Snacks are having a moment and food makers cashing in

February 26, 2016

Samantha Bomkamp
Chicago Tribune
February 22, 2016
http://www.chicagotribune.com/business/ct-snacking-boom-0223-biz-20160219-story.html

The market for snacks, sold at Walgreens and other retailers, is growing rapidly, analysts say, and manufacturers are working to cash in on the popularity. (E. Jason Wambsgans / Chicago Tribune)

The market for snacks, sold at Walgreens and other retailers, is growing rapidly, analysts say, and manufacturers are working to cash in on the popularity. (E. Jason Wambsgans / Chicago Tribune)

Three squares are so passe. Snacking is having a moment, and — you’re driving it.

You could be a 25-year-old Instagram-loving foodie, who shares daily updates of your homemade mini-meals and trendy restaurant tapas. Or a 33-year-old budding entrepreneur, who opts for smoothies and meal replacement bars because you don’t have time to shop, but have no time for junk food, either. Or a 41-year-old father, who indulges in a daily Starbucks run with co-workers. Or a 65-year-old retiree who isn’t up to preparing dinner anymore and opts for a bowl of popcorn or ice cream instead.

Consumers are driving food industry players — manufacturers and restaurants — to introduce items that satisfy a rapidly growing appetite for smaller meals that can be consumed on the run, even though it may not be the healthiest way to10 eat. Whether the fear of calories posted on restaurant menu boards is causing us to order smaller meals or hectic schedules are driving us to this new kind of eating, major food companies have caught on in a big way.

“The tradition of a piece of fruit or a handful of nuts as a snack — those are still there, but overall the definition of a snack has dramatically changed,” said Technomic President Darren Tristano.

Snacks spell big opportunity for food companies because they tend to be more expensive than traditional meal components. And one look around a grocery store shows that retailers like their potential too, as snacks get more prominent space on shelves, with some healthier fare being stocked in the produce department.

At cereal powerhouse Kellogg, whose brands include Pringles, Cheez-It, Keebler and TownHouse crackers, snacks have gone from 20 percent of its business in 2000 to almost 50 percent today.

This year, the company expects brands that have been struggling, like Kashi and Special K, to lead the growth. Both saw strong sales in the early 2000s, but fell out of favor when consumers steered away from “diet food,” Kellogg CEO John Bryant said on a conference call last week.

The brands have been revamped, and boxes include buzzwords like “nourish” instead of “diet,” and Kellogg is focusing the brands on hand-held forms, instead of just cereal by the bowl. “The expectation of consumers in the snack market has changed,” he said.

But Kellogg also expects brands like Pringles and Cheez-Its will be strong, and it is hurrying to develop more single-serve packages for its snacks so they become a grab-and-go item in a convenience or drug store.

At Hormel, whose meat brands including Jenni-O and Spam, it’s Wholly Guacamole that’s stealing the show, particularly in single-serve containers, according to CEO Jeff Ettinger. Hormel also recently introduced Skippy PB Bites with either a crunchy peanut butter or pretzel core.

Oak Brook-based TreeHouse Foods used to count beverages as its biggest category, but a 2014 acquisition propelled its snacks category to No. 1, and it now says it’s the largest private-label trail mix maker in the U.S.

Even health care companies are entering the snack market.

Abbott Laboratories, maker of Pedialyte, Ensure and Similac formula, earlier this month launched a line of snack bars called Curate aimed at adults seeking healthier alternatives to chips or cookies.

And last month, Chicago-based Hillshire Brands introduced a line of snacks aimed squarely at the young Instagram-addicted foodie, launched at a VIP event in New York with a former “Top Chef” contestant and Bravo’s Andy Cohen. The snacks include chicken bites with sauces like mango habanero and spicy chipotle and “small plates” of salame, cheese and crackers.

