Restaurant Loyalty Varies by Generation, Finds Technomic

July 14, 2014

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Repeat patronage is critical to most foodservice operators’ success. However, guests’ intent to return and their reasons for doing so vary considerably by generation, as revealed in a recent white paper using data from Technomic’s Consumer Brand Metrics (CBM) program.

The white paper, titled Keep ‘Em Coming Back: Customer Loyalty and What Drives a Generation to Return reveals that more consumers report they will return in the near future to Papa Murphy’s Pizza and In-N-Out Burger than any other restaurant tracked. Papa Murphy’s scores are driven by Generation X and Baby Boomers, while more Millennials than members of other generations say they’ll soon return to In-N-Out Burger.

“Millennials are looking for restaurants that not only satisfy their hunger, but that they can feel good about,” says Darren Tristano, executive vice president at Technomic. “Older consumers, on the other hand, place a higher priority on atmosphere and service.”

Highlights from the white paper include:

-In-N-Out Burger and Papa Murphy’s Pizza garner the strongest intent to return. More consumers strongly agree that “I will return to this restaurant in the near future” for Papa Murphy’s Pizza (54 percent) and In-N-Out Burger (52 percent) than for any other restaurant tracked in the program. While limited-service chains, which are visited more frequently overall, generally outperform full-service concepts on this attribute, both Cracker Barrel (46 percent) and Texas Roadhouse (44 percent) rank in the top fifteen restaurants overall.

- Among Millennials, In-N-Out Burger is the chain most likely to be revisited. Millennials place greater emphasis on the concept’s brand image, agreeing more strongly than other generations that In-N-Out Burger supports local community activities, offers new and exciting products and is an innovative brand.

- Gen Xers and Boomers are especially likely to say they’ll revisit Papa Murphy’s soon. Their motivations for returning differ, as Generation X rates the brand most favorably on cleanliness, convenient location and beverage quality, while Boomers score the chain most highly on service attributes, such as staff friendliness and payment handling.

These findings were derived from Technomic’s Consumer Brand Metrics (CBM) program, which offers consumer insights based on ongoing tracking of consumers’ perceptions of their recent experiences across 128 leading U.S. restaurant brands. Clients can analyze results across 62 experience attributes by time period, demographic group, dynamics of the occasion or designated market area. Data is updated on the Consumer Brand Metrics website quarterly.

Technomic provides numerous online services to the foodservice industry. To learn more, please visit Technomic.com or contact one of the individuals listed below. For Technomic updates, please follow us on Twitter, LinkedIn and our blog.


Dining Between Dayparts: The Evolution of Snacking

May 29, 2014

Snack consumption has been increasing in the U.S., leading to new definitions of snacks and new opportunities for foodservice operators.

Snack consumption is high and has been increasing. Just over half of U.S. consumers say they snack at least twice a day, up slightly from 48% in 2012. And, according to Technomic’s 2014 Snacking Occasion Consumer Trend Report, about one in five consumers say they snack at least three times daily. Over the past two years, consumers have broadened their definition of “snack” to include more foodservice items. Therefore, it is vital for to stay on top of snack trends.

What Makes a Snack?

Firstly, what differentiates a “snack” from other types of food? According to consumers, a snack is defined primarily by the type of food or beverage and by time of day it is eaten. Portion size also plays a large role, as more than two-fifths of consumers polled report that they define a snack by the size of the item. The ideal snack size differs by occasion, because some consumers snack as a meal replacement while others may snack on something small to hold them over between meals.

Fewer consumers polled today than in 2012 (58%) define a snack by the time of day it is eaten. This aligns with the general trend of consumers eating at more frequent intervals throughout the day rather than eating three meals per day.

Base: 1,500 consumers aged 18+ Source: 2014 Snacking Occasion Consumer Trend Report, Technomic, Inc.

Base: 1,500 consumers aged 18+
Source: 2014 Snacking Occasion Consumer Trend Report, Technomic, Inc.

The majority of consumers report that their definition of a snack has not changed in the past two years, but about one-third say their definition has changed. A quarter of consumers say they now include more types of food in their “snack” mindset. About a tenth of consumers say their definition of “snack” has changed to include other parameters such as more types of beverages, more foodservice items and more overlap with meals.

Slightly more men than women say their definition of “snack” hasn’t changed, while more women than men now include more types of food within the scope of what they consider to be a snack.

darren_blog_2

Base: 1,500 consumers aged 18+ Source: 2014 Snacking Occasion Consumer Trend Report, Technomic, Inc.

Because a substantial proportion of consumers have broadened their idea of what constitutes a snack, and fewer consumers today than in 2012 consider time of day as a factor in the definition of “snack,” customers may be open to restaurants’ suggestions to add a certain food to their “snack” mindset, even food that is not traditionally served as a snack or food that is typically eaten at another time of day. For instance, operators could list sides, appetizers or small plates on a special “snack” menu, rather than just listing them on the main menu.

Snacking Frequency

Based on their own personal perception of what a snack is, consumers were asked how often they snack. Overall, consumers snack about as often today as they did two years ago, with just a slight increase in snacking frequency. Half of today’s consumers (51%) report consuming multiple snacks on a typical day, and 21% do so at least three times per day. In comparison, just 48% of consumers polled in 2012 say they snack at least twice a day.

