Meanwhile On Main Street, Fast-Food Traffic Drops For The First Time In Five Years

Tyler Durden's picture

As the market closes at another all time high, the "recovery", if only on paper, is again bypassing most Americans and it is starting to hit where it hurts the most. According to restaurant tracker NPD Group, traffic at U.S. fast-food restaurant fell 1% in the third quarter, the sector’s first traffic decline in five years. Unfortunately, the reason is not that many Americans have migrated to a higher wealth group and are now eating at more expensive venues, but a more familiar one, namely higher costs of eating out, changing consumer behavior and higher bills for items such as rent and drugs. In other words, America's "main street" is so squeezed, it can't even afford to eat out as much as it did just one year ago.

According to Bonnie Riggs of the NPD Group, “the term growing your business in a 1% world has become a popular mantra for the restaurant industry after six consecutive years of annual traffic gains of just 1%,” said NPD analyst Bonnie Riggs. “However, over the past six months, restaurant industry traffic growth has come to a standstill and quick-service restaurants, which have been the traffic growth drivers, are now experiencing a slowdown in visits.”

While inflation in wages is missing for most Americans, expect for those on minimum wages who most likely already work in said fast-food restaurants, inflation in food costs is all too prevalent and eating out has become more expensive, even as the cost of food purchased for home use has fallen 2.4% in the past year, according to the October consumer price index.

Curious, even as food costs have shrunk because of a global glut in farm products such as wheat, rice, soy and corn, the price of rapidly prepared food has risen as a result of managers passing on rising minimum wages to consumers, which in turn has pressured overall sales and traffic. As MarketWatch notes, the pressure was evident in third-quarter earnings, with companies bemoaning the shortage of growth drivers and fretting about weak consumer confidence and general unease about the state of the world. In November, Moody’s Investors Service weighed in by slashing its operating-profit-growth forecast for the restaurant sector and revising its outlook to stable from positive.

Underscoring the severity of the economic reality for most Americans, a recent NPD survey found 75% of respondents saying they have cut back on restaurant dining as they keep a closer tab on spending in most or all purchase categories, with many saying restaurant prices are too high.

Meanwhile, for the Fed which is now considering letting the economy "run hot" because there is not nearly enough inflation (except in rent, medical bills, college tuition and, of course, asset prices), the average restaurant bill has climbed 21% in the past decade, and the gap between eating in and eating out has consistently widened. In fact, from a nation of people "eating out", the NPD estimates that 82% of all meals are now consumed at home.

Naturally, being an industry-funded organization, Riggs tried to spin the data: “the marketplace is changing, and despite improving economic indicators the consumer landscape is fundamentally reshaped,” she said. “What hasn’t changed and won’t change is the consumer’s need for food service; it saves them time and provides them with an experience.”

Or maybe, those "improving economic indicators" are really nothing more than a mirage, meant to boost the confidence of some Americans, if not those 95 million who are no longer in the labor force.

Meanwhile, fast food vendors are scrambling to come up with differentiation strategies in a field where there is tremendous saturation. For now, consumers are still drawn to new products and promotions, as well as competitive pricing, like "extensions" to the Big Mac and french fry line. No really, “We are impressed with McDonald’s potential product pipeline heading into 2017,” said Instinet analyst Mark Kalinowski. “Big Mac and french fry line extensions, platforms for customization, fresh beef and further menu innovation have been in test across multiple U.S. geographies.” McDonald’s is also planning to roll out a new mobile order-and-pay program in hopes of further driving traffic.

Now if only in addition to hip, cool, mobile apps, the fast food restaurants could also send some old-fashioned "money" to their cash-strapped customers, then the worst fast food market in 5 years might have a chance of turning around.

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smokintoad's picture

Traffic picking up out back by the dumpsters?

Raffie's picture

So the sales of the Agenda 21 Happy Meal are dropping.

Which means less people dieing and more mouths to feed in the future.

It will be total anarchy!

 

knukles's picture

Now that's a real good sign.... Just getting ready for Soylent Green Rations, Bitchez

LowerSlowerDelaware_LSD's picture
LowerSlowerDelaware_LSD (not verified) knukles Dec 6, 2016 7:14 PM

$15/hour for the burger flippers will fix this problem.

NoDebt's picture

They're still getting their high fat, high cholestorol pink slime from somewhere.  No shortage of porkers running around the WalMart near my neighborhood.

 

a Smudge by any other name's picture

The good news it's rent AND drugs not rent OR drugs.

CheapBastard's picture

DeBlazio said it was due to climate change.

Stuck on Zero's picture

All those millions of new food service worker jobs claimed by the BLS don't make sense unless you count dumpster diving.

Angry White Guy's picture

Rent OR drugs is aleady a forced choice for many.  Many more to come I suspect.

Raffie's picture

I am a big supporter of the Scoop Trucks to gather Special Snowflake rioters to have them processed into protein cakes and fed back the Special Snowflakes since they big on sustainability.

 

On a side note few months ago that more and more people can not afford to shop at Walmart and now are shopping at the dollar stores.

kuwa mzuri's picture

People are already suspecting processed meat products.

SWRichmond's picture

Fast food isn't even really food. Mostly toxic crap.

abyssinian's picture

because people are eating at highend steak house. shopping at Whole foods eating healthy to lower their health care cost! 

 

come on, it's ok to dream, have to spin anything negative in to bullish reason to buy more stocks tomorrow. MCD I am backing up the truck 

LowerSlowerDelaware_LSD's picture
LowerSlowerDelaware_LSD (not verified) abyssinian Dec 6, 2016 7:33 PM

I've got to say... the most out of shape, ugliest, most acne riddled people I've ever seen were at a Whole Foods the one time I went in to use their bathroom. Something doesn't add up.

