Foodservice Landscape in the U.S.: Restaurant Industry and Consumer Trends, 2nd Edition, The

February 2012 | 272 pages | ID: FEC883B7647EN
Packaged Facts

Abstracts

While the U.S. economic recovery remains fragile, we find much for the restaurant industry to celebrate. Packaged Facts' Foodservice Landscape forecasts restaurant growth of 4.2% in 2012, on the heels of 6% market growth in 2011.

Nonetheless, the industry continues to face significant challenges. For the past three years, guest traffic volume has come entirely from population growth, not usage increase. Restaurant operators across restaurant segments must also contend with the increased numbers of lower-spending guests and with the loss of higher-income patrons, which has translated to higher volume but lower guest check averages.

Food commodity price increases could also threaten the continuation of the 2010-2011 sales recovery. And while our analysis calls into question the impact of consumer confidence on guest visit frequency, further declines in the unemployment rate are needed to spur restaurant industry growth, as our analysis supports a relationship between the unemployment rate and guest visit frequency across a range of restaurant segments.

This report provides the guidance industry participants need to understand industry and consumer trends shaping the U.S. foodservice landscape, including the quick-service, fast casual, family, casual and fine dining restaurant segments:

• Restaurant price, promotion and branding strategy assessment, including stepped up industry “fast casualization”; the effect of daily deals on customer ordering habits; and restaurant operators’ menu pricing and promotion strategies.
• Macro-economic analysis & trending, including an economic forecast through 2014; consumer confidence trends and their application to foodservice; employment trends and their application to foodservice; consumer spending, wealth and debt trends and their application to foodservice; and retail and commodity food price trends and forecasts.
• Restaurant industry guest traffic trending, including guest traffic count and visit frequency comparisons for three restaurant segments (snack and beverage, limited-service and full-service), along with analysis by demographic and by daypart.
• Industry-leading restaurant brand analysis covering each major restaurant segment, including menu strategies; customer food lifestyle segmentation analysis; trended guest visit frequency analysis; and performance metrics.
• Restaurant cuisine & menu trending, focusing on menu item penetration by restaurant segment, including top proteins, sides, kids’ items, healthy claims, and preparation methods.
• Market size and forecast for restaurant and drinking place sales, same-store sales analysis of major brands for 2005-2011, and consumer restaurant spending by segment for 2007-2010.
• Assessment of health and wellness trends shaping the restaurant industry, including obesity and calorie count trends; health and food away from home correlations; government and industry health initiatives; and menu labeling effectiveness.
• Restaurant technology trend analysis, with a focus on increasingly mobile communication-oriented consumers and emerging mobile payment technologies.

Contents

CHAPTER 1: EXECUTIVE SUMMARY

Scope and Methodology

Scope of coverage

Methodology

Consumer survey methodology

Market size and forecast

Consumer restaurant spend trending

Menu item trend analysis

Other sources

Restaurant categories

Limited-service restaurant definitions

Full-service restaurant definitions

Other definitions

Share of Stomach: Restaurant Sales Analysis

Insight capsule

Restaurant Macroeconomic Analysis

Insight capsule

Fast facts

Restaurant industry guest traffic trends

Insight capsule

Fast facts

Restaurant cuisine & menu trends

Insight capsule

Restaurant Health & Wellness Trends

Insight capsule

Restaurant price, promotion and branding strategies

Insight capsule

Restaurant Technology Trends

Insight capsule

CHAPTER 2: SHARE OF STOMACH: RESTAURANT SALES ANALYSIS

Overview

Market size and forecast

Shaping growth

A fragile economy performing moderately well

Food commodity prices a potential boogeyman

Significant growth will remain elusive until unemployment rate drops

Potential for long-term shift in HH income distribution

Catering to non-white racial/ethnic groups more important than ever

Market and forecast

Graph 2-1: Sales at Restaurants & Drinking Places, 2006-14

Graph 2-2: Sales at Restaurant & Drinking Places, % Change, 2006-14

Performance context

Food away from home spending share declines, but 2010 growth is stable

Graph 2-3: Food Away from Home vs. Food at Home, 2001-2010

Restaurant Performance Index exhibits moderate strength during 2011

Graph 2-4: Restaurant Performance Index, 2007-2011

Restaurant segment performance & outlook

Quarterly samestore sales comparisons, by brand and restaurant segment

Reading the graphs

One-year and multi-year comparisons

Snack and beverage restaurant performance & outlook

Coffee wins; treats lose

Graph 2-5: Snack & Beverage Restaurant Annual Same-Store Sales Index:

2005-10, 2006-10, 2007-10 & 2008-2010

Positive segment momentum through 2011

Graph 2-6: Snack & Beverage Restaurant Quarterly Same-Store Sales Index:

