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Diners to Restaurants: "Please, Sir, We Want Some More... for Less"

LAS VEGAS, NV -- 11/09/09 -- 
 Although economists may be reporting an end
to the recession, the news has not reached restaurant customers, according
to a new survey released today by AlixPartners LLP, the global business
advisory firm.  Following a ..
Posted : Mon, 09 Nov 2009 16:32:31 GMT
Author : AlixPartners
Category : Press Release
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LAS VEGAS, NV -- 11/09/09 -- Although economists may be reporting an end to the recession, the news has not reached restaurant customers, according to a new survey released today by AlixPartners LLP, the global business advisory firm. Following a study released in March 2009, AlixPartners recently surveyed 1,000 consumers about their current dining habits and expectations for future spending in this sector. The study, released today at the 2009 Restaurant Finance & Development Conference, found that while most consumers expected they will eat out as frequently in the coming year as they have in the past 12 months, the amount they expect to spend -- an average of $11.49 per meal -- was almost 20% less than the average spending per meal reported in the study released earlier this year.

The results showed that while Americans do not want -- or do not have time -- to cook for themselves, they are not looking for luxury dining out. While the percentage of people dining out at least weekly rose to 63%, up from 52% in AlixPartners' March survey, the average number of monthly visits to Fine Dining establishments dropped by 36%.

"While food quality today remains top of mind for the consumer, the core driver for diners continues to be value, value, value," said Andy Eversbusch, a managing director at AlixPartners and head of the firm's Food Service Practice. "That determines how often people eat out, and where they eat out. Further, this survey suggests that while the industry continues to rely heavily on special discounts to drive traffic, it remains unclear whether this strategy will provide a sustained positive impact."

"Customers have been trained to take specials for granted," said Adam Werner, a director in the Food Service Practice at AlixPartners, and one of the authors of the study. "They have recalibrated their spending expectations based on the now-ubiquitous $5 sandwich and the $10 meal, and restaurants that aren't marching in the promotions parade risk being left behind."

According to Adam Fless, also an AlixPartners director and study co-author, "From these findings and our own experience in the field, we are seeing that restaurants are going to need to do a very delicate balancing act for the foreseeable future, requiring a long-range alignment of kitchen costs and dining experience. If they are not able to re-engineer their menus to offer exceptional value, they will continue to struggle. And if they are not able to manage their execution in a way that keeps their margins healthy, survival will be a challenge."

Fless also warned that attempts to arrive at quick fixes either by cutting margins to unsustainable levels, or by sacrificing food quality, often backfire. "A talented chef can make good food, and an owner can cut costs," he said. "But only restaurateurs who can do both in a sustainable way, will have a secure future."

The survey asked a representative sample of adults age 18 and above about their current and planned frequency and expenditure on dining out, as well as their preferred type of restaurant and key criteria in restaurant selection. The results include breakdowns by gender, region and income level. Other findings include:

--  63% dined out at least weekly over the last twelve months, 11% more
    than in AlixPartners' Q1 survey.  In spite of the increased visits, same
    store revenue continues to remain flat or declining. Fine Dining suffered
    the biggest reported drop in overall visits per month over last year.
--  Value is still most often cited by consumers as the reason to try new
    restaurants; promotions are far more important than previous survey,
    however their overall positive effects on revenue remain unclear.
--  Consumer preference continues to be driven not only by price, but by
    overall food quality which was again cited as the most important factor in
    selecting a restaurant.
--  Going forward, consumers plan to spend less in the next 12 months than
    they do currently.
--  Expected average spend in the next 12 months is projected to drop 3%
    as consumers shift more to meals under $5.
--  The study also found significant differences between the respondents
    along the lines of gender, annual income and geographic region.
    

About AlixPartners

AlixPartners is a global business advisory firm offering comprehensive services to improve corporate performance, execute corporate turnarounds, and provide litigation consulting and forensic accounting services. The firm's specialty is urgent, high-impact situations when results really matter. The firm has more than 900 professionals in 14 offices across North America, Europe and Asia, and is on the Web at www.alixpartners.com.

Media Contacts:

Meir Kahtan
(Meir Kahtan Public Relations)
+1.212.575.8188
Email Contact

Tim Yost
(AlixPartners)
+1.248.204.8689


Copyright © 2008 Market Wire. All rights reserved.


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