“Consumers are shifting away from this traditional snacking definition to include a more expanded variety of options to satisfy a more sophisticated food palate,” said Jeff Caswell, vice president and general manager of Hillshire Snacking. “This evolving definition is being spearheaded by millennials. … They have a passion for food exploration and like to try new flavors and push boundaries.”

He said sales of the new line have exceeded expectations.

Millennials, the largest segment of the U.S. population, are driving the snacking industry to create more fresh, healthy and protein-packed options, but other generations are partaking as well. People tend to snack more as they age, in part because older adults don’t have young families to cook for, said Darren Seifer, an NPD Group food and beverage analyst. The biggest snackers are those 55 to 64, NPD’s research shows.

But more snacking doesn’t always mean hitting the vending machine for a bag of M&Ms. Americans are eating fewer sweet snacks, choosing to save them for an evening indulgence, Seifer said. Their consumption fell about 5 percent in the past decade, compared with savory snacks like chips and beef jerky, which grew by 7 percent in the same period. Meanwhile, so-called “better-for-you” snacks like yogurt and cottage cheese cups have grown 25 percent.

“We start off the day with the best of intentions and then about 8 p.m., after you put the kids to bed, we’re allowing ourselves a bit of indulgence,” he said.

Deerfield-based Oreo maker Mondelez has seen both sides of America’s snacking obsession. Spurred by slowing sales of sweet snacks, it introduced Oreo thins to cater to those who want a healthier version. Mondelez, which also makes Ritz crackers, Cadbury chocolate, Sour Patch Kids and Honey Maid graham crackers, says it’s also focusing on smaller sizes for its brands to cater to snackers.

The company already derives 85 percent of its sales from snacks, up 10 percent from a year ago, and it sees a great deal of growth potential this year.

“Why do we like snacks so much? Quite simply, because of their growth potential. Snacking is a $1.2 trillion market, and it’s growing everywhere around the world,” said Mondelez CEO Irene Rosenfeld at a conference last week.

Smaller, more frequent meals may appeal to many Americans, but they’re not necessarily the healthiest option.

“Snacking or frequent eating tends to be less satisfying to your brain,” said Georgie Fear, a registered dietician and author of “Lean Habits For Lifelong Weight Loss.” “It’s hard to feel like we’ve eaten if we’ve just unwrapped a bar.”

In general, frequent snacks lead to “more dishes, more calories, and they’ve also hampered people’s decision-making abilities” because people can use snacks as an emotional crutch, Fear added.

There is a place for healthy snacking, Fear said, but she recommends sticking to options like whole fruit and yogurt. “Many people have gone out of their way to shift to smaller, more frequent meals. And then they (get more information) and think, ‘I’ve been washing that much Tupperware and it’s working against me?’ “


Snacking and Healthier Options are on the Rise

October 30, 2015

pictureSnacking is a growing trend and consumers are snacking more frequently. About half of today’s consumers (51 percent) say they eat snacks at least twice a day and 31 percent say they’re snacking more frequently than they were two years ago.

According to Technomic, Americans also are broadening their definition of a snack to encompass a wider range of foods and beverages.

Smoothies are they a snack or a meal? According to Vitamix and ORC International, 59 percent is snack, 25 percent is part of a meal and 18 percent meal.

“Snacking occasions represent a growth channel for restaurant operators. The retail market is aggressively promoting snacks, but there’s plenty of room for restaurants to expand their snack programs and grab share. By providing more innovative, healthy and easily portable snacks, and boosting variety, restaurants can position themselves to increase incremental traffic and sales –particularly among a younger customer base.” Darren Tristano, executive vice president of Technomic.

In an article by WholeFoods Magazine called “Healthy Snacking on the Rise in the US” this article reports that more Americans are snacking more than ever before – but are also make smarter snacking choices. In a recent survey taken, 33% of the survey population is snacking on healthier foods than they were last year. This number has steadily risen with time, and is something that only stands to increase with nearly a third of all parents surveyed mentioning that they are serving healthier snacks to their children.