Base: 1,522 (2012) and 1,750 (2014) consumers aged 18+; includes terminate data Source: 2014 Snacking Occasion Consumer Trend Report, Technomic, Inc.

Base: 1,522 (2012) and 1,750 (2014) consumers aged 18+; includes terminate data
Source: 2014 Snacking Occasion Consumer Trend Report, Technomic, Inc.

Limited-Service Opportunities

Increased snacking is strongly driven by younger consumers, so operators and manufacturers may want to focus on these consumers when developing and marketing snacks. Online and social-media marketing efforts, for instance, may pay off far better than traditional television advertising. In particular, younger consumers will respond to marketing that conveys the importance of snacks as part of social occasions with their friends. And images of younger consumers snacking at work or en route to a destination may convey the convenience of snacking and its role as an intrinsic part of today’s busy lifestyle.

Many restaurant operators are recognizing that snacks can be a traffic driver, appealing on a number of levels—from low price to craveability to on-the-go lifestyle integration.

Value menus are reflecting trends toward a proliferation of snacks and catering to off-peak dining occasions. The new Snack ’n Save Menu at Arby’s exemplifies this trend. Currently being tested in 13 markets, the Snack ’n Save Menu is designed to boost customer traffic and fuel multi-item purchases at each visit. Each of the 15 items on the menu is well suited for takeout and is sized for snacking. Ranging in prices from $1 to $2.99, the menu selection hits the main points relating to how consumers would define a snack. Some highlights are as follows:

  • Junior-size roast-beef sandwich
  • A two-sandwich pack of roast-turkey or roast-beef Mighty Minis
  • Mozzarella sticks
  • Jalapeño bites
Source: Arbys.com

Source: Arbys.com

Look for a value message to be increasingly delivered with snacks as the cornerstone of the menu lineup. This approach will likely lead to more value-oriented menus being dubbed simply as “snack” menus—with consumers picking up on the cue that snacks provide the overall value they seek.

Chains are also developing innovative portable packaging for their snack items. McDonald’s lists Chicken McBites, featuring bite-sized breaded and fried chicken breast pieces available in three sizes—including Snack, Regular and Shareable size varieties. The “deliciously poppable” McBites are served with the customer’s choice of Honey Mustard, Hot Mustard, Barbecue, Chipotle BBQ, Sweet n’ Sour, Buffalo, Ranch or Sweet Chili dipping sauce. The sauce can be inserted into a space in the lid when the lid is opened, which allows for easy on-the-go consumption.

The popularity of Chicken McBites has led to the introduction of Fish McBites, which are positioned in the same way. These items also reflect a burgeoning trend that centers on snacks as the core of the value menu.

Sources: Facebook.com; Chron.com

Sources: Facebook.com; Chron.com

This fall, KFC rolled out the limited-time KFC Go Cups in five varieties for $2.49 each. The selection includes a Chicken Little sandwich, four Original Recipe Bites, three Hot Wings, one piece of Original Recipe Boneless or two Extra Crispy Tenders, along with crispy seasoned potato wedges. The patented KFC Go Cup container was designed specifically to fit in a vehicle cup holder and is marketed as an on-the-go snack.

Key Takeaways

Understanding how snacking fits in with consumers’ typical dining behavior has implications for menu and product development. For instance, since younger consumers typically snack in addition to eating three meals per day, they may prefer a small portion or light snack. On the other hand, older consumers who are more likely than younger consumers to replace meals with snacks may be in need of a more substantial snack. Operators and suppliers should consider how snacking fits into the lives of their customer base when developing and marketing items to sell as snacks.

Clearly there is still ample room for restaurants to boost snack sales. However, restaurant operators should examine the feasibility of expanding into the snack category, keeping their customer base, and concept and menu positioning in mind.


Eating Ethnic: Traffic Drivers & Attitudes

June 26, 2013

For ethnic fare, U.K. consumers seek restaurants and menus that offer both an authentic taste and authentic ambiance.

It’s no surprise that consumer interest in and demand for ethnic foods at restaurants and other foodservice locations is on the rise. One quarter of all U.K. consumers (26%), and two-fifths of consumers aged 25–34 (40%), polled for Technomic’s 2012 U.K. Flavour Consumer Trend Report are more interested in trying ethnic cuisines and flavours than they were a year ago. Further, consumers call for more ethnic fare at restaurants. Fully 22% of consumers agree and another 30% agree somewhat that they would like to see more ethnic options at restaurants. This data signals greater opportunities for operators to differentiate their menus through globally influenced offerings and gain an increased share of consumers’ foodservice spending.

This piece will examine what is important to those seeking ethnic items as well as their willingness to try new cuisines.

Authenticity Is Key

A majority of U.K. consumers—71%—cite authentic taste as one of the most important factors in their decisions regarding ethnic foods. And it seems to be more important to older than younger consumers. Three-quarters of consumers aged 55+ (74%), compared to 60% of consumers aged 18–24, choose a restaurant for ethnic foods based on the authentic taste of the food.

