For some time, consumers threatened to cut back on discretionary spending to counter high gas prices, but in the restaurant segment, no significant drop was discernable until now. New data reported by MarketBrief (a combined effort between Technomic and American Express) shows consumers are truly weary of pain at the pump, and they're changing their food spending habits to offset the increase.
If you've ever looked at Nielsen Ratings for Food Network shows or sales of high-end cookware, you'd think everyone aspired to be a home chef. But the truth is consumer desire to cook has yet to translate into action. For most, TV shows like "Emeril Live" and "Good Eats" are more for entertainment than education.
So what should operators do to win over ready-to-eat food buyers?
One possible solution is to convince them your food is not only ready to eat, it's better tasting and more healthful than ready-to-eat grocery food. A brother of mine once remarked that the food his wife brings home from the grocery is "so processed that it's actually half-eaten." Without even reading nutritional labels on the boxes his wife brings home (and to be fair to the ladies, he's no cook either), he knows it's not as good for him as fresh food prepared from raw ingredients.
So position your food as
Amazingly, 56 percent said they'd not be upset by an increase of $1 or more, and 13 percent "reported that no amount would keep them from ordering that menu item or visiting that restaurant, researchers reported.
But the pizza biz could probably work on its variety as many have the same offerings: pizza, wings, breadsticks, subs and salads.
An operator outside of Cleveland just started selling spaghetti by the bucket and is reporting favorable results. (Talk about low food cost, low labor and convenient.)
Take-and-bake operations large and small have done very well selling desserts (both ready-to-bake and ready-to-eat) and salads. While marketing expert Kamron Karington suggests giving things like salads and desserts away to drive trial, think of how doing so would raise your value proposition.
And again, how can your operation be more value oriented than by burning its own gas to bring food to the customer's house? Again, promote delivery.
In the survey, consumers were told gas price increases could lead to menu price increases. They then were asked to consider a menu item that costs $10 and to determine how much of an increase would make them reconsider ordering that item or visiting that restaurant in the future.
1. Work the value formula with limited-time offerings, including "smaller-portioned alternatives at lower price points."
2. While consumers may not blame you for raising prices, do so conservatively. If you go too high, frequency could suffer.
Reward those customers now more than ever by inviting them back with rewards. Even if you give away a few freebies (sides, drinks, a smaller version of their favorite large pizza), you'll drive frequency and offset a lower ticket average.
Editor's note: Data for the May 2006 American Express MarketBrief was culled from an Internet survey of 500 consumers representative of the United States population. The survey has a margin of error of plus or minus 4.5 percent.