Do discounts increase customer visits at restaurants? NPD says no.
Five-dollar foot long? At first glance, discounts might appear to increase the incentives for people to eat out. But a new study suggests it may not have a significant effect.
Consumer restaurant traffic was flat in Q1, but restaurant visits on deal were up twice that rate overall and up 3% for quick-service restaurants, according to The NPD Group.
A significant driver in that “deal” traffic has been the discount competition among QSR burger chains, especially McDonald’s heavily marketed McPick 2 for $2 or $5, Wendy’s 4 for $4 bundle and Checkers/Rally’s $4 Meal Deal. “Combo meal visits to traditional QSRs increased by 2% in the first quarter of 2016, and helped improve QSR hamburger visits overall. The average deal rate (percent of visits where an item was purchased on a deal) for QSRs is 26%. The average deal rate for the burger chains offering the combo meal value deals is 35%,” NPD reports.
But all that dealing is not growing the market: Overall QSR burger customer traffic was flat in Q1 compared to year ago, per NPD.
However, customer traffic at QSRs during breakfast hours was up 4% versus a year ago. For the overall industry, morning visits increased by 2%. Servings of breakfast foods rose 8%.
NPD notes that Chipotle’s category dominance skews results for the fast-casual category, which saw flat customer traffic growth in the first quarter. But exclude Chipotle, which continues to suffer from backlash over food-safety issues, and fast-casual visits are up 5%.
Breakfast’s status as the lone growth daypart helps explain Good Times Burgers & Frozen Custard’s decision this week to add a new line of double-egg breakfast sandwiches as well as seasoned breakfast potatoes.
The new Bacon & Cheddar Breakfast Sandwich has two eggs, Cheddar cheese and bacon in bread from local Izzio’s Artisan Bakery in Denver (the 37-store chain’s base). The Tuscan Breakfast Sandwich has two eggs, pesto, tomato, and balsamic vinaigrette in Izzio’s Artisan Bakery bread. The sandwiches available before 10:30 a.m. and are $3.79 alone; $5.99 in a combo with new Wild Spuds breakfast potatoes and a drink.
The Shoney’s chain has launched an “American Icon Tribute” promotion that adds three new burgers to its menu.
Available through July 24, the new items are the Steakhouse Burger; Ham & Cheddar Burger (topped with Cheddar, shaved ham, onion and lettuce with mayo); and a Patty Melt (with American cheese and sautéed onion on grilled sourdough bread). Served with fries, each is $7.99.
Shoney has 140 units in 16, primarily Southeastern, states.
This article first appeared at BurgerBusiness.
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