Diners Still Demanding Cheap Eats

A new study by the financial consultancy AlixPartner doesn't bode well for the beleagured restaurant industry. Diners are still seeking bargains. And even if traffic goes up, spending won't. Not anytime soon.

As reported by Nancy Luna, the Orange County Register's Fast Food Maven, consumers plan to spend an average of just $11.49 per restaurant meal over the next year. That's 20 percent below what consumers were planning just last March, when we were already mired in a deep recession.

When diners do decide to eat out, they go for the deep discounts being offered by desperate restauranteurs. And they'll sacrifice quality for value. Thanks to the long recession, consumers have "have recalibrated their spending expectations based on the now-ubiquitous $5 sandwich and the $10 meal," said Adam Werner of AlixPartner.

And, he added, "restaurants that aren’t marching in the promotions parade risk being left behind."

Are you listening, Andy Puzder, CEO of CKE Restaurants? No, I didn't think so.

Thanks in part to promotions and discounts, traffic is up fairly substantially (except on the high end, where it is way down). The number of people who dined out at least once a week over the past year is up 11 percent, according to the study. But diners are walking in with tight fists—same-store sales are generally flat or declining. And total spending will fall by 3 percent over the next year, AlixPartners forecasts.