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Restaurant Sales Up Due to Diverse Concepts and Diner Incentives

Restaurant sales growth continues to outpace total retail sales growth, according to CBRE’s 2019 U.S. Food in Demand Series: Restaurants.

Steady growth is fueled by delivery options and technological innovations such as ghost kitchens and dining-in services. Rising consumer demand for delivery options in particular is driving dramatic shifts in restaurant operations and partnerships with third-party delivery providers.

Some restaurants are even doing away with dining rooms altogether as consumers increasingly order food deliveries through apps, reported St. Louis Post-Dispatch (Nov. 15). For instance, Chopt Creative Salad Co.’s newest location—in New York—has no cash registers or tables for customers. At the location, shelves hold salads ready for pickup, while delivery workers shuttle other orders through the front door and greeters inside help customers place orders. Delivery orders at Chopt make up nearly half of its business at larger locations, according to CMO Julie Atkinson.

Restaurants are expected to continue refining solutions to delivery challenges, including the acquisition of consumer data. Additionally, the concept of native delivery—whereby consumers use a restaurant’s own digital platform to order direct delivery—is gaining traction. More and more restaurateurs are investing in native delivery platforms to offset third-party fees and provide more personalized in-app experiences.

Meanwhile, coupons are helping entice consumers to dine out more frequently. Coupon usage at restaurants is up five percentage points to about a third of U.S. adults, according to Packaged Facts. 

Restaurant coupons are boosted by instant, digital and online/app point-of-sales use through newer delivery services. This is on top of longstanding restaurant coupon use for fastfood pizza chains or other fast food chains—including for drive-through. 

Consumers are more likely to dine out if a restaurant uses incentive-based marketing strategies, which include coupons, according to Valassis. Coupon users visit restaurants seven times per month on average compared to non-coupon users who do so less than five times per month. Overall, 77% of consumers say they use coupons at restaurants.

“Consumers’ desire for savings is strong across purchase categories and the restaurant market is no exception,” said Dana Baggett, executive director—restaurant, Valassis.

Despite the fact that 54% of diners usually visit the same eatery, the research found 20% of consumers will switch restaurants based on promotions or coupons, with 12% doing so in order to find the lowest price.

In fact, when deciding between several restaurants they like, 54% will pick the one that offers a coupon, with this number rising to over 60% among weekly dining visitors. Fifty-seven percent use coupons for a location they never visited, with this number peaking for fast-casual, family and fine dining restaurants. 

In regards to distributing coupons, 41% of diners want to receive coupons at least once per week. Millennials have an even stronger preference, with 54% favoring weekly distributions, as well as parents, with 49% desiring at least a coupon a week.

CBRE predicts rapid growth in fast-casual dining will persist among traditional concepts as well as regional and specialty startups entering the market due to lower barriers to entry. Almost four in five restaurants opening by top 500 chains in 2018 were a fast-casual concept. The category is buoyed by health-conscious consumers who are more willing to try new foods and cuisines. 

In third-quarter 2019, limited-service chains’ same-store sales averaged a 4% increase, while full-service chains’ same-store sales averaged 0.9%, reported Restaurant Business Online (Nov. 19). Fast-casual chains such as Wingstop and Chipotle Mexican Grill were top performers, with samestore sales rising 12.3% and 11% respectively.