Growth Seen for Mid-Day Meals

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Growth Seen for Mid-Day Meals


Consumer spending on lunch is expected to bounce back 2 percent in 2011 to reach $114 billion following two years of recession-related declines, so finds another tasty Packaged Facts report, “Lunch Trends in the U.S. Foodservice Market.”

After rising to $119 billion in 2008, lunch daypart sales declined 4 percent in 2009, and sales are estimated to fall another 3 percent in 2010 to $112 billion.

“This has been a very tough climate for lunch foodservice and its counterparts, and that won’t change overnight although change is coming,” predicts Dan Montuori, publisher of Packaged Facts. “Growth in the lunch daypart still faces a few near-term challenges including the impact of unemployment on work-driven restaurant routines, bargain-minded consumers who weigh the cost of a bagged lunch against the indulgence of eating out and an industry environment in which players are chasing foot traffic at the expense of guest check through the extreme push of value meal deals.”

By pushing the price envelope with $1 deals for lunch, operators are creating the same pool of “extreme affordability” customers as in the breakfast segment – customers hooked on products that have undermined guest check averages yet have ironically helped sustain the industry. Respondents to Packaged Facts proprietary survey reveal that interest in lunchtime meals priced under $5 and under $10 is stable across household income brackets, suggesting price sensitivity among a large segment of diners regardless of their personal wages. Respondents aged 18-24 are 60 percent more likely than average to choose a restaurant because it offers meals under $3.

Yet, as in the breakfast daypart, ubiquitous limited time offer lunch meal deals – with their allure to attract new visits and test longer-term menu strategies – and the addition of bundling components could allow restaurants to build up guest check sizes without sacrificing foot traffic, according to the report., which cites as examples Taco Bell’s $2 Meal Deal, which by offering three items for $2 is intended as a twist on the more common 1:1 ratio of items per dollar as featured in jack in the Box’s “Pick 3 for $3” customizable LTO (limited time offer) value meal. Also, as with breakfast, strategies by operators like Denny’s and Bob Evans to place everyday value for quality food at the forefront of their branding initiatives plays well in the family restaurant segment, where value for the money has always been a selling point.

Finally, ingredients are almost as important as price for many consumers when dining out and foodservice operators are confirming guests’ growing interest in better-for-you choices. Customers are seeking positive health benefits from ingredients like fiber and whole grains and menu items featuring more vegetables or fruit but less meat. Packaged Facts’ research suggests that students are more likely than average to be influenced by healthful lunch foodservice offerings, while both men and women are likely to choose a restaurant that offers smaller portion sizes to reduce cost and control calories.

Knowing what consumers want to munch for lunch and what they want to pay is knowledge that can be turned into an advantage in the competition for the critical foodservice dollar by the observant food retailer.