Consumer Trends Evolving in the Chain Restaurant Space
lingering effects of COVID-19, inflationary pressures, and a desire among
consumers for new types of cuisines will impact the chain restaurant space for
years to come.
according to The NPD Group's Stephanie Epperson, a panelist on a recent
webinar co-hosted by The Food Institute and DMA entitled
"Evolving Buying Patterns of Chain Restaurant Patrons."
Consumer Buying Trends
highlighted that although the restaurant recovery was ongoing, behavior below
the surface continued to evolve.
that the average customer made 89 total chain restaurant purchases in the 12
months ending in September 2021, representing an 11% drop compared to the same
period in 2019. However, the spend per purchase was up 14% for the time frame
to $14.46 per occasion.
two data points together, Epperson showed that total spend per buyer is flat,
with the average consumer spending $1,279 on chain restaurant purchases in the
2021 period, compared to $1,271 in 2019.
also noted a generational difference. Consumers under the age of 45 cut out
eight restaurant purchases in the 2021 period when compared to 2019. For
consumers over the age of 45, 15 restaurant purchases were cut out.
Consumers More Loyal?
posited an interesting question for the audience: Are consumers more loyal to
restaurant brands in the wake of the pandemic? She highlighted research showing
the average consumers visited 20 unique chains in the 2019 reference period,
while in 2021, the average consumer only visited 17 unique concepts.
noted restaurant chains shouldn't see their customers are exclusively their
own. Instead, they share customers with other brands, and buyer churn was
She cited Popeyes
as an example. Despite the popularity of its chicken sandwiches, 38% of
customers who purchased a meal from Popeyes in 2020 did not return in 2021.
LTOs, New Launches
some advice for those looking to boost brand loyalty among consumers, starting
with limited-time offers (LTOs). She shared research showing that LTOs appealed
to chain's existing buyers, and that LTO buyers visit a chain at a rate 2.4
times higher than non-LTO buyers.
LTO purchases drive check prices. She showed that LTO main dishes offered a
$3.60 party check lift when compared to the period before the launch of an LTO.
Desserts provided a $2.89 average party check lift.
said new product launches could also successfully drive customer purchases,
citing Burger King as an example. She said 21% of Impossible Whopper
buyers in October 2019 had not visited a Burger King location in the year prior
to that eating occasion. Food Institute Focus
Rush Coming Back for Restaurants
physical restaurant visits during lunch rose 4% in the year ending September
2021 compared to a year ago when visits were down 11%, based on The NPD
Group's U.S. foodservice industry tracking.
are on-the-go now, and the lunch rush is coming back," said NPD Group food and
beverage industry analyst Darren Seifer in a press release.
traffic hasn't fully recovered to pre-pandemic levels, down 8% from September
2019, the increase is a significant improvement over the double-digit declines
seen in 2020. Against this backdrop, restaurant lunch visits are now forecast
to grow by double-digits through 2024, according to NPD's Future of Lunch
workplaces starting to reopen, consumers have also returned to convenient ways
to prepare or source lunch. Easily transported categories, like packaged lunch
and snack kits, are positioned to do well through 2024, while consumers will
also look to retail for ready-to-eat foods for convenient lunches.
service restaurants (QSR), which represented 79% of lunch restaurant orders in
the year ending September, are benefiting from the lunchtime rebound.
increased 4% in the period compared to same period year ago when visits were
down 9%. However, QSR lunch visits haven't fully recovered to pre-pandemic
levels and in the year ending September 2021 are still down 12% from the same
period in 2019.
"In order to
attract during lunchtime with much of the population still working from home,
restaurants need to offer convenience to consumers, and at lunch, it's about
saving time," Kim McLynn, executive director, The NPD Group, told The Food
Institute. "The more a restaurant can offer convenience, speed, and quality
food during lunch, the more they will attract customers."
is also recovering.
that online and physical visits to restaurants during the breakfast and AM
snack period increased by 7% in the year ending September 2021 compared to a
year ago when visits declined by 13%, but the daypart is still 7% below the
pre-pandemic period of year ending September 2019. Food Institute Focus
Acquisitions Remain Red Hot
market's potential appears to be underscored by recent quick-service restaurant
In the span
of two weeks, a pair of QSR parent companies expanded their culinary offerings
via acquisitions of established brands. Restaurant Brands International (RBI)
made headlines Nov. 15 after it said it would acquire Firehouse Subs for
$1 billion, which followed the Nov. 2 news that FAT Brands would acquire
Fazoli's for $130 million.
among QSR parent companies, a category that also includes Yum Brands and
Inspire Brands, is likely to continue as capital is easy to get right now and
these companies look to protect their share of franchisees, according to Dan
Rowe, the CEO of Fransmart.