What a great opportunity for any restaurant, café, juice or smoothie bar to take advantage of this growing trend. Now more than ever it is important to offer customers what they want and that is healthier options.

The healthy trend is also dominating menus. Gone are the days of serving only indulgent foods or offering calorie laden menu items. The most prominent industry buzzword over that last decade is healthy which appears in various forms on today’s menus. This change has been inspired by the growing public awareness of healthy attributes in food and consumers are leaning on restaurants to go beyond adding a side salad to create a healthy meal.


Crumbs Bakery Chain Closes Up Shop

July 21, 2014

When Crumbs, the New York City-based chain that built its business around cupcakes, shuttered several dozen of its remaining locations on Monday, it seemed like an abrupt ending for a company that opened a decade ago to ride the wave of popularity of the sugary treat sparked by the TV series Sex and The City.

But Crumbs’ rise and fall isn’t surprising when considering the company’s dependence on a fad. In fact, it’s the latest cautionary tale for one-item restaurants and other chains that devote their entire menus to variations of a single product.

– Krispy Kreme, for instance, expanded rapidly in large part on the cult-like following of its doughnuts. But sales started declining and the company ended up closing locations. Last year, restaurant industry researcher Technomic said Krispy Kreme had 249 locations, down from 338 a decade ago. The chain has broadened its menu more recently.

– A similar fate befell Mrs. Fields, which is known for its cookies. The chain has suffered in part because of the ubiquity of places that sell cookies, and it was down to 230 stores last year, from 438 a decade ago.

– TCBY had 355 stores last year, down from 1,413 a decade ago. Part of the chain’s problem is the competition, given the proliferation of frozen yogurt places.

Companies that only offer one item can fall victim to a number of risks. For one, trendy products tend to attract competition from big and small players that want to jump on the bandwagon. For instance, Starbucks and Cold Stone Creamery have been trying to capitalize on the cupcake trend with cake pops and ice cream cupcakes, respectively.

Being beholden to a single item also makes companies more susceptible to customers’ whims and changing tastes. There’s always a new fad. Frozen yogurt. Chopped salads. Freshly squeezed juices. Entrepreneurs may be eager to open stores selling these products, but there’s always the danger that fickle customers will move on to the next thing.

“A cupcake shop today can’t survive on just cupcakes,” said Darren Tristano, a Technomic analyst.

To combat the risks, many chains diversify their menus. And several have prospered by moving beyond their flagship products.

Dunkin’ Donuts, for instance, has been pushing aggressively into specialty drinks and sandwiches, with a focus on boosting sales after its morning rush hour. And Starbucks has introduced a range of new foods and drinks in its cafes, including premium bottled juices and salad boxes. The coffee chain even plans to expand wine and beer offering in evenings to as many as 1,000 locations over the next several years.

Magnolia, another popular New York City cupcake shop, is credited for sparking the cupcake craze after it was featured in Sex and the City.

The chain, which opened in 1996, has endured while many of the cupcake shops that opened up in its wake – including Crumbs – focused on just cupcakes. That’s in part because Magnolia, which now has 7 locations, offers a variety of desserts, including cakes, pies, cookies, brownies and banana pudding.

Sara Gramling, Magnolia’s spokeswoman, said the company is learning about the dangers of focusing too heavily on one product, as well as expanding too quickly.

“We’ll be mindful of those lessons,” she said.

Still, some chains manage to persevere by carving out a niche where there aren’t many competitors; Auntie Anne’s and Cinnabon have expanded locations over the years.

As for Crumbs, the company noted in a statement late Monday that it was evaluating its “limited remaining options.” That will include a Chapter 7 bankruptcy filing.


7-Eleven Launches New Doritos Loaded

July 18, 2014

By 10 a.m. Wednesday, the day of its launch, 7-Eleven’s brand new Doritos Loaded product had at least one Crystal Lake fan.

