Slow Sales Could Force Restaurants To Cut Advertising

Many Factors Contributing To Declining Sales

When an industry that often advertises on radio suffers -- radio suffers -- and that's what's happening as the food service industry, which went into 2011 with high hopes, could consider cutting radio advertising. After two years of declining sales and visits, it looked like the entire industry was set for a modest gain as the country began to pull out of the recession. When THE NATIONAL RESTAURANT ASSOCIATION released its annual forecast numbers in FEBRUARY, the picture looked much improved, with 3.4% growth projected year-over-year.

Those positive predictions haven't come to pass. A recent NPD GROUP report revealed that restaurant foot traffic declined in the second quarter of 2011. Even worse, the NRA's own RESTAURANT PERFORMANCE INDEX sank to its lowest level in 13 months in AUGUST.

In the most recent data from MEDIA MONITORS, MCDONALD'S and BURGER KING were among radio's top-10 advertisers (NET NEWS 10/10). WENDY's, SUBWAY, BUFFALO WILD WINGS and PANERA BREAD were among the top-50 radio advertisers.

TUNDRA SPECIALTIES, a national restaurant supplies and equipment distributor, conducted a survey of customers in the food service industry to get a better feel for how the persistent weakness in confidence was affecting their business. 58% of respondents felt consumer confidence is negatively affecting their business, which falls in line with the general perception that the American economy is faltering.

"People aren't spending money because they fear the unknown," said one respondent. "Will they be unemployed or homeless?" He's extended his operating hours and added menu items in order to attract more business.

Independent operations have been particularly hard hit. This SPRING the NPD GROUP reported that of the 9,450 restaurants that closed between APRIL 1st, 2010 and MARCH 31st, 2011 8,650 (92%) of them were independently run.

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