RiverRoad's picture

They have bathrooms?   Eeweeu!!

NoDebt's picture

Given the only jobs we've made in this country over the last 8 years have been for burger-flippers, this does not bode well for the unemployment rate.

 

RiverRoad's picture

Throw in Amazon's coming cashier-less grocery stores and there's gonna be a lot of folks lining up to build that Wall. 

no ice's picture

Oh.  So, the "one time" you went into Whole Foods "to use the bathroom" you saw the "most out of shape, ugliest, most acne riddled people" ever?  What did you do? Wander around the store looking at everyone's asses and faces?  My experience is much different from yours.

McShits and their cohorts are doing poorly because they serve a bunch of stale GMO'd, pesticide laden, high fructose corn syrup, aspartamed, toxic chemicalized crap and have the nerve to call it "food."  And, they market that poison to kids.  On top of that, they treat their employees like shit.  McShits exists to keep the pharmaceutical industry in business. Period.  But, their day is coming because people are starting to realize that they don't want to eat the food the "illuminati" is pushing on them.  

 

 

 

 

 

 

 

 

Abbie Normal's picture

That's funny...all I see at Whole Paycheck are the pretentious elite lining up to pay $11/lb for heirloom tomatoes or other overpriced products that are half that much at the local farmer's market.

cbxer55's picture

I agree. I avoid fast "food" like the plague it is. Haven't eaten fast "food" this year.

The few times I did last year were either to Arby's or Subway.

flaminratzazz's picture

tax the rich

feed the poor

until there are no

rich no more

RiverRoad's picture

More like folks saving up for Christmas the only way they can........Movie theaters are empty then too.

Squid Viscous's picture

Nigs will always go to the movies, the worse the better

daveO's picture

Before and/or after going to MCD's.

Kprime's picture

a lot of them double sized go before and after.  the movie is over an hour long; you don't expect us to starve ourselves, do you?

JuliaS's picture

Theaters, like retail stores are dead. Mass migration of former A-listers to network television a testament to that. TV used to be a movie star's graveyard. These days it's a place of salvation.

Internet is killing off every old form of entertainment and there's no going back.

Arnold's picture

Just one word Benjamin, just one word.

 

Baconator.

NoDebt's picture

Or plastics.  Pretty much the same thing.

 

1980XLS's picture

Nah,

Peasants moving up from McDonald's to Ruth Chris Steak House. (Sarcasm)

Snowflakes migrating To Ping Pong & Pizza.

Hohum's picture

Americans eaitng healthier!  Productivity should follow.

Raffie's picture

Hillary & Friends only eat GMO/Gluten Free aborted fetuses.

Mr Pink's picture

I'm gonna disagree....I'm pretty sure her and the Podesta gang prefer real live babies. They have developed a real love for Haitan little ones

flaminratzazz's picture

Make more apps,, always the answer

restelle's picture

People are waking up to the toxic waste dump GMO poison they call "food". 

 

davinci7_gis's picture

Time for the robots and machines to start flipping burgers!

MilwaukeeMark's picture

You pay a huge premium to have others do what you can do for yourself and traditionally did yourself: like wash your own car, make your own coffee, pack your own sandwich, fertilize and cut your own grass, change your own oil.
As the economy continues to pinch people they will again discover these "do it for yourself" throwbacks to an earlier time, and people who perform these services will feel the effects.

Mazzy's picture

Hey, don't share my frugal secrets.  It's the only way I'm able to blow my co-workers out of the water financially.  While they buy tattoos and sick their cars up, I'm out buying rental units.

"Man, you're "LUCKY" that you have your rental unit"

The fuck? Luck had shinola to do with it.  Stop buying Taco Bell and fancy rims for your ricer.  Mother fuckers got more invested into their tattoo portfolio than even in a simple emergency savings account.

flaminratzazz's picture

so tell me.. being you seem to be in that age group, wtf is with the diamond earring stuck in every nigerz head?

Mazzy's picture

The PC "artist" crowd make for good little monkeys.  They all think they're "creative" and "individualistic" by mimicing each other. 

Yeah, those stars tattooed on your elbows are real original you fucksticks!

Oh well, somebody's making money off it.  Landlords and creditors are very happy that most millenials have chosen to be spendthrift broke idiots. 

It would be nice if more of them had real job skills to keep the overall economy going.  I believe it is my personal right to not have to bail out anyone who has a tattoo, piercing, mudskipper, or vape canister.  I owe nothing to no other man or woman except for the handful of mortgage debt that I've voluntarily chosen.

flaminratzazz's picture

you seem to have a few cells floating in the grey matter..

remember grasshopper,

 

buy when there is blood in the streets..

Scrubbing Bubblez's picture
Scrubbing Bubblez (not verified) flaminratzazz Dec 7, 2016 2:27 AM

It's their uniform!

ejmoosa's picture

But a tattoo will be theirs forever!  Unless you get it removed, which will cost five times the original inkwork...

Kidbuck's picture

You ignore comparative advantages at your peril.

daveO's picture

The quality of fast food has deteriorated greatly while the price has gone up. Their quarterly earnings driven model is killing them.

chunga's picture

I love this one..."the cost of food purchasd for home use has fallen 2.4% in the past year, according to the October consumer price index".

Squid Viscous's picture

granny has lost her appetitte for meow mix?

Jethro's picture

What does the Chapwood Index show for your area?

chunga's picture

I don't know what that is but by my account the prices of food keep going up and we really make an //big// effort to keep costs down. I've made theargument before that it's actually cheaper (in the short term) to buy fast food clot burgers than make stuff yourself.