Going Out for Lunch Is a Dying Tradition
Restaurants suffer as people eat at their desks; no more three-martini sit-down meals
The Harbor Bar restaurant at a Whole Foods Market location in Midtown Manhattan last week. The average
price of a restaurant lunch has risen about 20% since the recession. PHOTO: MARK KAUZLARICH/BLOOMBERG
price of a restaurant lunch has risen about 20% since the recession. PHOTO: MARK KAUZLARICH/BLOOMBERG
The U.S. restaurant industry is in a funk. Blame it on lunch.
Americans made 433 million fewer trips to restaurants at lunchtime last year, resulting
in roughly $3.2 billion in lost business for restaurants, according to market-research
firm NPD Group Inc. It was the lowest level of lunch traffic in at least four decades.
in roughly $3.2 billion in lost business for restaurants, according to market-research
firm NPD Group Inc. It was the lowest level of lunch traffic in at least four decades.
While that loss in traffic is a 2% decline from 2015, it is a significant one-year drop
for an industry that has traditionally relied on lunch and has had little or no growth
for a decade.
for an industry that has traditionally relied on lunch and has had little or no growth
for a decade.
“I put [restaurant] lunch right up there with fax machines and pay phones,” said Jim
Parks, a 55-year-old sales director who used to dine out for lunch nearly every day
but found in recent years that he no longer had room for it in his schedule.
Parks, a 55-year-old sales director who used to dine out for lunch nearly every day
but found in recent years that he no longer had room for it in his schedule.
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Like Mr. Parks, many U.S. workers
now see stealing away for an hour
at the neighborhood diner in the
middle of the day as a luxury.
Even the classic “power lunch”
is falling out of favor among
power brokers.
now see stealing away for an hour
at the neighborhood diner in the
middle of the day as a luxury.
Even the classic “power lunch”
is falling out of favor among
power brokers.
When he isn’t on the road for a Detroit-based building products company, Mr. Parks
works from his home in Carlisle, Ohio, and eats there. When he meets clients at their
offices, they have food delivered and work during what they call a “lunch and learn.”
works from his home in Carlisle, Ohio, and eats there. When he meets clients at their
offices, they have food delivered and work during what they call a “lunch and learn.”
Even some restaurant-company executives don’t go out for lunch. Employees at Texas Roadhouse Inc.’s Louisville, Ky., headquarters order in so often that they know the
delivery drivers by name. “A lot of our folks are trying to be more efficient,”
company President Scott Colosi said.
delivery drivers by name. “A lot of our folks are trying to be more efficient,”
company President Scott Colosi said.
How to Fix Your Lame Desk Lunch
Lunch should be a break, but that doesn’t always happen. So here are a few expert suggestions for your
office lunch. Photo: Jeff Bush
office lunch. Photo: Jeff Bush
Cost is another factor working against eating out for lunch. While restaurants have
raised their tabs over the past few years to cope with rising labor costs, the price of
food at supermarkets has continued to drop, widening the cost gap between bringing
in lunch and eating out.
raised their tabs over the past few years to cope with rising labor costs, the price of
food at supermarkets has continued to drop, widening the cost gap between bringing
in lunch and eating out.
Restaurants are adapting by offering delivery, faster service and smaller portions. But
the shift signals trouble for the industry, which makes more money serving meals
inside restaurants, where soft drinks, alcoholic beverages, appetizers and desserts
boost margins. Maintaining nearly empty dining rooms is costly.
the shift signals trouble for the industry, which makes more money serving meals
inside restaurants, where soft drinks, alcoholic beverages, appetizers and desserts
boost margins. Maintaining nearly empty dining rooms is costly.
Among the hardest hit are casual sit-down restaurants—such as Dine Equity Inc.’s
Applebee’s and Ruby Tuesday Inc. —because of the time it takes to order, get served
and pay. Such establishments last year saw their steepest ever decline in lunch traffic
, according to NPD.
Applebee’s and Ruby Tuesday Inc. —because of the time it takes to order, get served
and pay. Such establishments last year saw their steepest ever decline in lunch traffic
, according to NPD.
Even fast-casual chains that cater more to harried customers with counter service instead of wait staff are experiencing slower growth. Lunchtime traffic at those restaurants—excluding Chipotle Mexican Grill Inc., which has suffered steep declines in the wake of disease outbreaks—grew 2% last year after posting growth of 5% or higher in each of the prior four years.
The pain is spreading to suppliers. Meat giantTyson Foods Inc. recently said a 29% drop in quarterly earnings was due partly to the decline in restaurant traffic.
