The effectiveness of deals in driving traffic to restaurants has declined considerably, according to a new survey from market research company The NPD Group. Research was captured from more than 4 million consumer restaurant visits over the past year and shows that restaurant visits using a “meal deal” had declined by 3% in 2012. Traditionally, combo meals and value menu item offers, the most frequently used types of deals, were responsible for the decline in traffic. Some examples of these offers include the $1 menu from McDonald’s and the $10 dinner box from Pizza Hut. But it is not just ‘fast’ food that runs such promotions. Popular sit-down dining restaurants, such as Red Lobster’s $7.99 lunch special, also have such offers.
The data does not undermine the importance of deals in the restaurant business; in fact, deals were the driving force during the peak of the recession. Non-deal traffic had fallen by 1% while deal traffic gained 5% in 2008. In 2009, deal traffic had increased by 3% in while non-deal traffic had declined by 4%. Deal traffic went nearly flat in 2010, while non-deal traffic had declined by 1%. In 2011, both deal and non-deal traffic was unchanged. 2012 provided the first glimpse at a changing industry. Non-deal traffic had gone up by 2% while deals had fallen by 3%. So what changed?
Ultimately, the deal has been in place for too long. Restaurants made an effort to offer great deals to drive traffic during the recession, but consumers have now become reliant on such promotions, essentially believing that the “deal” price is the regular price. For example, the “two for $20″ craze is now available at nearly every casual dining restaurant during lunchtime with many offering it during the dinner hours as well.
The restaurant industry needs to get creative and change consumer perception of these types of meal deals. Relying on existing value items and bundled meals may no longer be a viable option for restaurateurs. There is a silver lining, however. While ‘deals’ may be declining, visits based on coupons such as “buy one, get one free” and discounted prices are on the rise. Perhaps future marketing efforts should focus on these types of promotions in order to drive consumer traffic.