2008-11, 2009-11 & 2010-11

QSR performance & outlook

Outlook

QSR: The behemoth grows while others falter

Graph 2-7: Quick-Service Restaurant Annual Same-Store Sales Index:

2005-10, 2006-10, 2007-10 & 2008-2010

Mixed momentum through 2011

Graph 2-8: Quick-Service Restaurant Quarterly Same-Store Sales Index:

2005-10, 2006-10, 2007-10 & 2008-2010

Fast casual: some industry leaders, but growth far from universal

Graph 2-9: Fast Casual Restaurant Annual Same-Store Sales Index:

2005-10, 2006-10, 2007-10 & 2008-2010

Positive momentum

Graph 2-10: Fast Casual Restaurant Quarterly Same-Store Sales Index:

2008-11, 2009-11 & 2010-11

Pizza: Domino’s shows sales leadership

Graph 2-11: Pizza Restaurant Annual Same-Store Sales Index:

2005-10, 2006-10, 2007-10 & 2008-2010

Positive signs

Graph 2-12: Pizza Restaurant Quarterly Same-Store Sales Index:

2008-11, 2009-11 & 2010-11

Family restaurant performance & outlook

Graph 2-13: Family Restaurant Annual Same-Store Sales Index:

2005-10, 2006-10, 2007-10 & 2008-2010

Negative momentum

Graph 2-14: Family Restaurant Quarterly Same-Store Sales Index:

2008-11, 2009-11 & 2010-11

Casual restaurant performance & outlook

Casual Bar & Grill narrows losses

Graph 2-15: Casual Bar & Grill Restaurant Annual Same-Store Sales Index:

2005-10, 2006-10, 2007-10 & 2008-2010

Casual bar & grill momentum shifts markedly positive

Graph 2-16: Casual Bar & Grill Restaurant Quarterly Same-Store Sales Index:

2008-11, 2009-11 & 2010-11

Casual Steak takes a beating

Graph 2-17: Casual Steak Restaurant Annual Same-Store Sales Index:

2005-10, 2006-10, 2007-10 & 2008-2010

2011 brings wind to sails

Graph 2-18: Casual Steak Restaurant Quarterly Same-Store Sales Index:

2008-11, 2009-11 & 2010-11

Casual Italian

Graph 2-19: Casual Italian Restaurant Annual Same-Store Sales Index:

2005-10, 2006-10, 2007-10 & 2008-2010

Olive Garden momentum falters

Graph 2-20: Casual Italian Restaurant Quarterly Same-Store Sales Index:

2008-11, 2009-11 & 2010-11

International and seafood casual restaurants

Graph 2-21: Casual International Restaurant Annual Same-Store Sales Index:

2005-10, 2006-10, 2007-10 & 2008-2010

Momentum returns

Graph 2-22: Casual International Restaurant Quarterly Same-Store Sales Index:

2008-11, 2009-11 & 2010-11

Fine dining performance & outlook

Outlook

Fine dining restaurants fall the hardest

Graph 2-23: Fine Dining Restaurant Annual Same-Store Sales Index:

2005-10, 2006-10, 2007-10 & 2008-2010

2011 brings moderate rebound—but 2007 sales levels remain distant

Graph 2-24: Fine Dining Restaurant Quarterly Same-Store Sales Index:

2008-11, 2009-11 & 2010-11

Consumer spending trends

Restaurant growth: follow the money

Table 2-1: Demographic Share of HH Income: 2007-2010

Follow the population

Table 2-2: Demographic Shares of Persons & Households: 2007-2010

Food at home gains

Hispanics driving growth in food spending

Table 2-3: Food, Food at Home, Food Away from Home & Restaurant Expense:

Hispanic v. Non-Hispanic, 2007-10

Driving restaurant spending

Table 2-4: Restaurant Share of Spend, by Restaurant Segment:

Hispanic v. Non-Hispanic, 2007-10

Driving dayparts

Table 2-5: Restaurant Share of Spend, by Daypart: Hispanic v. Non-Hispanic, 2007-10

Growth at opposite ends of the age spectrum

Lifestyle change to mark restaurant spending boom?

Table 2-6: Food, Food at Home, Food Away from Home & Restaurant Expense, by Age, 2007-10

Carrying full-service restaurants

Table 2-7: Share of Spend, by Restaurant Segment, by Age, 2007-10

Daypart spending trends

Table 2-8: Restaurant Share of Spend, by Daypart, by Age, 2007-10

HH income trends

Table 2-9: Food, Food at Home, Food Away from Home & Restaurant Expense, by HH Income, 2007-10

Table 2-10: Restaurant Share of Spend, by Restaurant Segment, by HH Income, 2007-10

