Where’s the growth? - SmartBrief

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Where’s the growth?

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Restaurant traffic increased a bit in the U.S., Canada and other developed countries during the first quarter, with the exception of Australia and several European countries, including Germany, Italy and Spain, according to NPD Group. The picture was a bit brighter when it came to the average check, which was up in all 10 countries measured, except Spain and the U.K.

“While a recovery of the global foodservice industry seemed possible at the end of 2011, lack of consumer confidence and economic uncertainty entering into the new year may have put the recovery on hold for the time being,” NPD’s Bob O’Brien said.

As restaurant chains become increasingly global and look overseas for growth, international traffic and sales patterns become more important, as a guide to potential lucrative markets and as an indicator of whether there will be enough upside in some markets to offset downward trends in others.

China saw the biggest increase, with total spending up 25.6%, the average check up 13.4% and traffic up 11%, Nation’s Restaurant News reported. Japan’s numbers show restaurants are continuing to come back from devastation wrought by last year’s earthquake and tsunami.

Since Q1, Europe’s economy has foundered further, and things in China and some other parts of Asia have slowed, raising questions about what Q2 and Q3 traffic and sales data will show.

Also since Q1, weather conditions, including a drought in the U.S. Midwest, have fueled prediction of significantly higher prices for beef and other food commodities. The forecast might make choosing the right expansion markets even more important for chains looking to sales growth to offset higher costs.

For McDonald’s, the latest potentially lucrative market is Siberia. After finding success with 324 eateries in western Russia, the chain and its Russian franchisee are poised to open the first of at least 10 eastern Russian McDonald’s in Siberia, media outlets including Eater National reported. The golden arches will join Subway and KFC, the only Western chains that have opened units in the remote, wintry market.

KFC and sister chains Pizza Hut and Taco Bell often lead the way when entering markets. Parent Yum! Brands’ growth strategy has long hinged on international growth, which seemed a no-brainer a few years ago, with the U.S. in recession, domestic traffic slow and competition on the rise.

With overseas economies also uncertain these days, does global growth still seem the best bet for restaurant chains? Share your thoughts in the comments.