Tuesday, November 1, 2011

Picky eaters spell trouble for some restaurant chains

Chipotle and Subway are winning; Quizno's and Friendly's are not. These are the headlines from the latest round of data from the NPD Group on the success of mid-size restaurant chains among 18-24 year olds, and as reported today in the Wall Street Journal.

Friendly Ice Cream recently filed for Chapter 11 bankruptcy as did Real Mex Restaurants, the owner of Chevy's and other sit-down Mexican food chains. And, Quizno's, citing heavy competition from Subway, hired restructuring advisers earlier this year.

The chains with the most marketing clout, coupled with their ability to react to rising costs, are beating the smaller chains or those who fail to attrack the choosier (read "pickier") eaters.

Among the coveted 18-24 year old crowd--the key audience for these chains--restaurant visits are down dramatically. In the year ended May 2011, 18-24 year olds visited restaurants 192 times each, on average, down from 245 times five years ago.

The weak job market is a factor as this demographic group has been hard-hit by unemployment. And, the taste buds of this crowd is changing too with a greater focus on the need for fresh and healthy ingredients, coupled with the obvious desire for high value.

What once was the most reliable visitor to these less expensive chain restarants is now more picky--not only with the food they eat but because of less money in their pockets.

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