Daypart trends

Table 2-11: Restaurant Share of Spend, by Daypart, by HH Income, 2007-10

CHAPTER 3: RESTAURANT MACROECONOMIC ANALYSIS

Overview

Our take: muted optimism

Economic forecast through 2014

GDP: A long time getting back, but finally passes pre-recession levels

Forecast factors

Graph 3-1: Unemployment, GDP & Inflation Forecast, 2011-2014

Analysis: consumer confidence & foodservice

Consumer confidence remains abysmal but is rising from bottom

Present Situation Index increases business condition perceptions & job prospects brighten

Expectations Index rises on business conditions & job prospect optimism

Graph 3-2: Unemployment Rate, Savings Rate & Consumer Confidence, 2007-2011

Foodservice application and analysis

Strong correlations to LSR family, snack and beverage & high-frequency limited-service usage

Table 3-1: Degree of Consumer Confidence, Limited-Service Restaurant Use & Usage Frequency

Weaker correlation to full-service usage

Table 3-2: Degree of Consumer Confidence, Full-Service Restaurant Use & Usage Frequency

Tie between consumer confidence and restaurant brand performance?

Table 3-3: High-Confidence Consumers: Restaurant Brand Usage & High-Frequency Use

Analysis: employment & foodservice

Unemployment remains high but is tapering downward

Job openings rise

Foodservice application and analysis

Rise in the unemployment rate results in lower restaurant engagement

Limited-service restaurant usage among employed consumers remains stable

Table 3-4: Limited-Service Restaurant Usage Frequency Analysis, By Employment Status, 2008-2011

Full-service restaurant usage among employed consumers dips

Table 3-5: Full-Service Restaurant Usage Frequency Analysis, By Employment Status, 2008-2011

Demographic analysis

Trouble areas

Restaurant industry ramifications

Bright spots

Restaurant industry ramifications

Table 3-6: Unemployment Trends, by Demographic, October 2009 to December 2011

Analysis: spending, wealth and debt trends

Consumer spending ticks upward

Inflation-adjusted foodservice & accommodations consumer spending up 4% since 2005

Graph 3-3: Real Personal Consumption Expenditures by Type of Product,

Indexes, 2007-2011

Lower energy prices free up discretionary income for restaurant spending

Graph 3-4: U.S. Regular Gasoline Prices, 2007-2011

Household wealth gradually rebounds

Graph 3-5: Household Net Worth, 2005-2011

Wealth bedrocks follow two different paths

Home prices remain depressed

Wilshire 5000 reflects significant market gains & stock equity strength

Graph 3-6: Wealth Effect: Wilshire 5000 and Case-Shiller Index: 2007-2011

Consumer balance sheets undergoing repair

Household debt burden declines

Financial obligations ratios also drop

Graph 3-7: Consumer Debt Ratios: 2007-2011

Food price outlook

Commodity food prices

Commodity cost containment as profit margin protection

Menu pricing to become a more dicey proposition

Restaurant setback a possibility

McDonald’s commodity costs to rise by 4.5% to 5% in 2012

Managing price increases

Graph 3-8: Producer Price Index, Selected Commodities, 2007-2011

Grocery and restaurant price outlook

Graph 3-9: CPI Forecast, Food at Home & Food Away From Home 2011 & 2012

CHAPTER 4: RESTAURANT INDUSTRY GUEST TRAFFIC TRENDS

Overview

NPD: Guest traffic trends and forecast summary

Foodservice usage, by foodservice establishment type

Fast food and convenience store foodservice share youth appeal

Usage among 55+s plummets

Table 4-1: Foodservice in Past Month, by Foodservice Outlet: Gender, Age & HH Income

Convenience store foodservice usage varies by race/ethnicity

More of an urban phenomenon

Table 4-2: Foodservice in Past Month, by Foodservice Outlet: Race/Ethnicity, Region & Population Density

Foodservice usage, by daypart

Lunch and dinner exhibit widest usage

Target female snackers

Table 4-3: Foodservice in Past Month, by Daypart: Gender, Age & HH Income

Hispanics a breakfast opportunity?

Urban versus rural

Table 4-4: Foodservice in Past Month, by Daypart: Race/Ethnicity, Region & Population Density

Restaurant guest traffic count and frequency comparisons, 2008-11

Visit frequency definitions

Population growth saves industry

Table 4-5: Restaurant Usage by Major Segment, 3-Year Growth Index, 2008-11

Stable guest visit frequency trends

Table 4-6: Limited-Service & Full-Service Restaurant Guest Visit Frequency, 2008-2011

Age restaurant usage trends

Snack and beverage usage declines

Table 4-7: Restaurant Segment Usage & Growth, by Generation, 2008-11

LSR guest visit frequency, by age

Graph 4-1: Limited-Service Restaurant Usage Frequency, by Age/Generation, 2011

Consumers age 45-64 lead usage growth

Table 4-8: Limited-Service Restaurant Guest Traffic Trending, by Age/Generation, 2008-2011