Two-fifths of consumers feel it is very important that ethnic food be prepared by someone from that country or region. Again, older guests feel more strongly: 50% of consumers aged 55 or older place high importance on the food being prepared by someone from the country or region, compared to only 32% of consumers aged 18–24. Ethnic restaurants are limited in their ability to hire and retain staff from other countries, so operators of restaurants that base their appeal on authenticity of the fare may want to consider establishing apprenticeships allowing their chefs to train other cooks in order to maintain the authenticity of menu offerings.

Servers who are from the same country or region as the restaurant’s cuisine may also drive ethnic purchases at restaurants. Patrons may consider these servers to be more knowledgeable about the menu. Nearly half of consumers choose an ethnic restaurant based upon the staff’s knowledge about the menu. These consumers may be seeking menu suggestions or thorough answers to their questions about an unfamiliar ethnic ingredients or preparations.

Ambiance also plays a key role in creating an authentic experience. Almost three out of 10 consumers decide which restaurant or foodservice establishment to visit for ethnic foods based at least in part upon the authenticity of its ambiance or décor.

Interestingly, while more men (45%) than women (36%) feel that it is important that their ethnic food be prepared by someone from that country or region, more women than men place high importance on authentic ambiance (30% of women vs. 25% of men).

Some consumers also choose an ethnic restaurant based on general restaurant amenities. Three out of 10 consumers choose a restaurant to visit for ethnic fare based on the availability of takeaway, and 28% place importance on customisation at ethnic restaurants.

Base: 1,000 consumers aged 18+Source: The U.K. Ethnic Food & Beverage Consumer Trend Report, Technomic Inc. 2012

Base: 1,000 consumers aged 18+
Source: The U.K. Ethnic Food & Beverage Consumer Trend Report, Technomic Inc. 2012

Menu Attributes Can Drive Purchases

Consumers may not be familiar with some ethnic dishes available at restaurants, and in fact, many consumers choose ethnic foods to discover new flavours. Various menu features could aid consumers in choosing an enjoyable meal.

More than half of consumers (53%) feel it is important that the menu include descriptions of ethnic dishes. As we have seen, consumers place high importance on authenticity when choosing an ethnic restaurant, suggesting that these restaurants may use traditional ethnic names for menu items that may be unfamiliar to many consumers. So it’s no surprise that 37% of consumers prefer that menus at restaurants that offer ethnic items present their fare both in English and in the language corresponding to the cuisine.

Similarly, consumers place a high importance on a menu that includes ingredient listings and photos of ethnic dishes. More than a third of consumers feel it is important that a menu provides a list of ingredients in ethnic dishes, and a quarter would like to see photos of ethnic dishes.

More women than men report that descriptions and lists of ingredient for ethnic dishes are among their top five factors in deciding where to eat ethnic foods. This could be related to the fact that more women than men say they eat ethnic foods to discover new flavours and to try something new, suggesting that these women may be less familiar with the ethnic foods they are considering.

Consumers want to explore and discover new flavours through ethnic foods. However, some may not have much knowledge about ethnic dishes, particularly less familiar options. Operators may find that highlighting their popular dishes, ingredients or flavours can help consumers choose an appropriate dish. Additionally, operators can train their staff not only to be knowledgeable about the menu in order to answer patrons’ questions, but also to ask customers if they have questions. Without enough knowledge to make informed choices, consumers may skip over items they would enjoy.

Base: 1,000 consumers aged 18+ Source: The U.K. Ethnic Food & Beverage Consumer Trend Report, Technomic Inc. 2012

Base: 1,000 consumers aged 18+
Source: The U.K. Ethnic Food & Beverage Consumer Trend Report, Technomic Inc. 2012

Importance of Ethnic Beverages

Offering ethnic beverages native to the particular cuisine served at a restaurant can add to consumers’ perception of authenticity. Forty percent of all consumers polled agree that restaurants should provide ethnic beverages that are associated with the cuisine offered.

While about equal proportions of men (40%) and women (41%) agree that restaurants that offer ethnic foods should also offer ethnic beverages, differences emerge by age. Consumers aged 18–44 are more likely than those 45+ say that restaurants should offer ethnic beverages along with ethnic foods. Further, consumers aged 25–34 are the most likely to agree with this proposition, with half saying that restaurants that offer ethnic foods should also offer ethnic beverages native to the particular cuisine.

Base: 1,000 consumers aged 18+ Consumers responded using a 1–6 scale where 1 = disagree completely and 6 = agree completely Percentages may not equal cumulative percentage due to rounding Source: The U.K. Ethnic Food & Beverage Consumer Trend Report, Technomic Inc. 2012

Base: 1,000 consumers aged 18+
Consumers responded using a 1–6 scale where 1 = disagree completely and 6 = agree completely
Percentages may not equal cumulative percentage due to rounding
Source: The U.K. Ethnic Food & Beverage Consumer Trend Report, Technomic Inc. 2012

To Try or Not To Try?

Consumers’ attitudes toward trying ethnic foods largely fall somewhere between adventurous and conservative.

Technomic asked consumers about their attitudes toward trying mainstream and unique ethnic foods and flavours. Generally, consumers are neither particularly adventurous nor especially conservative about ethnic foods. More than two-fifths of consumers say they try both mainstream and unique ethnic foods from time to time.