Rowe told The
Food Institute these companies were "leveraging existing franchisees to
develop other in-house brands as non-competitive expansion vehicles, instead of
their franchisees expanding outside the network...It's both defense and offense
for these strategic buyers."
sector has a fair number of operators, ranging from QSRs like Subway to
fast-casual concepts like Panera Bread to delivery-driven operators like
Jimmy John's, which was acquired by Inspire Brands in 2019.
Subway was by far the largest operator in the space, estimating its footprint
at about 40,000 locations. In comparison, he said Jimmy John's, Jersey
Mike's, and Firehouse Subs each had less than 10% of Subway's footprint,
but the ubiquitous demand for sandwiches and falling prospects for Subway
cleared a lane for the smaller operators to grow.
market share is still wide open," he said. "The good news for all the other
sandwich guys is that Subway is falling apart."
for Ghost Kitchens
reason for acquiring established brands in different cuisine categories could
be their use of ghost kitchen concepts, much like Inspire Brands deployed in
the Atlanta market, reported CNBC (Nov. 11). Full Story
Kitchen, billed as
the first ghost kitchen launched, owned, and operated by a multi-brand
restaurant company, will offer products from its signature brands, which also
include Arby's, Buffalo Wild Wings, Rusty Taco, Dunkin',
Under such a
model, RBI would be able to provide cuisine from four different brands, and FAT
Brands would be able to leverage 15 unique banners when offering products via a
FAT Brands Continue to Grow
formed by the merger of Burger King and Tim Hortons in 2014, but
it did not take long for the company to expand from burgers and breakfast to a
different cuisine: It acquired Popeyes Louisiana Kitchen for $1.8
billion, giving it a competing banner for Yum Brands' KFC unit.
acquisition has largely been seen as a boon for the company, and its
performance during the chicken sandwich wars would back that up. However, it
also expanded the company's culinary footprint, adding a pure play into the
fried chicken arena.
acquisition by FAT Brands followed two other purchases it made in 2021. In
June, the company acquired Global Franchise Group from Serruya
Private Equity Inc. and Lion Capital LLP for $442.5 million.
gave it access to a variety of restaurant concepts, including Round Table
Pizza, Great American Cookies, Hot Dog on a Stick, Marble
Slab Creamery and Pretzelmaker. Additionally, in September, the
company announced it would acquire the Twin Peaks sports lodge concept
from Garnett Stations Partners for $300 million. Food Institute Focus
plans to offer $250
million in low-interest loans over the next five years to increase diversity
among franchisees. McDonald's said Hispanics, Asians, and Blacks made up 29.6%
of all U.S. franchisees at the end of 2020, while women made up 28.9% of domestic
owners, reported The Wall Street Journal (Dec. 8). Full Story
Starbucks is opening a pick-up cafe in midtown
Manhattan with Amazon that uses the retail giant's cashierless
technology to attract busy consumers who want to buy coffee or snack quickly.