FSR guest visit frequency, by age

Graph 4-2: Full-Service Restaurant Usage Frequency, by Age/Generation, 2011

Gen Y leads full-service traffic growth

Table 4-9: Full-Service Restaurant Guest Traffic Trending, by Age/Generation, 2008-2011

HH income restaurant usage trends

Downward migration in HH income has serious ramifications for restaurant industry

Table 4-10: Restaurant Segment Usage & Growth, by HH Income, 2008-11

LSR guest visit frequency, by HH income

Graph 4-3 Limited-Service Restaurant Usage Frequency, by HH Income, 2011

<$50K HH income LSR users increase 16%

Table 4-11: Limited-Service Restaurant Segment Usage & Growth, by HH Income, 2008-11

Usage increases most pronounced among <$25K & <$25-$49K HH income users

Table 4-12: Limited-Service Restaurant Guest Traffic Trending, by HH Income, 2008-2011

FSR guest visit frequency, by HH income

Graph 4-4: Full-Service Restaurant Usage Frequency, by HH Income, 2011

Loss of $50K+ FSR users not made up by gains in <$50K HH income users

Table 4-13: Full-Service Restaurant Segment Usage & Growth, by HH Income, 2008-11

Table 4-14: Full-Service Restaurant Guest Traffic Trending, by HH Income, 2008-2011

Race/ethnicity restaurant usage trends

Table 4-15: Restaurant Segment Usage & Growth, by Race/Ethnicity, 2008-11

LSR guest visit frequency, by race/ethnicity

Graph 4-5: Limited-Service Restaurant Usage Frequency, by Race/Ethnicity, 2011

FSR guest visit frequency, by race/ethnicity

Graph 4-6: Full-Service Restaurant Usage Frequency, by Race/Ethnicity, 2011

Hispanic restaurant usage trends

Table 4-16: Limited-Service & Full-Service Restaurant Guest Traffic Trending, Hispanics,

2008-2011

Presence of children restaurant usage trends

LSR guest visit frequency, by presence of children

Graph 4-7: Limited-Service Restaurant Usage Frequency,

by Presence of Children, 2011

FSR guest visit frequency, by presence of children

Graph 4-8: Full-Service Restaurant Usage Frequency,

by Presence of Children, 2011

Daypart guest visit frequency

Summary analysis

Dinner remains biggest draw

Breakfast and snack growth

LSR breakfast, LSR dinner and FSR snack outpace other daypart segments

Table 4-17: Restaurant Use, by Daypart and Restaurant Segment, 2008-11

Daypart restaurant usage, by age

Table 4-18: 2011 Daypart Use, by Restaurant Segment: Age

Daypart restaurant usage growth, by age

Percentage breakfast use among 35-44s grows over time

Percentage snacking use among 25-34s on the upswing

Table 4-19: 2008-2011 Daypart Usage Growth, by Restaurant Segment: Age

Daypart restaurant usage, by HH income

Table 4-20: 2011 Daypart Use, by Restaurant Segment: HH Income

Daypart restaurant usage growth, by HH income

Table 4-21: 2008-2011 Daypart Usage Growth, by Restaurant Segment: HH Income

CHAPTER 5: RESTAURANT CUISINE & MENU TRENDS

Overview

Datassential

What’s hot?

Table 5-1: Top Menu Trends, 2011

Restaurant segment distribution

Table 5-2: Restaurant Brand Distribution, by Segment, 2011

Top proteins

Table 5-3: Top 10 Proteins, Restaurant Penetration, by Segment, 2011

Top sides

Table 5-4: Top 10 Sides, Restaurant Penetration, by Segment, 2011

Kids’ menu item analysis

Hot trends

Table 5-5: Top Kids Menu Trends, 2011

Table 5-6: Top Kids Items, Restaurant Penetration, by Segment, 2011

Healthy menu claims

Table 5-7: Top 10 Healthy Claims, Restaurant Penetration, by Segment, 2011

Menu presence trends

Table 5-8: Top 10 Healthy Claims, Restaurant Penetration, 2007-11

Preparation method analysis

Hot preparation methods

Table 5-9: Hot Preparation Method Trends, 2011

Top preparation methods

Table 5-10: Top Preparation Methods, Restaurant Penetration, by Segment, 2011

Mexican menu presence dwarfs those of other Latin American regions

Table 5-11: Latino/Hispanic Cuisine: Restaurant Industry

Menu Incidence & Brand Penetration, by Segment, 2011

Marketing claims that jumped the shark

Words the restaurant industry has killed

Artisan? Are you sure?

Stretching “local” boundaries

Handmade, yes; but does saying so really convey anything?