On one end of the spectrum, 5% of consumers report that they prefer traditional foods and rarely try ethnic fare. These consumers are likely less adventurous eaters in general. Beyond these highly conservative eaters, more than a quarter of consumers (28%) enjoy ethnic foods and flavours but tend to try only those that are mainstream, such as Chinese, Indian and Thai.

On the other hand, some consumers are more enthusiastic about trying new ethnic foods and flavours. Seven percent of consumers say they actively seek out mainstream ethnic foods, and another 4% actively seek out unique ethnic foods.

Base: 1,000 consumers aged 18+ Source: The U.K. Ethnic Food & Beverage Consumer Trend Report, Technomic Inc. 2012

Base: 1,000 consumers aged 18+
Source: The U.K. Ethnic Food & Beverage Consumer Trend Report, Technomic Inc. 2012

Key Takeaway

Consumers want to try new ethnic flavours and appreciate authenticity in the global cuisines and influences that they grew up eating. Restaurants and other foodservice operators can help build traffic and loyalty by offering authentic dishes and experiences while educating consumers about the cuisines’ flavours, ingredients and preparations.


Strangers eat out together – Communal tables new dining trend

June 21, 2013

Mary Altman and John Pinson, though each traveling alone on business, savored some conversation with their barbecue recently as they sat together at one of 4 Rivers Smokehouse’s large picnic tables in Winter Park, Fla.

The two discovered they both live in Jacksonville, Fla., so they chatted about their lives there.

“When you’re by yourself, it’s nice to meet somebody and, coincidentally, to meet somebody from your own hometown,” said Pinson, a salesman in his 70s.

Diners such as Pinson are surrendering some of their personal space as more restaurants install communal tables. The extra-long tables, which generally seat from six to 16 people each, are often occupied by multiple groups of diners who don’t know one another.

Though such tables are supposed to foster a sense of togetherness, restaurants also have a financial incentive to use them because they seat more people quickly.

“This is going to be a trend that will slowly become part of the restaurant-dining-seating options,” said Darren Tristano, executive vice president at the food-industry-research company Technomic. “Over time, more restaurants will jump in because they can squeeze more space out of it.”

For some people, communal dining feels too much like sitting with a bunch of strange students in the school cafeteria. But it is gaining acceptance as eating out in America becomes more casual, New York restaurant consultant Clark Wolf said.

“The notion of formal dining at your own table, with all that goes with it, has receded more and more,” he said. “We just don’t value it anymore the same way we did.”

But casual restaurants aren’t the only ones doing this. At a high- end Orlando restaurant called simply The Table, customers pay $120 apiece to sit for hours around a single, 22-seat table with strangers as they consume a five-course meal.

“Usually by the end of the first course, people are talking, and it’s great,” said Tyler Brassil, who co-owns The Table with his wife. “It’s a community thing.”

The 4 Rivers chain, meanwhile, has dining rooms dominated by picnic tables, along with some booths.

“It fits really into our entire model of wanting people to be together,” founder John Rivers said. “Anyone can sit with anybody here.”

For solo diners, communal tables can help them feel less awkward about sitting alone without forcing them to sit at the bar. McCoy’s Bar & Grill in the Hyatt Regency at Orlando International Airport added two long tables recently to appeal to travelers who might be alone.

For Altman, a marketer who frequently dines alone while on business trips, communal dining is a comfortable arrangement. But when she brought her more introverted husband to 4 Rivers, she said, “he was not quite as comfortable as I was.”

Zagat Survey has listed communal tables as the No. 1 most- annoying restaurant trend. Jason Kessler, who writes a column, The Nitpicker, for Bon Appetit magazine’s website, has also given them a harsh review.

Kessler is 30 – one of those “millennials” who supposedly embrace togetherness.

But “when I go out to dinner, I’ve chosen who I’m going with for specific reasons,” he said. “I like the privacy of dining at my own table.”

Others, such as Laura Kaminsky of Longwood, Fla., are more ambivalent. Kaminsky has eaten at communal tables, mostly while on vacation. In general, she prefers traditional restaurant seating.

Still, she said, “if you embrace it, it’s an opportunity to meet people. Kind of an adventure.”

Pulitzer Newspapers Inc.


Too big to sell? McDonald’s looks at super-sized menu

May 31, 2013

 Medill Reports ChicagoDT_screenshot 

Darren Tristano, Executive Vice president at Technomic, Inc., weighs in on balancing McDonald’s expansive menu with consumer demand.

Click to view the video (please allow a few seconds for item to download).


Marketers, Retailers to Feel Sting of Consumer Paycheck Pinch

January 29, 2013

012113-air-jordan-graphicAs payroll taxes rise, the middle and lower classes will spend less at stores—and the corner bar.

Already moody from the uneven economic recovery, consumers are about to get a lot grumpier. The first pay period of the year ushered in higher Social Security taxes, which are expected to suck more than $1 billion from spending in 2013, presenting marketers with yet another challenge as they seek to pry precious dollars from shoppers.

