fully recovered from the recession and is growing. Supported by the segment of the population least impacted by the economic slowdown, these restaurants have made efforts to become more contemporary.”

Who is eating out less often? NPD found that Millennials and families with children curtailed their restaurant visits this year. Through September, traffic from families with kids was off one percent; for customers aged 25-34, total annual restaurant occasions have fallen from 251 in 2008 to 207 in 2013.

Growth today is coming from older demographic groups and emerging ethnic populations. Baby boomers and seniors, who have weathered the recession better than younger generations, will continue to be a force. And restaurants will need to adapt menus to reflect the tastes of a more diverse population.

“The influence of the growing U.S. Hispanic population is reflected in the increased popularity of fruits, juice drinks and more flavorful spices and seasonings. The growing Asian population carries its influence on menus, as well, with noodles, rice, specialty sauces and other foods and flavors,” NPD notes.

Healthy eating options remain a priority for increasing numbers of restaurant guests, from families looking for nutritious, balanced meals for their children to boomers and seniors managing health and diet issues to gluten-avoiders. Restaurants that emphasize fresh ingredients and preparation are best positioned to capitalize on that demand.