“Consumers are buying fresh foods, from supermarkets, and eating them at home as a replacement for eating out,” Tyson Chief Executive Tom Hayes said.
The average price of a restaurant lunch has risen 19.5% to $7.59 since the recession, as rising labor costs pushed owners to raise menu prices—even as the cost of raw ingredients has fallen. According to the Bureau of Labor Statistics, the U.S. last year posted the longest stretch of falling grocery prices in more than 50 years.
“We believe significant food deflation was the primary culprit behind last year’s
weakness, favoring food at home pricing over food away from home pricing to a
degree not seen outside of the global financial crisis,” Sanford Bernstein analyst
Sara Senatore said in a recent report on the restaurant industry.
weakness, favoring food at home pricing over food away from home pricing to a
degree not seen outside of the global financial crisis,” Sanford Bernstein analyst
Sara Senatore said in a recent report on the restaurant industry.
More fundamental shifts in consumer behavior also are at play. The share of people
doing at least some of their work at home—and who are unlikely to go out and eat—
has fluctuated over the years, but was as low as 19% in 2003 and reached a high of
24% in 2015, according to the BLS. And the continued rise of online shopping means
fewer trips to the mall—or a stop for a restaurant lunch there. (Read about how people
in cities around the world eat lunch.)
doing at least some of their work at home—and who are unlikely to go out and eat—
has fluctuated over the years, but was as low as 19% in 2003 and reached a high of
24% in 2015, according to the BLS. And the continued rise of online shopping means
fewer trips to the mall—or a stop for a restaurant lunch there. (Read about how people
in cities around the world eat lunch.)
Despite the traffic decline, dollar sales at lunch were flat last year because of the menu
price increases. But restaurants can’t raise prices indefinitely. In fact, many now are
offering lunch discounts to bring people out to eat.
price increases. But restaurants can’t raise prices indefinitely. In fact, many now are
offering lunch discounts to bring people out to eat.
LUNCH AROUND THE WORLD
JEWEL SAMAD/GETTY IMAGES
Some lunch specials at casual-dining restaurants cost less than a fast-food
meal. Lunch can be had for $6 at
Brinker International Inc.’s Chili’s
Grill &Bar, and for as low as $6.99
at Darden Restaurants Inc.’sOlive
Garden.
meal. Lunch can be had for $6 at
Brinker International Inc.’s Chili’s
Grill &Bar, and for as low as $6.99
at Darden Restaurants Inc.’sOlive
Garden.
Brazilian steakhouse Fogo de Chão Inc.FOGO -0.36% —where
lunch can take two hours and cost
up to $34—last year introduced a
$15 lunch special of salads, soups,
cured meats and stews that can be
completed in under an hour.
lunch can take two hours and cost
up to $34—last year introduced a
$15 lunch special of salads, soups,
cured meats and stews that can be
completed in under an hour.
After it saw lunch traffic “fall off” in late 2015, sports-bar chain Buffalo Wild Wings Inc. introduced a cheaper “fast break lunch” menu with smaller portions. Chief
Executive Sally Smith said the new menu—and a 15-minute service guarantee—recently
helped improve traffic.
Executive Sally Smith said the new menu—and a 15-minute service guarantee—recently
helped improve traffic.
Many restaurants are restructuring. Cosi Inc., Garden Fresh Corp. and Old Country
Buffet owner Buffets Inc. recently have filed for chapter 11 bankruptcy protection.
Others, like Ruby Tuesday and Famous Dave’s of America Inc. DAVE -1.28% have
been closing restaurants.
Buffet owner Buffets Inc. recently have filed for chapter 11 bankruptcy protection.
Others, like Ruby Tuesday and Famous Dave’s of America Inc. DAVE -1.28% have
been closing restaurants.
Bob Evans Farms Inc. BOBE 0.22% in January sold its struggling restaurant business
to private-equity firm Golden Gate Capital. On the same day, Bob Evans announced
that its packaged-foods arm was acquiring a potato-processing company in an effort
to focus on growing demand for refrigerated side dishes.
to private-equity firm Golden Gate Capital. On the same day, Bob Evans announced
that its packaged-foods arm was acquiring a potato-processing company in an effort
to focus on growing demand for refrigerated side dishes.
Josh Benn, managing director at corporate-finance advisory firm Duff & Phelps
Corp., said new restaurant concepts, such as those that cater to consumers’ desire for
faster, healthier food, are on the rise.
Corp., said new restaurant concepts, such as those that cater to consumers’ desire for
faster, healthier food, are on the rise.
“I think there’s a death and regeneration happening in this whole industry,”
Mr. Benn said.
Mr. Benn said.