Karen Black-Vetter went into 7-Eleven, 1024 McHenry Ave., Crystal Lake, intending to leave with the usual snacks. But then, she saw the bold red signs advertising Doritos Loaded.

At $1.99 and 360 calories for a pack of four, Doritos Loaded are warm triangular pan-fried snacks, filled with melted cheese and encrusted with the signature nacho cheese flavor.

“We read that sign, and I said, ‘We have to try that,’” Black-Vetter said, sitting in the car with out-of-town friend Leslie Phiscator.

7-Eleven Inc. on Tuesday announced the launch of the new product, which can be found exclusively at 5,500 7-Eleven stores nationwide as of Wednesday, corporate spokeswoman Margaret Chabris said.

The snack food comes hand-in-hand with a new tropical Mountain Dew flavor called Solar Flare.

While its appeal is meant to hit all “on-the-go folks,” Chabris said Doritos Loaded is expected to be especially popular among younger Americans who prefer snacking to full meals – specifically, millennials.

“We have found that more and more people are not sitting down for three square meals a day, but they want something filling and affordable,” she said, adding the information stems from corporate studies. “It seems like, particularly, millennials snack throughout the day, so this is a perfect snack item for them.”

According to a 2012 report from the NDP Group, a market research company that tracks consumer trends, more than half of all Americans – 53 percent – snack two to three times a day.

Darren Tristano, executive vice president of food industry consulting company Technomics Inc., said annual studies done by Technomics also have found today’s America to be more snack-inclined than years prior.

“The snacking trend we’ve seen … is consumers are grazing more now, which means they’re having less to eat with greater frequency,” Tristano said. “Instead of three square meals, we’ve started to see more late-night snacking … and snacking late-morning and mid-afternoon.”

As far as snacks go, however, a dietitian at Centegra Hospital – Woodstock and McHenry said 7-Eleven’s newest product probably isn’t the best choice as it’s heavy in sodium, containing 1,070 mg.

“Anything that is providing half a day’s worth of sodium and it’s just a snack,” Susannah Baldock said, “that would be the first sign to look at something healthier.”

Those who indulge in Doritos Loaded could be swayed simply because of brand familiarity, though.

Tristano said food trends are pointing toward the use of big-name brands to increase revenue opportunities.

“One of the trends we’ve seen has been the opportunity for branded food services to take very leverageable brands like Doritos and other snacks, and build them into food service products in restaurants, and now we’re seeing it more out of the convenience stores.”

Based on previous new-product rollouts, however, Tristano said the buzz will likely quiet down in time.

“Most products that 7-Eleven introduces tend to be on a short-term basis,” he explained. “They’ll probably see how it registers with customers.”

At the Crystal Lake store, owner and franchisee Katen Patel was optimistic about the future of Doritos Loaded.

“I think it targets our target customer; I think kids are going to love it,” Patel said, sporting an official Doritos Loaded T-shirt. “If it does what Doritos does for our chips brand, I think it’ll do really, really well.”

It only took one bite each before Black-Vetter and her friend, Phiscator, were nodding in approval to one another in the car.

“Oh yeah,” Black-Vetter said. “I’ll get this again.”


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.


Making Sense of Value and Pricing Expectations

March 25, 2014

The prevalence of value-based promotions spiked in recent years as U.S. restaurant operators aimed to drive incremental traffic and sales among consumers affected by the recession. The use of these deals is becoming ingrained in consumer behaviour, even as the economy slowly improves. During the economic recession, consumers were more likely to cut back spending altogether, deals or no deals. Now that the economy is on the mend, consumers are accustomed to these deals being available and likely expect that they will be in the future.

While price continues to be a major component of the value proposition, it is by no means the only factor. Value is multidimensional, including the quality of food and beverage, and the quality of service and convenience. These different facets of value allow flexibility in formulating value propositions and pricing strategies.