Paychecks began shrinking Jan. 1, when the tax rate jumped to 6.2% from 4.2%, ending a temporary break that began in 2011. For a household making $50,000 a year, that means a loss of about $83 a month, or $1,000 a year. The payroll tax applies only to wages up to $113,700. Various analysts have projected anywhere from a $113 billion to $120 billion hit to the economy, with most agreeing the keenest pain will be felt in the first quarter as consumers adjust. IHS Global Insight cited the higher taxes when lowering its first-quarter consumer-spending growth projection to 1.4% from 2.6%.

For the middle and lower classes, “any hit to their income will affect their spending patterns,” said Greg Daco, an IHS Global economist, adding that consumers could shell out less for groceries, clothing, toys and more. “They are going to, wherever possible, limit their spending to essentials if their budgets are tight.”

For industries that rely on spending from blue-collar workers, the hit could not come at a worse time. Look no further than the corner bar, where beer sales had begun to stabilize after a multiyear slump thanks to the decreasing unemployment rate. But in the fourth quarter, as fears rose of higher taxes and the fiscal cliff, sales slumped again. The number of beers sold at bars and restaurants in the quarter fell 2%, compared to a modest 0.5% drop in the first nine months of the year, according to GuestMetrics, which tracks the hospitality industry.

“The initial sticker shock of having your paycheck go down will affect beer demand,” especially in the first quarter, said Harry Schuhmacher, editor of Beer Business Daily. As a result, marketers will face more pressure to keep sales steady with effective ads and in-store marketing, he said. “There’s going to be a real big focus on retail execution—getting big displays out there,” he said. “Beer is not going to be on the grocery list. So to overcome that, they’ve got to generate impulse buys.”

In a report last week, Bernstein Research stated that the tax hike will hurt middle-and-upper income consumers the most because low-income households typically derive a share of income from nonwage sources such as government assistance. As such, Bernstein projected that discount retailers, such as dollar stores and Walmart, will be insulated and might even stand to benefit as consumers trade down. But department, general-merchandise, apparel and home-furnishing stores face higher risks, Bernstein stated, citing marketers such as Target, Best Buy and Williams-Sonoma.

Morgan Stanley took a slightly different view, saying that marketers catering to lower-income households will suffer the most. In a report last month, it projected that the tax hike would decrease “discretionary-spending capability” by 6% for people who make less than $40,000, noting that “most households at this level spend all that is available to them.” As a result, Morgan Stanley projected headwinds for retailers that cater to the teen market, such as Aeropostale, as well as restaurants that target the low end, including KFC, Pizza Hut, Taco Bell, Domino’s and McDonald’s. This might explain the rash of value-oriented marketing in the sector of late. “Many consumers will be faced with making hard choices about where to eat and how much they have to spend at restaurants,” said Darren Tristano, exec VP at Technomic, a restaurant consultant.

Conversely, packaged-food brands could benefit as people eat at home more often. That was the case when the recession took hold in 2008, noted Todd Hale, Nielsen’s senior VP of Consumer & Shopper Insights. “I would expect that we are going to see some return to that, but not completely, because things are not as dire as they were back then.” But in the short term, at least, shopping patterns are likely to change. Sales of private-label products—which have been relatively flat—could rise some, Mr. Hale said. Also, consumers, at least for a little while, might use more coupons after cutting back on them last year as the economy rebounded, he said.

The question is how much of the tax-rate hit will be blunted by positive factors, such as the improving unemployment rate, rising housing market and fairly stable gas prices. David French, senior VP-government relations of the National Retail Federation, noted that when the tax cut was put in place two years ago, the organization’s members did not report much of a boost largely because of higher energy costs, which ate up the new consumer cash. “Today, ironically, we kind of have a mirror-image situation: As the tax cut has lapsed, energy prices have fallen,” he said. The tax hike, he said, is “probably going to be somewhat lost in the wash of other economic factors.”

Either that, or consumers are about to take marketers to the cleaners.


Technomic Presents First-Ever Chain Restaurant Consumers’ Choice Awards

January 28, 2013

consumers_choice_award_140x148NEWPORT BEACH, Calif. — Technomic presented the winners of its first-ever Chain Restaurant Consumers’ Choice Awards on Jan. 16 at the Consumer Trends & Directions Conference in Newport Beach, Calif. Consumers themselves selected the winners, the company said.

Technomic asked consumers to rate 115 restaurant chains on more than 60 different attributes as part of its comprehensive Consumer Restaurant Brand Metrics program, which records 80,000 consumer visits annually. The Chain Restaurant Consumers’ Choice Award-winners were selected based on analysis of consumer ratings in four key areas: food and beverage, service, atmosphere and brand image. The winners are:

  • Service
    Quick Service: Chick-fil-A
    Fast Casual: Firehouse Subs Full Service: Outback Steakhouse
  • Food & Beverage
    Quick Service: Culver’s ButterBurgers & Frozen Custard
    Fast Casual: McAlister’s Deli
    Full Service: Cracker Barrel Old Country Store
  • Atmosphere
    Quick Service: Caribou Coffee
    Fast Casual: Panera Bread Co.
    Full Service: LongHorn Steakhouse
  • Brand Image
    Quick Service: Jamba Juice
    Fast Casual: Qdoba Mexican Grill
    Full Service: Red Robin Gourmet Burgers

“Technomic is pleased to recognize these leading chains for their success at satisfying customers,” stated Technomic Executive Vice President Darren Tristano . “But it’s important to point out that it’s the consumers who rated the chains and selected the winners. In essence, this award is from the customers themselves.”


