According to food service market research conducted by The NPD Group, revenue-generating beverages have been declining over the past five years, with tap water becoming one of the fastest growing beverages ordered at U.S. restaurants.
Based on NPD’s research, tap water servings currently represent 10 percent of the 50 billion beverage servings ordered at restaurants.
The recently release NPD report claims over the past five years there has been a six percent drop in total beverage servings excluding tap water at restaurants, a decline of 2.7 billion servings. Tap water servings have increased by 2.8 billion servings since 2006.
The report, based on surveys of 5500 adults, 18 years and older, indicates the decline in beverage orders at restaurants was in carbonated soft drinks and brewed coffee.
Besides a growth in orders for iced tea, other growth categories include newer drinks like smoothies, iced/frozen/slushy drinks, and specialty coffee drinks.
“Although the economy and high unemployment are factors in tap water’s upswing and beverage servings declines, some beverages, like carbonated soft drinks were declining prior to the recession,” says Bonnie Riggs, NPD restaurant industry analyst and author of the report.
Riggs added that a key takeaway from this report is that much of the declines in beverage servings are tied to the price/value relationship the consumer perceives.
According to the report, free refills were among an assortment of reasons consumers gave for ordering tap water instead of other beverages. The cost of carbonated soft drinks and other non-growth beverages was a prime factor for customers not ordering these drinks.
“Some declining beverages will fare better as the economy recovers, but beverage providers will need to address consumers’ concerns and poor value perceptions to stem further losses,” says Riggs.
Riggs says not all beverages are on the decline. “New flavors, addressing taste interests, preparing fresh/freshly made, and creating new versions of existing beverages are factors in the beverages that are growing.”
Consumer Confidence Drops to 2-Year Low
Bloomberg news reports consumer confidence slumped in October to the lowest level since March 2009, as Americans’ outlooks for employment and incomes soured.
“Dysfunctional labor and housing markets and the turmoil in Europe all are drags on confidence,” Robert Dye, chief economist at Comerica Inc. in Dallas, said before the report. “Consumers are fundamentally constrained, and consumer spending won’t be leading the economy forward.”
This summer, restaurant operators reported a net decline in customer traffic for the first time in three months, as many restaurants are just struggling to stay open. And based on U.S. Census Bureau statistics, a majority of Americans haven’t dined out in a year.