CHAPTER 6: RESTAURANT HEALTH & WELLNESS TRENDS

Making health a priority

The argument in dollars and cents: $150 billion a year

Calories trending higher

Long-term calories trend: negative; short-term trend: positive

Graph 6-1: Caloric Intake by Food Group: Number of Calories, 1970-2009

Restaurant industry growth and the obesity connection

Frequency of restaurant use correlates with negative diet self-perception

Fast food correlation even stronger

Eating out and calories: 1 meal out a week = 2 extra pounds a year

Diet and health tied to type of restaurant frequented

Burgers and fries

Sandwich/sub

Full-service

Consumers underestimate restaurant meal calories

Calorie underreporting raises concerns

Government and industry initiatives quickly gathering steam

MyPlate

HealthierUS School Challenge

Kids LiveWell

Patient Protection and Affordable Care Act of 2010

Health professionals’ hopes

Barriers to effectiveness

No change in transaction volume or calories per transaction

Increased consumer awareness

Consumer confusion

Health apathy at POS

Interaction with restaurant labeling differs from grocery labeling

Expect behavioral change

NPD says calorie information will have little effect on consumer ordering: we disagree

Study context

Changes in food choices and spend

On the menu

How to promote health on the menu

Table 6-1: Successful Health and Nutrition Promotion Strategies, 2011

Reduce the added sugar

How much is too much?

Hold the salt

The cost savings: $32.1 billion?

The restaurant connection

Healthy claims: inherent health leads the pack

Table 6-2: Top Healthy Claims: Restaurant Penetration by Segment, 2011

Healthy claims: trend leaders

Table 6-3: Top Healthy Claims: Restaurant Penetration, 2007-11

Mini trend tapers, but opportunity remains

Next step: portion control without labels

Mini-desserts: incenting use while limiting food content

A trend with legs

“Healthy”: more expensive and often not so healthy

Restaurant segment analysis reveals significant price differences

“Natural” QSR menu items do exist; but does natural mean “healthy”?

Consumers’ propensity to health and nutrition on the upswing

Few have been ordering healthy items

But interest in food health is there

The upside

The downside

Graph 6-2: Food & Diet Propensities: Healthful Propensities, 2007-11

Graph 6-3: Food & Diet Propensities: Indulgence & Dieting, 2007-11

Self-care on the upswing

Graph 6-4: Food & Diet Propensities: Knowledge, Money & Time, 2007-11

Packaged Facts’ proprietary psychographic analysis

Healthy menu introductions

Whataburger

Einstein Bros. Bagels

CHAPTER 7: RESTAURANT PRICE, PROMOTION AND BRANDING STRATEGIES

Overview

Fast casual as nexus of change

Facing a hard reality

Countering full-service malaise with fast casual concepts: rationales

Brand launches

Red Robin Burger Works

IHOP Express

IHOP Cafe

A “signature” Steak ’n Shake

Warning: “fast casual” not the easy, simple solution to sales woes

Pei Wei fast casual brand not immune to lowering menu prices

Pei Wei Diner Select

Lower price points lower the barrier to purchase frequency

Stripped down fast casual: Pei Wei Asian Market

“No service” strategy

Non-traditional locations

JambaGo: a non-traditional market foray

Building loyalty

E-mail incentives trigger follow up visits

Tie to cause marketing

Make it more rewarding

Daily deals: weighing the pros and cons of social couponing

Daily deal sites

The “Groupon” effect

An overblown concern?

Pros

Cons

Who daily dealers take with them

How daily dealers choose the restaurant

Daily dealer spending and ordering behavior

Cannibalization effect

Intent to return and recommend

Spinning value

Moving away from extreme affordability

Burger King jettisons $1 menu items

Wendy’s eschews extreme affordability: W mid-tier offering incents value meal trade up

Value as choice

Cheesecake Factory promotes tiered pricing

P.F. Chang’s moves price points downstream

Olive Garden lowers entree-level price points to incent lower-income guests

Strengthens everyday affordability to reach lower-income households

At Denny’s, everyday value provides the foundation; LTOs provide the balance

$2 $4 $6 $8 Value Menu delivers a chunk of sales

LTOs provide trade-up incentive

Everyday combos

Everyday value promotion: dueling 2 for $20 promotions

Family bundles

All-you-can-eat

Upselling on quality: Domino’s

Product reformulation pays huge dividends

Balancing low-price promotions with higher quality introductions

Artisan Pizza promises quality; provides upselling ammunition

Expanding the demographic

Supplementing menu with more healthful offerings

Expanding cuisine reach

CHAPTER 8: RESTAURANT TECHNOLOGY TRENDS

Overview

Mobile consumers; mobile technology

Why it matters

A plethora of consumer-facing potential

Note on location-based services

Online ordering evolves

Shift to multi-concept platforms

Adapting online ordering to mobile technology

A youth driven phenomenon

Graph 6-1: Mobility & Technology Index, by Age, 2010

Restaurant lifestyle engagement informs technology use

Table 6-1: Mobility & Technology Attitudes & Behaviors

Table 6-2: Mobility & Technology Attitudes & Behaviors, Restaurant Lifestyle Group