Income Influences Patronage and Attitudes

October 18, 2012

High-income consumers not only use foodservice more often than lower-income consumers do, they also have a different set of demands.

Consumers’ household income—particularly as it relates to their disposable income—strongly impacts many areas of their life, including where they live, where and how they shop, their daily priorities and intrinsic motivations—essentially their overall lifestyle.

Wealth also influences how and why consumers use foodservice. High-income consumers are about twice as likely as lower-income consumers to use foodservice at least once a week, making them an important demographic for the industry. However, it would be remiss to not examine patronage and purchasing decisions among middle- and lower-income groups to determine how to build incremental sales with these consumers as well.

Technomic’s recent Influence of Income Consumer Trend Report polled consumers of all stripes, then broke them down into Working, Lower-Middle, Upper-Middle and Affluent income groups.

  • Working—Generally consumers who earn an annual household income of $34,999 or less. Those earning up to $44,999 were also included in this group if their household size was larger than two individuals. Those in high-cost areas such as major cities were also included in this group if they earned up to $54,999 and had an even larger household size of three or more individuals.
  • Lower Middle—Consumers who report an annual household income of roughly $45,000 to $74,999. Consumers with even lower income ranges, such as those earning $35,000–$44,999, were included in this group if they lived in a low cost-of-living area or if their households included just themselves or one other individual.
  • Upper Middle—Generally consumers who earn $85,000–$104,999 annually. Those in smaller households, or in lower cost of living areas such as rural, suburban or small city areas, were included in this group as long as they reported an income of at least $65,000–$84,999.
  • Affluent—Generally consumers who report an annual household income of roughly $125,000 or more. Consumers who live by themselves and earn $105,000–$124,999 were also included in this group, while households in this income bracket but with a larger household size or in higher cost of living areas fell into the Upper-Middle income group.

Foodservice Patronage

Affluence is tied to greater foodservice usage; nearly twice as many Affluent consumers as those in the Working group use foodservice more than once a week. Wealthier consumers also source a greater portion of their meals away from home than lower-income consumers, with the greatest gap at lunch. On average, more than two-fifths of Affluent consumers’ lunches, compared to just a third of Working consumers’ lunches, are purchased at restaurants.

Base: 2,000 consumers aged 18+
Source: The Influence of Income Consumer Trend Report

The fact that away from home lunch purchases vary so widely based on consumers’ level of affluence speaks to the importance consumers place on convenient foodservice options at lunch, and a preference to source lunch from restaurants regularly if they can afford to do so. Many lower-income consumers likely can’t afford to purchase food away from home for lunch as often as their higher-income counterparts, choosing to eat at home or bring meals from home more often. Operators may be able to increase incremental traffic and sales at lunch by varying their menus to offer options for consumers on a tight budget. This could be through options that provide greater value, such as combos, or items that are offered at absolute low price points, such as value meals. However, when doing so, operators will want to be sure that these items do not cause core customers to trade down from their usual, higher-priced offerings.

Takeout and delivery usage skews to lower-income consumers, while a significantly greater proportion of meals purchased by Affluent consumers are for dine-in. Consumers with a higher disposable income are also more likely to use technology such as a cell phones or smartphones to place their takeout and delivery orders.

Different Priorities

Low prices are the highest priority for Working and Lower-Middle income groups when choosing a limited-service restaurant for dine-in occasions, while Affluent consumers place greater importance on a convenient location. Low prices are also more important to lower-income groups than higher-income groups at full-service locations, as the chart illustrates.

Affluent consumers place a higher priority on convenience of location than any other income group, for both limited- and full-service restaurant occasions. This data suggests that lower-income consumers sometimes need to go out of their way for the low-cost items they seek, while higher-income consumers are willing and able to pay higher prices to visit a convenient location.

Base: 952 consumers aged 18+ who dine in at these locations
Source: The Influence of Income Consumer Trend Report

Consumers with different levels of affluence cope with time constraints in different ways; lower-income consumers are more willing to trade health for convenience, while higher-income consumers are more likely to multi-task during meals and eat on the go.

Slightly more Affluent than Working consumers say an appealing taste and the use of fresh ingredients are important for limited-service dine-in occasions, suggesting that, to some degree, lower-income consumers associate these qualities with higher prices. Lower-income consumers may assume to some extent that taste and freshness cost more, and as a result likely rate it lower because of their priority on low prices. Meanwhile, for full-service dine-in occasions, Affluent consumers emphasize taste and freshness, while lower-income consumers are more likely than higher-income consumers to place a high level of importance on menu variety.

Higher-income consumers are more likely to seek restaurant recommendations from friends and family; a third of Affluent consumers, compared to a fifth of Working consumers, say they often ask for such recommendations. Higher-income consumers are also significantly more likely than lower-income consumers to utilize computers and smartphones to research restaurant menus online. And twice as many Affluent than Working consumers say they often consult online review sites and blogs when choosing a restaurant.

Priorities do not always differ by income group. Two out of three consumers overall agree that order accuracy and food that tastes just as good as for dine-in are highly important for takeout and delivery occasions; the fact that there are few significant skews by income indicates that these are must-haves for takeout occasions regardless of consumers’ level of affluence.