This article explores U.S. consumers’ value equation; the appeal of restaurant deals and promotions; consumer price thresholds and how low prices drive traffic. U.K. operators will find many of these themes suitable for their own customers, whether they are deal-seekers or not.

The Value Equation

The restaurant value equation is comprised of a host of factors. It’s not straightforward—and it’s evolving. Primary drivers of value are price, quality, service and atmosphere. Secondary drivers vary but may include the meal or occasion as well as the diner’s mood and needstates. Consumers asked to describe what constitutes good value in a restaurant mention food quality, appropriate portion sizes, fair prices, service and cleanliness.

Food and beverage trump price in creating good value. Highlighting specific qualities of food and beverages—such as quality, convenience or healthfulness—can help marketers create a message of good value. Even at limited-service restaurants, the quality and taste of the food are most important: 86% of consumers say food and beverage are key to the LSR value equation, vs. 74% who name price. At full-service restaurants, of course, service and ambiance are also central: 87% name food and beverage as a component of value, 60% mention price, 28% ambiance, and 24% the service and amenities.

Customisation can enhance the value proposition. Half of diners—and a larger proportion of those under 35—say customisation is important in creating a good value proposition. They want to know that the meal will match their personal preferences and that they will get (and pay for) only the ingredients they like. Restaurants can incorporate customisation by offering menu items in multiple portion sizes (thus making them appropriate for both meals and snacks); allowing ingredient substitutions; and varying the heat level of foods from mild to super-spicy. Even a simple bottle of hot sauce left on the table allows patrons to customize their dish to their liking.

Deal-seeking in restaurants has become ingrained behaviour for consumers. Dealing was essential during the recession, but since then operators have been hoping to scale back on deals as the economy improves. However, consumers expect to continue employing deals; more than half say they’re using more deals now than two years ago. Interestingly, deal-seeking is not tied to income constraints; eight out of 10 diners at almost all income levels say they order from dollar menus at fast-food restaurants at least once a month, and among those with annual incomes over $150,000, seven out of 10 do the same. In addition, four out of 10 consumers use “daily deal” websites, and two out of 10 use them more than once a month. (These sites encourage restaurant patronage, but not loyalty; 55% of subscribers to daily-deal sites say they turn to these deals so they can try new restaurants more often.)

Traditional buy-one-get-one and half-off specials resonate strongly with consumers. More restaurant traffic is being driven by specials rather than the quality of the food, atmosphere or experience, with consumers asking: “What can I get for the price?” Deals that provide immediate half-off savings represent the most attractive value: eight out of 10 consumers say buy-one-get-one deals and half-off promotions add strong value, compared to seven out of 10 who name set-price specials, coupons or value menus. Buy-one-get-one specials, coupons and half-off deals are effective in driving traffic, with almost two-thirds of consumers saying they’d be likely or extremely likely to visit restaurants that offered these.

Base: Approximately 800 consumers aged 18+; base varies as promotions were randomly rotated Sum of percentages may not equal cumulative percentage due to rounding Source: The 2013 Value and Pricing Consumer Trend Report, Technomic

Base: Approximately 800 consumers aged 18+; base varies as promotions were randomly rotated
Sum of percentages may not equal cumulative percentage due to rounding
Source: The 2013 Value and Pricing Consumer Trend Report, Technomic

Pricing Expectations

Consumer price thresholds increase as the day progresses.Operators should make sure that their price thresholds are in line with what consumers are willing to pay (keeping in mind that consumers may report lower thresholds than they would actually accept). Research for Technomic’s Value and Pricing Consumer Trend Report found a “sweet spot” between what consumers consider optimal and what they’ll pay without complaint for each meal in each restaurant segment.