Higher-frequency restaurant users' technology connection

Table 6-3: Mobility & Technology Attitudes & Behaviors, High-Frequency Restaurant Segment Users, Selected Restaurant Segments

Success story: Five Guys

Mobile share of online ordering: 33%

Mobile payments

Why it matters

A new era of speed and convenience

Quicker card-based restaurant service

Usage is nascent, but consumer interest is there

NFC payments set for launch and quick uptake

Apple and Google in the wings

Google Wallet arriving at a restaurant near you

Starbucks takes the barcode route

Benefits

Stored value card foundation

26 million transactions and counting

Other developments

Remote drive-thru ordering

Mobile POS growth

Buffalo Wild Wings testing iPad ordering

MCD TV

Incenting sit-down sales?

Call centers build incremental sales

CHAPTER 9: RESTAURANT BRAND ANALYSIS: SNACK & BEVERAGE SEGMENT

Overview

Performance summary: snack and beverage restaurant segment

Coffee wins; treats lose

GRAPH 9-1: Snack & Beverage Restaurant Annual Same-Store Sales Index:

2005-10, 2006-10, 2007-10 & 2008-2010

Positive segment momentum

Graph 9-2: Snack & Beverage Restaurant Quarterly Same-Store Sales Index:

2008-11, 2009-11 & 2010-11

Starbucks Corporation

Beverages comprise three-quarters of retail sales

Table 9-1: Starbucks, Revenue Mix by Product Type, 2009-2011

Recession response

Menu pricing strategies and customer incentives

Social media and technology innovation

A holistic approach firing on all cylinders

Driving toward a strong, unified emotional connection

Food and drink customization online

My Starbucks Idea

Brand managers mingling with the people: what a concept!

