July 26, 2010: The economy is still taking a toll across the country, and the Burger Kings, Jack in the Boxs, Denny's, TGI Fridays and Ruby Tuesdays are feeling the pinch. restaurant category. The U.S. restaurant unit count declined by 1%, a loss of 5,204 restaurants, this spring compared to Spring 2009, according to marketing and research firm The NPD Group, Port Washington, NY.
Independent restaurant closings contributed to most of the decline, while chain units remained relatively stable, according to NPD’s "Spring 2010 ReCount," which is a census of commercial restaurant locations in the U.S. compiled in the spring and fall each year. Information for the "Spring 2010 ReCount "was collected from April 1, 2009 to March 31, 2010.
In addition, visits to U.S. restaurants declined by 3% for the year ending May 2010 compared to a year ago. Consumer spending at restaurants declined by 1%, the first decline in dollars NPD has reported since it began tracking the foodservice industry in 1976, according to The NPD Group’s CREST, which continually tracks consumer usage of commercial and non-commercial foodservice outlets,
The number of quick service restaurants declined by 1% (2,521 units). Full service restaurant units also experienced a unit loss of 1% (2,683 units) The FSR category includes the casual dining, mid-scale and fine dining segments with such chains as Denny's, Golden Corral, IHOP, TGI Friday's and Ruby Tuesday.
ESPN Zone, which opened its first location in 1998, typifies what the NPD Group reports. and shows that even chain owner The Disney Co. is not immune to the situation. The chain is closing or has closed locations in New York, Baltimore, Chicago, Las Vegas and Washington, DC, with only restaurants in Los Angeles and Anaheim staying open.
“It’s been a difficult time for the restaurant industry with customer traffic down over the past year,” Greg Starzynski, director, product development-foodservice at NPD. “The unit losses we’re seeing in our latest census are a reflection of the weakness in the industry with the greatest impact on the independent restaurant operators.”
The NPD Group report follows on the heels of a report from Jefferies & Co. restaurant securities analyst Jeff Farmer indicating that some fast-food chains likely would not see a rise in same-store sales rise until the employment rate among young men, one of its key demographics, begins to rise. An analysis comparing ten years of quarterly same-store sales showed that same-store sales for Burger King, Jack in the Box and Sonic rose and fell in conjunction with the unemployment rate. The chain sales dip as unemployment rises, he said.
NPD GROUP QSR/FSR DATA
Segment System Type Spring 2009 Spring 2010 PCYA*
TOTAL REST ALL 584,620 579,416 -1%
CHAINS 267,979 267,868 0%
INDEPENDENTS 316,641 311,548 -2%
QuickSR ALL 308,648 306,127 -1%
CHAINS 213,144 213,308 0%
INDEPENDENTS 95,504 92,819 -3%
FullSR ALL 275,972 273,289 -1%
CHAINS 54,835 54,560 -1%
INDEPENDENTS 221,137 218,729 -1%
*Percent change from a year ago
Source: The NPD Group/ReCount, Spring 2010