The Technomic study indicated that casual dining operators face subtle and complex challenges to their businesses today that extend beyond the current economic climate.

"For one, many chains have overbuilt units, with expansion rates averaging five percent over the past four years even as sales growth was slowing," said Ron Paul, president of Technomic in Chicago. "Restaurant supply now exceeds consumer demand. On top of that, many consumers tell us that traditional casual dining chains lack differentiation, that 'they all look alike.'"

Consumers may be cutting back on spending and visits to casual dining restaurants, but where are they eating instead?

At dinner time, the most important day part for casual dining chains, 85 percent of surveyed consumers said they are eating at home more often-either cooking, or more likely, sourcing prepared meals from various food retailers. Other options are also popular, said Paul, citing independent and fast food restaurants being used as substitutes for casual dining by over one third of respondents.

But it is not unmitigated disaster for the casual dining segment. In spite of the challenges they face, some chains remain successful and outperform their competitors largely through differentiation and better understanding of their core customers, said Technomic.

The survey found, for example, that the core market for casual dining consists of heavy patrons (who visit casual dining restaurants at least weekly) and moderate customers (who visit two or three times a month). Together, these core groups represent half of all visits.

But these customers differ demographically from the general population: they are disproportionately male (55 percent), young (average age 43) and higher-income (averaging close to $63,000 a year). They also tend to live in the suburbs.

"They're not hard to find," said Paul. "But now more than ever, in order for a casual dining chain to succeed, they must know themselves, know their customers, and know how to convey what sets them apart in a crowded field."

Technomic said the study, "Casual Dining Outlook: A Consumer Assessment and Best Practices Analysis," provides chain operators and suppliers to the industry with a better understanding of the current situation in casual dining, as well as insights on formulas for success.

For more information, contact rpaul@technomic.com.