Dawn of a Rebound
You have to get up early to beat the competition, and perceptive retail foodservice thinkers should pay attention to a wake-up call from Packaged Facts called “Breakfast Trends in the U.S. Foodservice Market” that predicts that consumer spending on breakfast at restaurants will rebound from an anticipated downturn in 2010 to approach $38 billion in 2011, as current value menu pricing strategies influence future spending habits.
“Fast food and QSR (quick-service restaurant) operators are playing the ‘price equals value’ card for everything it’s worth,” says Dan Montuori, publisher of Packaged Facts. “By pushing the envelope with $1 deals, they risk enabling a pool of ‘extreme affordability’ customers,” Montuori notes. “But the upshot for breakfast is that it remains a relatively untapped daypart, so the traffic gained today may translate into additional revenue tomorrow. We believe that decisions by the likes of Denny’s and Bob Evans to place everyday value for quality food at the forefront of their branding values makes a great deal of sense.”
Montouri goes on: “Value pricing meets the reality of today’s and tomorrow’s lower-to-middle and middle-income consumers who frequent family restaurants. For breakfast, they are spinning full-service value menus and value in portion size.”
This philosophy started with the proliferation of non-breakfast $1 value menus, and Packaged Facts expects McDonald’s foray into the $1 breakfast menus to create pressure among other fast food/QSR players to match its lead. Indeed, Burger king, Wendy’s, and Subway have already made major breakfast moves. The bottom line is that low cost resonates with restaurant breakfast users, with 31% of respondents to Packaged Facts proprietary survey claiming they have been influenced by a maximum $3 price when selecting a restaurant for breakfast, versus 16 percent who placed a limit at $10.
Convenience influences consumer breakfast decisions, with convenience to work or errands, routine, and the need to get somewhere else quickly factoring in. Also relevant are breakfast menu features, such as getting a favorite menu item, wide variety, and healthy menu items. And, because more than half of U.S. adults drink coffee, restaurants have created value bundles that offer coffee with breakfast food to increase foot traffic.
Even though restaurant sales fell during the recession and initial recovery, breakfast has fared relatively well and has taken market share away from both the lunch and dinner dayparts. Packaged Facts found that only 34 percent of restaurant-goers had eaten breakfast at a restaurant in the past month and an even smaller percentage of the general population said the same, which means the industry has an opportunity to woo the more than 150 million adult consumers who do not eat restaurant breakfasts.
In addition to the Packaged Facts survey, market research company The NPD Group in its report “The Future of Foodservice” notes that breakfast accounted for nearly 60 percent of the restaurant industry’s traffic growth over the past five years.
So wake up and smell the coffee, bearing in mind Bill Haley’s dictum: “Well, roll my breakfast ‘cause I’m a hungry man.”