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Base: 1,800 consumers aged 18+ Source: The 2013 Value and Pricing Consumer Trend Report, Technomic

Snacks provide a unique pricing opportunity because women are willing to pay more for snacks than men are. For example, while the average consumer would pay $5 for a snack, women aged 25‒34 would pay $6.50. A number of chains, from coffee-café Starbucks to quick-service burger chain SONIC, have experimented with “happy hours,” during which they sell snacks at a special price. And while some fast-casual bakery cafés are seen by consumers as offering only unhealthy pastries for snack time, Au Bon Pain has built afternoon traffic with female-pleasing small plates like hummus with cucumber and Thai peanut chicken with snow peas.

“Fresh” and “premium” descriptors can increase consumer price thresholds.Nearly half of consumers say they would be likely to purchase—and to pay more for—food or beverage that is fresh; 37% say the same about premium options. Operators may be able to justify higher price points on food and beverage billed as fresh, homemade, premium, authentic, local, natural, organic, seasonal or sustainable. They should carefully consider both what such terms could mean when applied to their offerings and how to adjust their price threshold.

Value and Low Prices Help Justify Restaurant Visits

The good news for restaurant operators is that good value makes consumers feel better about eating out: 57% say they can eat out more often if meals are low in cost, and 52% say low prices help them justify the money they spend eating out.

Base: 1,500 consumers aged 18+ Source: The 2013 Value and Pricing Consumer Trend Report, Technomic

Base: 1,500 consumers aged 18+
Source: The 2013 Value and Pricing Consumer Trend Report, Technomic

Key Takeaways

The value equation involves multiple inputs, but price and quality both play strong roles in all segments. Deal-seeking in restaurants has become ingrained behaviour, and consumers don’t expect to change. Operators must find ways to adjust prices, deals and portions so they can still make money. Price and value promotions can effectively drive traffic. But be careful what you’re driving traffic to; you probably don’t need more business on Friday night. Freshness, quality and customisation can help justify higher prices.

There is pent-up demand for restaurant meals. Consumers who are looking for low prices are doing so to eat out more often. Older consumers seek value and “worth,” while younger diners have a more straightforward desire for deals; operators should consider strategies that don’t alienate any part of their customer base.

Darren Tristano is Senior Managing Director 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 http://www.technomic.com.


Fries Hit the Spotlight

May 17, 2013

2/13- Full HappyA new chain pushing French fries as a snack rather than a side dish is Bay State-bound.

The first of 10 planned French Fry Heaven locations in Massachusetts and New Hampshire is targeted for Saugus’ Square One Mall in June and the Natick Mall soon after.

Fitchburg franchisee Aramis Jordan was catching up on reading one Sunday when he came across an ad for the Jacksonville, Fla.-based company.

“The first thing that came to my mind was, ‘Why didn’t I think of this?’ ” he said. “I looked at my wife and said, ‘What do you think?’ She said, ‘Everybody loves French fries.’ ”

French Fry Heaven sells Belgian-style fries (“Angels”) and sweet potato fries (“Saints”) cooked in trans fat-free peanut oil and served in paper cones for $3 to $6. Each location has 21 toppings, from the traditional salt or ketchup to mayo and chili powder, steak sauce and pepper, cheeseburger flavor and curry and peanut butter. Sweet options for the sweet potato fries include Nutella and peanut butter sauce, marshmallow and pumpkin spice, blueberry and vanilla, and funnel cake. Customers also can choose a variety of sea salts.

Jordan and business partner William Choate, who also own eight Edible Arrangements stores in Central Massachusetts, are in final negotiations for a 900-square-foot Saugus store and a kiosk outside the Natick Mall food court.

French Fry Heaven locations also develop regional toppings, and the duo is mulling lobster bisque or clam chowder flavors.

Former college president Scott Nelowet came up with the idea for French Fry Heaven in 2010 after seeing the proliferation of French fries-only small stands and stores on a trip to Europe.

“It probably has opportunities in nontraditional locations like kiosks in mall food courts, train stations or airports,” said Darren Tristano of Technomic, a food industry consulting firm in Chicago. “The only way you can make money on those types of concepts is to have low overhead costs and a platform of 500 to 900 square feet.”