evans ink

Anecdotally, it’s becoming apparent that restaurants are struggling as consumers pull in their spending reins. It seemed to start with the gas price crisis, and certainly is continuing through the economic downturn.  People are simply not going out as much as a higher share of earnings are applied towards savings, and as job security fears weigh heavily on consumer’s minds.

I discovered a year end research report synopsis on consumer restaurant spending by a small blog post on the finance blog, Infectious Greed, which linked to the NPD Group’s 2008 research results summary.  The details are insightful, and point to the critical importance of incentive offers to entice consumers into restaurants in 2009.

From NPD’s Consumer Report on Eating Share Trends:

“…According to NPD, promotion-related visits supported all commercial foodservice gains, as deal visits increased six percent and non-deal visits slipped by one percent. For the annual period ending November 2008, 23 percent of all traffic involved some type of consumer-recognized deal. Over 90 percent of the increase in deal visits came from quick service restaurants (QSR).

While QSR traffic growth slowed in 2008, the segment fared better than full service restaurants. The modest growth at QSR offset losses at midscale restaurants. Deal-related traffic kept QSRs in a positive position. Casual dining traffic was stable for the year; however, trends weakened n the latter half of the year with a two percent decline in traffic for the fall quarter.

As consumers took advantage of discounts at lunch, lunch traffic increased after realizing no growth in 2007. However, visits to restaurants for supper continued to trend down. Morning meal and snack-related occasions slowed over the previous years’ growth, but did experience positive growth in 2008.

“I don’t believe consumers, no matter the state of the economy, will abandon restaurants entirely, they will just use them differently – more cost-consciously,” says Balzer, who has been observing how American eat for 30 years. “There will be no recession in eating; there will just be winners and losers. The restaurants that deliver value and make it easy to get food cheaper, in new and compelling ways, will win.”

boldface emphasis added by me.

These results reinforce the importance of promotion and discount offers to survival in one of the largest segments of online local advertising.  Promotion content has never been in the cross-hairs of online yellow pages.  Interestingly - so far - I have not seen Yelp embrace this trend, although it would be a really obvious next move.  It seems to have become an increasing part of CitySearch’s model.

While the obvious conclusion for YP publishers is to concentrate more seriously on promotion based content, the YP brand has never been recognized as the place to go for live promotion or coupons. Likewise IYP sites have done little to bring offers or promitions into their use cases.

I’d suggest that the focus should be on the distribution of promotions. Promotional content and SEM programs need to be more tightly connected.  There’s not a more Pavlovian moment to offer a consumer a deal then when they have just clicked a search box looking for restaurants. Perhaps we can convince Google to let a bell ring alongside the SEM ad!