My Starbucks Rewards continues to strengthen

iPhone & Android apps

Connecting with Wi-Fi

Mobile payments

eGifting

Customizable Frappuccinos

Retail development innovation

Starbucks juice bar concept

Beverage innovation

Blonde Roast

Evolution Fresh - Beyond Starbucks’ doors

Food innovation

Bistro Box launch

Product innovation

VIA

Seattle’s Best

K-Cups

Graph 9-3: Starbucks Usage Frequency Food Segmentation Analysis

2008-2011 guest traffic frequency analysis: Starbuck’s

General use on decline; higher-frequency use increases

Trouble spots: females, high-income individuals and black consumers

Graph 9-4: 2008-2011 Guest Traffic Frequency Analysis: Starbuck’s

2011 builds on 2010 turnaround

Same-store sales momentum strengthens

Traffic and guest ticket rises

Table 9-2: Starbucks, Selected Metrics, 2007-11

Dunkin’ Donuts

Marketing initiatives - Creating a Fan

2009-11 menu strategy

Beverages

K-cups a hit

Table 9-3: Dunkin Donuts: 2011 New Beverage Menu Items & LTOs

Food

Hitting the right notes with breakfast and snacking

Sandwiches, wraps and dollar menu fill out breakfast menu

Big ‘N Toasty offers premium alternative

Incremental health innovation

Hearty Snacks

Table 9-4: Dunkin Donuts: 2011 New Food Menu Items & LTOs

2008-2011 demographic trend analysis: Dunkin Donuts

Strong usage growth across demographics

Graph 9-5: 2008-2011 Demographic Usage Frequency Trending: Dunkin’ Donuts

Sales performance

Expansion plans and unit growth

Same-store sales improve

Table 9-5: Dunkin’ Donuts, Selected Metrics, 2007-11

Jamba Juice

Food and beverage strategy

New on the menu

Menu-related performance

Retail branding strategy

New store concept to underpin market expansion strategy

Sales performance: Jamba Juice

Table 9-6: Jamba, Inc., Selected Metrics, 2007-11

CHAPTER 10: RESTAURANT BRAND ANALYSIS: QSR SEGMENT

Overview

Burger King

Growth strategy

Menu initiatives

Barbell strategy remains in place

Breakfast trends

Premium

2011 ushers aggressive value experimentation

Table 10-1: Burger King: 2011 New Food Menu Items & LTOs

Litigation forces Value Menu transition

Incremental ice cream sales bump

Fry wars

Customer food lifestyle segmentation analysis

Application

Graph 10-1: Burger King Usage Frequency Analysis, Food Lifestyle Segmentation

2008-2011 guest traffic frequency analysis: Burger King

18-24s eschewing the brand

Other trouble spots

Graph 10-2: 2008-2011 Guest Traffic Frequency Analysis: Burger King

Sales performance: Burger King

2010 brings guest check pressure

2011 closes gap in same-store sales declines

Table 10-2: Burger King, Selected Metrics, 2008-11

McDonald’s

Tiered menu approach

Dollar Menu to remain a fixture

No trading down to Value Menu

Breakfast: a quarter of sales, with unit volumes on the upswing

Breakfast strategy: sales growth = guest count growth

McNuggets revitalized: Chicken on the upswing

Beverage sales are booming

Coffee lays the foundation for broadening McCafe platform

Other initiatives

Reimaging rolls forward

Extending hours

Increasing capacity with side-by-side drive-thru

Food lifestyle segmentation analysis: Convenience and Ease and Weekend Cooks

Graph 10-3: McDonald’s Usage Frequency Analysis, Food Lifestyle Segmentation

2008-2011 guest traffic frequency analysis: McDonald’s

Customer usage trends the envy of the QSR segment

Trends strong across the board, with one important exception

Graph 10-4: 2008-2011 Guest Traffic Frequency Analysis: McDonald’s

Sales performance: McDonald’s

Table 10-3: McDonald’s, Selected Metrics, 2007-11

Wendy’s

2009-2010 strategy: “Real” food at a real value

Wendy’s reenters breakfast wars with premium QSR differentiation

Redhead Roasters

Tweaking menu strategy by moving away from extreme affordability

Weaning customers off of extreme affordability

The W

2011 menu introductions

Chicken line extensions on the way

“Food Lifestyle” segmentation groups a blend of McDonald’s and Burger King

Graph 10-5: Wendy’s Usage Frequency Analysis, Food Lifestyle Segmentation

2008-2011 guest traffic frequency analysis: Wendy’s

Demographic trends suggest turnaround

Mixed usage trends

Graph 10-6: 2008-2011 Guest Traffic Frequency Analysis: Wendy’s

Sales performance: Wendy’s

Table 10-4: Wendy’s, Selected Metrics, 2009-11

Jack in the Box

Regional footprint and boon and a bane

Highly concentrated Hispanic areas influence restaurant-leading Hispanic share

Table 10-5: Jack in the Box Location & Hispanic Population Analysis

Menu strategy

Value bundling drives traffic but lowers average check

Menu activity

New menu boards

Sales performance: Jack in the Box

Table 10-6: Jack in the Box, Selected Metrics, 2007-11

Domino’s Pizza

Menu overview

Growth strategy

Menu innovation: higher quality products timed with well executed promotions

Product reformulation pays huge dividends

Balancing low-price promotions with higher quality introductions

Artisan Pizza promises quality; provides upselling ammunition

Carryout promotion

Technology innovation

iPhone app passes $1 million in weekly sales

Call center builds incremental sales

Food Lifestyle Segmentation

Graph 10-7: Domino’s Usage Frequency Food Segmentation Analysis

Domino’s delivers to Hispanics

Table 10-7: Domino’s Location & Hispanic Population Analysis

2008-2011 guest traffic frequency analysis: Domino’s

Graph 10-8: 2008-2011 Guest Traffic Frequency Analysis: Domino’s

2008-2011 guest traffic frequency analysis: Pizza Hut

Graph 10-9: 2008-2011 Guest Traffic Frequency Analysis: Pizza Hut

Sales performance: Domino’s

Table 10-8: Domino’s, Selected Metrics, 2007-11

Chipotle Mexican Grill

Competitive positioning: customization; Food with Integrity

Marketing that backs Food with Integrity

2010-2011 menu strategy

Restaurant expansion: ShopHouse translates Chipotle model to different cuisines

Digging deeper into established markets while expanding into new ones

Cultivating loyalty

Farm Team Loyalty program off the ground

Cultivate Chicago guest interaction event

Chipotle Cultivate Foundation

2008-2011 guest traffic trend analysis: Chipotle

Growth across demographic groups

Graph 10-10: 2008-2011 Guest Traffic Trend Analysis:

Chipotle Mexican Grill

Food Lifestyle Segmentation: Variety on a Budget & True Foodies

Graph 10-11: Chipotle Usage Frequency Analysis, Food Lifestyle Segmentation

Sale performance: Chipotle

Industry-leading same-store sales growth

Table 10-9: Chipotle Mexican Grill, Selected Metrics, 2007-11

Panera Bread

Menu initiatives

Trade up winner

Owning the menu category

Paninis go from development to the menu

Breakfast, salads and cookies performing well

What to expect in 2012

Catering

Loyalty program at 8 million members and counting

Panera Bread Food Lifestyle Segmentation

Variety on a Budget and True Foodies turn the doors with greatest frequency

Graph 10-13: Panera Bread Usage Frequency Analysis, Food Lifestyle Segmentation

2008-2011 guest traffic frequency analysis: Panera Bread

Graph 10-14: 2008-2011 Guest Traffic Frequency Analysis: Panera Bread

Sales performance: Panera Bread

Table 10-10: Panera Bread, Selected Metrics, 2007-11

Qdoba Mexican Grill

Aggressive expansion underway

Menu strategy

Sales performance: Qdoba

Table 10-15: Qdoba, Selected Metrics, 2007-11

CHAPTER 11: RESTAURANT BRAND ANALYSIS: FAMILY SEGMENT

Overview

Family restaurant segment performance summary

Graph 11-1: Family Restaurant Annual Same-Store Sales Index:

