Restaurant traffic still slow

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The restaurant industry continued to struggle during the fourth quarter of 2010, according to a leading research firm.

New data from the NPD group show that while business was up very slightly at the two ends of the spectrum -- fast-food and fine dining -- traffic actually dropped a little for all the moderate restaurants in between.

For example, customer traffic dropped by 3% at midscale restaurants compared with a year earlier, and by 2% at casual dining eateries, a category that includes such chains as Panera Bread or Applebee’s. At fast-food restaurants, by comparison, traffic was up by 1%.

The best news was at fancy restaurants, where traffic was up by 3% for the second year in a row. The improvement comes after several quarters of steep declines during the lowest points of the economic downturn.

Bonnie Riggs, restaurant analyst for the NPD Group, said restaurants will continue to have to work hard to lure customers in over the coming year. Many have kept business up by offering steep discounts and coupon deals, and they will likely have to keep doing that for some time, she said. That’s in large part because so many people are still out of work. Restaurants are among the first indulgences that people cut out when they have to save money.

“We are beginning to see many encouraging signs, however, with unemployment still over 9% and consumer confidence low, consumers continue to scrutinize every purchase,” she said.

-- Sharon Bernstein