A Change in Attitude

Just half of Affluent consumers, versus three-fifths of Working consumers, view eating out at full-service restaurants as a special treat. This indicates a significant difference between Affluent and Working consumers’ perceptions and motivations for dining at full-service restaurants. Working consumers have tighter budgets and do not visit full-service restaurants as frequently as Affluent consumers, which is likely why lower-income consumers view these occasions as special events.

Additionally, more than a quarter of Affluent consumers, compared to just a tenth of Working and Lower-Middle consumers, say they eat out at restaurants more frequently than they prepare food at home, confirming that Affluent consumers have a high reliance on and preference for restaurant meals.

Base: 898 (a special treat) and 934 (whenever I want to) consumers aged 18+; responses were randomly rotated
Respondents indicated their opinion on a scale of 1–6 where 6 = agree completely and 1 = disagree completely
Source: The Influence of Income Consumer Trend Report

Wealthy consumers also appear to use restaurants to a greater extent than lower-income consumers as a place to socialize. Seven out of 10 Upper-Middle income-group consumers, and just three-fifths of Working and Lower-Middle consumers, say restaurants are a great place to get together with friends.

Although few consumers actively follow restaurants through social media, those who do are most likely to be from Upper-Middle and Affluent households. Facebook, the leading social media site consumers use to connect with restaurants, appeals to consumers from all levels of wealth. However, Twitter and Groupon, in particular, are used regularly by Affluent consumers.

Two-fifths of Affluent consumers, compared to a quarter of Working consumers, say they prefer restaurants with new or innovative menus, suggesting that unique offerings may help attract higher-income consumers. Several ethnic cuisines, including Japanese, Spanish, Greek and Thai, are especially appealing to Affluent consumers.

Base: 914 (willing to try new foods) and 933 (new or innovative flavors) consumers aged 18+; responses were randomly rotated
Respondents indicated their opinion on a scale of 1–6 where 6 = agree completely and 1 = disagree completely
Source: The Influence of Income Consumer Trend Report

Key Takeaways

Consumers’ level of affluence strongly impacts when and how they use restaurants, and it would be easy to focus on these frequent diners. But while they are very important to the foodservice industry because of their high patronage, they account for just a small proportion of consumers. Therefore, it is important for operators to consider their lower-income customers as well.

Understanding the preferences of consumers at different income levels is key to developing strategies that meet the various needs of consumers, regardless of income.

Darren Tristano is Executive Vice President of Technomic Inc., a Chicago-based foodservice consultancy and research firm. Since 1993, he has led the development of Technomic’s Information Services division and directed multiple aspects of the firm’s operations. For more information, visit www.technomic.com.


Burgers and Blueberries?

May 8, 2012

They don’t like to admit it, but today’s consumers are still influenced by advertising perceptions. Key marketing terms can drive those perceptions toward better-for-you emotional drivers, craveability and real attitude and usage trends.

Recently, Burger King launched their “Fresh Menu,” which adds several new items including salads, premium chicken tenders and smoothies. McDonald’s recent earnings report indicates that the focused and increased effort by Burger King toward this new and fresh promotion has allowed them to gain some share from McDonald’s and has given Burger King some renewed momentum. 

McDonald’s, on the other hand, has been promoting a more “wholesome” menu and recently added “sweet, plump, fresh blueberries by the bushel” to their menu promotions. They are combined with crunchy walnuts, real banana and two full servings of whole grains in Blueberry Banana Nut Oatmeal, and with yogurt and granola—“a half cup of dairy and a full serving of whole grains”—in the Blueberry Yogurt Crunch. The effort shows an emphasis on more healthful offerings combining seasonal berries with “low-fat” yogurt and the “wholesome crunch of granola.”

Although these efforts may only have a small impact on consumer menu choices, these brands are providing the important alternatives that give consumers better options when dining away-from-home. 

This may be a small step, but nonetheless, a step in the right direction.

McDonald's Blueberry Ad (English)

 

McDonald's Blueberry advertisement (Español)


Capturing Lunch and Dinner Customers

April 23, 2012

John Lofstock | Apr 06, 2012

When it comes to foodservice, convenience store operators must develop the expertise to make smart choices and deliver winning mealtime solutions.

 People need food, and convenience stores need people to like their food, which is why keeping lunch and dinner menus fresh, new and exciting is so important.

The food itself is the key point of differentiation for anyone in the foodservice business. Keeping menus fresh requires innovation and a keen eye for new products and emerging consumer trends.

“I think everybody likes variety, at lunch especially,” said Rick Yost, operations manager for Dead River Convenience Stores in Rockport, Maine. “You may get a guy two or three days a week for lunch and he’s not going to want to eat the same cheeseburger two or three times, so it’s important to have a variety.”

Dead River stores offer a standard, core food menu, but the company also gives store deli managers the latitude to add as many as five items on top of those that they feel will appeal to local tastes. There is, Yost pointed out, sufficient geographic diversity to make such flexibility critical to success.

