CHICAGO — The bad news for restaurant owners for the first quarter of 2010 is that customer traffic continued to decline for the seventh consecutive quarter. The recession has not been kind to the industry. But the good news is that the dropping rates of visits has eased compared to the steep declines experienced in previous quarters.

According to market researcher The NPD Group, all segments of the restaurant industry experienced traffic losses in the quarter, with QSR (down -2 percent) continuing to hold up slightly better than casual dining restaurants (down -3 percent). Midscale (down -4 percent) and and fine dining/upscale hotel (down -6 percent) were the hardest hit.

Non-commercial foodservice outlets, like lodging, hospitals, military, schools and vending segments, saw traffic decreases -7 percent below what they were a year ago. Losses at lodging showed marked improvement this quarter with traffic volume just -3 percent below year ago levels.

The long downturn has caused franchise chains to rethink their strategies. Many are trying to back out of the heavy discounting and coupons that was all the rage a few quarters ago.

Two sectors helped buoy up traffic, breakfast meals and pizza.

Morning meals experienced flat traffic compared to a year ago. That is great news compared to supper traffic, which has been slipping since 2006. The first quarter of 2010 it declined by -4 percent. Even lunch visits were down by -2 percent.

The QSR pizza category was driven by aggressive marketing programs. It led all categories in growing dollars and traffic, a turnaround that occurred after 12 consecutive quarters of declining customer counts.

"There are signs of improvement but the industry isn't out of the woods yet, and won't be until the economy stabilizes, the unemployment picture improves, and consumer confidence maintains positive momentum," says Bonnie Riggs, NPD's restaurant industry analyst. "Our foodservice forecast suggests there will be two more quarters of traffic weakness before the industry recovers traffic losses."