The partnership with Amazon is the latest step in Starbucks' plan to adapt its
locations to consumers' new habits, reported CNBC (Nov. 18). Full Story
IHOP opened its first virtual location in
Toronto in partnership with Ghost Kitchens Brands.Full Story
Jif, Goldfish, and Pizza Hut
have been named to TikTok's first-ever Culture Drivers list, which
highlights 14 brands doing the best, most engaging, and entertaining work on the
platform. Full Story
Burger King will cut some of its menu items to
help workers process drive-thru orders more quickly, according to Restaurant
Brands International CEO Jose Cil. He also said new technology for
preparing sandwiches and digital menu boards are helping make drive-thrus more
efficient, reported USA Today (Dec. 1). Full Story
Kinghas re-introduced the Italian Original Chicken sandwich for a
limited time. Full Story
John's will waive
all or most initial franchise fees and discount royalty rates in an effort to
incentivize development starting in 2022 and beyond. Full Story
Brands agreed to buy
Arizona-based Native Grill & Wings for $20 million. The purchase gives
FAT Brands three separate chicken wing concepts, reported Yahoo! (Nov. 22). Full Story
MOD Pizza joined the growing parade of
restaurant companies to announce plans to go public. The Seattle-based chain
announced it has confidentially submitted a draft registration to the Securities
and Exchange Commission for a proposed initial public offering, reported
Nation's Restaurant News (Nov. 22). Full Story
its first loyalty program and mobile app. Full Story
John's International is
entering Sub-Saharan Africa with plans to open 60 locations in Kenya and
Uganda. Full Story
Burgers, Fries & Shakes is seeking to close out key markets in Texas by adding 54 new
locations across Austin, Waco, San Antonio, and Houston.Full Story
Peaks will open 10
locations in Philadelphia. Full Story
on the Move:
Foods named Matt
Glover VP of accounting, Jia Scott VP of treasury, and Rhonda Whiteman VP of
operational accounting. Full Story
Dan James VP of real estate and construction. Full Story
Howie's Pizza named
Steve Clough director of franchise development. Full Story
Chris Smith president of McLane Grocery. Full Story
Burgers, Fries & Shakes named Doug Willmarth president. Full Story
Pizza is promoting
Kate Trumbull, Christopher Thomas-Moore and Juan Joachin to senior vice
president roles. Full Story
SUPPLY CHAIN NEWS
Shortage Update: Restaurants Limit Delivery, Online Sales to Focus on Dine-In
shortage continues to take a toll on restaurants across the U.S., just as the
holiday season gets underway.
a California Boston Market shut on Thanksgiving after staff did not show
up, leaving customers unable to collect pre-ordered meals. "No employees
showing up today... We are unable to fulfill the orders," a sign at the
restaurant read, as reported by Business Insider (Nov. 26). Full Story
closer look at the implications of the labor shortage for restaurants as well
as signs of hope in recent employment data.
Limit Delivery Amid Labor Shortage
restaurant companies are shutting down delivery and online sales for periods to
focus on dine-in customers, reported The Wall Street Journal (Nov. 28). Full Story
Factory, Dine Brands Global, and First Watch Restaurant Group are
among the operations juggling delivery and online orders as locations struggle
example, is reducing business at its restaurants on weekends, when brands can
only take about four to-go orders every 15 minutes, CEO Gene Lee told
investors. There are a lot more orders than that," Lee said. "We know we have
slowdowns aren't going unnoticed by customers. Fifteen percent of diners said
delivery wasn't available from full-service restaurants at peak times in recent
months, according to a recent poll by consumer-research firm Lisa W. Miller
& Associates LLC.
Jobs Added in November, More Teenagers Employed by Restaurants
bright side, U.S. employers added 534,000 new jobs in November, with franchise
employment up 35,300, according to ADP. Among franchises, restaurants
added 21,700 jobs while food retailers shed 900 jobs.
found that more teenagers were hired by restaurants in 2021. Teenagers have
commonly made up a sizeable portion of limited-service restaurant employment.
In 2019, 17% of all hourly, non-management employees were 18 years old or
younger. By the end of Q3 2021, the percentage grew to 24%.
shift was observed in the full-service segment. The percentage of hourly,
non-management employees 18 years old or younger was 4.6% in 2019. In Q3 of
2021 the percentage increased to 7.2%.
the 25- to 34-year-old age group had the biggest reduction in its share of both
limited-service and full-service employees. Food Institute Focus
Sales Growth Best for Industry in Over a Decade
restaurant sales were up 8.27% in November when compared to November 2019,
representing the best sales growth for the industry in over a decade, according
to Black Box Intelligence. Comparable traffic was down 4.65% for the
month, indicating many of the sales gains were due to increased prices and
larger tickets for to-go and delivery orders. Full Story
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