“The optional five items rotate in and out,” Yost noted. “My stores are far apart and we have some coastal region locations that do a lot of lobsters rolls and things like that in the summertime. Then we also have some mountain-based stores where there are a lot of snowmobilers and skiers. They’ll do a lot of chili-type items in the wintertime, which aren’t necessarily big sellers in the stores along the beaches, but they’ll do well there. That’s where that kind of menu diversity is crucial.”

Tracking the Trends

Yost and his Dead River colleagues keep their fingers on the pulse of Americans’ ever-shifting food preferences by studying the retail market and interacting with consumers.

When it comes to identifying new products and food trends, suppliers are also a good source for information. “As long as it’s a two-way street where suppliers are feeding us accurate trending data and not trying to simply sell us something, we will always listen to what they have to offer,” Yost said.

Among the trends Dead River is seeing in its New England markets for the lunch daypart is a surge in Mexican foods, such as mini tacos and burritos. At dinner, customers are seeking value meals and more bundling.

“People are looking for more full meals,” Yost said. “It used to be our entire dinner menu consisted solely of pizza. Now we offer a Chester’s Chicken program in a lot of stores, with an eight-piece meal that comes with potatoes and other side dishes. It’s really a replacement meal, an alternative to the QSRs out there.”

The Dead River menu has expanded over the past two years to include several varieties of lasagna, spaghetti and chicken. “These are the alternative, full-service meals that are providing our strongest growth to date,” Yost said.

This coming summer, Dead River will once again be focusing on meal replacement items. As such, the company is placing a greater emphasis on desserts, such as smoothies and bakery items. “Customers like to end meals with an indulgence. We have found that when we have bundled these items together with a fresh meal, sales have been strong, so we will continue to focus on this growing demand.

Seeking Value

One trend that relates equally to the lunch and dinner dayparts is the move toward value offerings, including both dollar menus and combo meals, according to Kelly Weikel, consumer research manager for Chicago-based research and consulting firm Technomic Inc.

“I think that as more c-stores compete to take business from QSRs and fast-casual restaurants they will take a page from these locations and start offering more value menus—this will also be relevant to the snacking category—and pushing more combo meals that bundle an entrée, side and beverage at lunch,” Weikel said.

Additionally, as the quality perception of c-store foods increases, the industry will become a more viable choice for consumers at dinner. Since their positioning is centered on convenience, Weikel reasoned, and because other retailers are actively pushing them, this could mean more family-style bundles offered at dinner.

Indeed, in October 2011 a Technomic survey polled 500 c-store customers who purchase foodservice items at least every six months at a convenience store about value meals and dollar menus in a c-store setting. To ensure that consumers understood the difference between these two types of value offerings when responding, value meals and dollar menus were discussed separately and clearly defined.

Consumers not only agree that value offerings are appropriate at convenience stores, many have come to expect them and say such offerings influence them to visit c-stores instead of fast-food restaurants, Technomic found. Many customers reported they expect to see value meals (44%) and dollar menus (50%) at c-stores.

Despite the fact that value menus are a fast-food staple, Technomic research suggested more consumers (54%) expect fast-food restaurants to offer dollar menus. More importantly, most consumers said value meals (55%) and dollar menus (54%) can influence them to visit c-stores instead of fast-food restaurants, Technomic reported.

While both types of value offerings are about equally likely to drive traffic and help c-stores compete with fast-food restaurants, the data relating to consumer expectations indicated that consumers think value or dollar menus could be effective in a c-store setting.

Among the overall c-store trends Weikel identified are:

• A focus on stealing business from both quick-serve and fast-casual restaurant operators.

• Continued emphasis on quality,   freshness,  health and made-to-order foods.

• A growing need to cater to Hispanic consumers, especially with snacks and desserts.

• The expansion of private-label brands to offset a weak economy.

• C-store consumers will push for more adult beverages, specialty/high-quality coffees.

Boosting Meal Occasions

Technomic, which tracks and analyzes all retail segments that serve food and beverages, reported in January that over the past year, 40% of consumers have cut back on away-from-home dinner purchases, largely because they have less money to spend on dining out. This makes it more important than ever that c-stores combine quality with value. If they can deliver on these promises, the industry has a real opportunity to steal customers from other foodservice segments.

When weighing dine-out options, today’s consumers are more likely to choose restaurants based on the availability of frequent diner programs. As a result of consumers’ decrease in away-from-home dinner purchases, it is vital for operators and suppliers to stay on top of dinner and late-night trends, such as combo meals, smaller portions or shareable items, in order to more effectively identify opportunities of growth.

“It’s imperative for operators to recognize the importance of today’s value equation,” said Darren Tristano, Technomic’s executive vice president. “Drawing dinner and late-night traffic now means exploring new ways to underscore value beyond low prices. Operators may be able to boost dinner sales by strengthening their overall value with other pricing strategies, such as specials or combo meals.”

Technomic researchers have also found average unit volumes for c-stores offering prepared food and dispensed beverages jumped to more than $136,000 in 2011, up from $123,000 in 2007. The growth rates were based on approximately the same number of stores offering foodservice, indicating operators are becoming better at foodservice expansion and execution.

Overall, Technomic reported, c-store foodservice grew to $11.5 billion in 2011 (from $10.2 billion in 2007), based largely on the expansion of foodservice items, additional stores adding foodservice and more foodservice experience.


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