Red Lobster is trying to create the ambiance of a small, seaside town in Maine as it rolls out a three-year remodeling plan for its 700 U.S. and Canadian restaurants.
The seafood chain is the latest eatery to spruce up its menu, décor and architecture to lure consumers who can afford to eat out more frequently. With economists trimming growth forecasts and unemployment at 9.1 percent, restaurants are becoming increasingly dependent on households earning more than $70,000 to keep sales growing, according to Malcolm Knapp, a New York-based consultant who has monitored the industry since 1970.
“We’ve really become an ‘allocation nation,’ where every month, people look at what’s left from their paycheck and decide how they’re going to spend that money,” said Knapp, creator of the Knapp-Track Index of monthly restaurant sales and guest counts. “Restaurants are re-conceptualizing their brands to appeal to a broader demographic.”
Americans in lower-income brackets have been forced to cut back on dining out to live within their means, according to Robert Dye, senior economist at PNC Financial Services Group Inc. in Pittsburgh. Real disposable incomes, the money left over after taxes and adjusted for inflation, are essentially flat since December 2010, he said. Meanwhile, more-affluent households are benefiting from higher dividend payments and earnings from rental properties, which have grown 10 percent and 20 percent, respectively, since the September 2009, Bloomberg data show.
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