Article

FCES15: The changing course of consumer behavior

Consumers of all kinds have a nearly endless array of options from which to choose, whether they're purchasing furniture, cars, housewares, or any good or service. The same holds true for where they spend their money when dining out.

Sarah Quinlan, senior vice president of Market Insights, MasterCard Advisors.

October 28, 2015 by Travis Wagoner — Editor, Networld Media Group

Consumers of all kinds have a nearly endless array of options from which to choose, whether they're purchasing furniture, cars, housewares, or any good or service. The same holds true for where they spend their money when dining out. Where are consumers dining, and what are they looking for in the restaurants they choose?

By most accounts the economy has rebounded since the recession and housing-market bust of 2008. One particular area in which consumers are saving money is at the gas pump.

"Seventy-two percent of gas savings are being spent," Sarah Quinlan, senior vice president of Market Insights for MasterCard Advisors, said during a session on Oct. 19 at the Fast Casual Executive Summit in Miami. "Are you capturing it at your restaurant?"

Quinlan also noted that 75 percent of spending is done by women, but it's for a reason: "Women want to make memories rather than just buy stuff," she said.

Dining out is a memory-maker for many consumers. Where consumers dine out is changing, but regardless of where they're dining, spending on doing so has increased.

According to Quinlan, leading areas of spending in U.S. sector performance are dining out (up 10.3 percent), purchasing furniture (up 6.5 percent) and grocery shopping (up 4.6 percent). Areas where spending is lagging include at department stores (down 3.5 percent), on electronics (down 4.5 percent) and on luxury goods (down 12.8 percent).

With the increased spending at restaurants, Quinlan advised, "Never discount! Consumers are willing to spend on something unique."

Fast casual restaurants have the upper hand on competing restaurant categories when it comes to uniqueness. Quinlan said that in the restaurant segment year-over-year growth rates in September showed that fast casual dining grew by 15.6 percent, casual dining by 11.4 percent and quick serve restaurant dining by 8.7 percent.

"You are competing on the experience you offer," Quinlan said. "Branding matters. Fast casuals are grabbing market share. People don't want to be 'me-too.' They want to be unique and they want value for their money."

Those in the millennial generation are helping to drive the increase in fast casual dining.

"Millennials are all about the experience," Quinlan said. "They're spending more on eating out than on eating at home. Masses drive the price. It's volume times price."

As well, Quinlan advised that fast casual operators need to be constantly testing and learning new concepts and ideas. She used the example of the "innovation funnel," in which, for example, a fast casual operator would brainstorm many ideas based on customer trends, screening the best ideas, testing the top ideas, and then rolling them out into stores to maximize the return on investment.

Quinlan also stressed the importance of fast casual operators understanding their "local market intelligence," with key insights being, "How is my business performing? How loyal are my customers? And how can I can get more customers?"

Restaurateurs, according to Quinlan need to focus on, "your performance; your competitive set; your customers; and your customer reach."

An example of extending customer reach Quinlan gave was for fast casual operators to partner with local groceries. "Sell your unique products there," she said.

A customer's dining experience is also of vital importance, Quinlan said: "Make the in-store experience look calm and seamless."

About Travis Wagoner

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Travis Wagoner spent nearly 18 years in education as an alumni relations and communications director, coordinating numerous annual events and writing, editing and producing a quarterly, 72-plus-page magazine. Travis also was a ghostwriter for an insurance firm, writing about the Affordable Care Act. He holds a BA degree in communications/public relations from Xavier University.