2005-10, 2006-10, 2007-10 & 2008-2010

Negative momentum

Graph 11-2: Family Restaurant Quarterly Same-Store Sales Index:

2008-11, 2009-11 & 2010-11

Bob Evans

Growth strategy

Menu trends

New on the menu

Daypart analysis

2008-2011 guest traffic frequency analysis: Bob Evan’s

Broadly based guest traffic losses

Graph 11-3: 2008-2011 Guest Traffic Frequency Analysis: Bob Evan’s

Sales performance: Bob Evan’s

Sequential same-store sales improvement, but still negative

Table 11-1: Bob Evans, Selected Metrics, 2009-11

Cracker Barrel Old Country Store, Inc.

Restaurant operations

Retail operations

Marketing and menu strategy

Menu changes geared toward maintaining relevance and reach

Supplementing menu with more healthful offerings

Kids LiveWell options

Luring the budget-conscious with LTOs

Meet Reformed Traditional food segmentation group halfway on health?

Graph 11-4: Cracker Barrel Usage Frequency Analysis, Food Lifestyle Segmentation

2008-2011 guest traffic frequency analysis: Cracker Barrel

Penetration rates falling; HH income usage trends shifting downward

Graph 11-5: 2008-2011 Guest Traffic Frequency Analysis: Cracker Barrel

Fiscal 2012 outlook

Table 11-2: Cracker Barrel, Selected Metrics, 2009-11

Denny’s

Recession challenges: region, lower-middle income demographic and late-night

Marketing strategy

America’s diner is always open

But other rollouts round out the menu

2010 shift to everyday value supported with LTO entrees

Everyday value provides the foundation

$2 $4 $6 $8, who do we appreciate?

2-4-6-8 Value Menu mix hovering around 20%

LTOs provide the balance

Tour of America

Let's Get Cheesy

Baconalia

Fit Fare

Graph 11-6: Denny’s Usage Frequency Analysis, Food Lifestyle Segmentation

2008-2011 guest traffic frequency analysis: Denny’s

Mixed usage trends: youth a trouble spot

Graph 11-7: 2008-2011 Guest Traffic Frequency Analysis: Denny’s

The Hispanic connection

Denny’s geographic analysis

Table 11-3: Denny’s Location & Hispanic Population Analysis

A non-traditional expansion strategy

Travel centers

Universities

Fast casual

Smaller footprint models on the horizon?

Sales performance: Light at the end of the tunnel

Table 11-8: Denny’s, Selected Metrics, 2007-11

CHAPTER 12: RESTAURANT BRAND ANALYSIS: CASUAL SEGMENT

Overview

Chili’s Bar & Grill

Company growth strategy

Franchising/joint ventures

Restaurant operations

On the menu

Entree pricing

Back-of-the-house: “Kitchen of the Future”

Front-of-the-house: Reimaging

Menu innovation

Everyday value promotion

Experimenting with lunch: from Bottomless Express to Lunch Break

A fast casual response

Going forward

Usage trending downward

Trouble spots: younger consumers and higher HH income consumers

Graph 12-1: 2008-2011 Guest Traffic Frequency Analysis: Chili’s

Menu pricing analysis

Table 12-1: Chili’s, Menu Pricing Analysis, 2007-11

Sales performance: Chili’s

Q3 2011 and going forward

Table 12-2: Chili’s, Selected Metrics, 2008-11

Olive Garden

Menu strategy

First: emphasize promotions

Then, go beyond promotions

Then, strengthen everyday affordability to reach lower-income households

And pick up the pace

2008-2011 guest traffic frequency analysis: Olive Garden

Graph 12-2: 2008-2011 Guest Traffic Frequency Analysis: Olive Garden

Sales performance: Olive Garden

Table 12-3: Chili’s, Selected Metrics, 2008-11

CHAPTER 13: RESTAURANT BRAND ANALYSIS: FINE DINING

Overview

Morton’s The Steakhouse

Pending sale

Dependence on business spending

Beef, beef and beef

Rounding out the menu

Wine sales holding steady

Private dining boardroom bookings on the rise

Bar 12-21 boosting bar sales

Steak & Seafood for Two promotion extended

Sales performance: Morton’s

On a price-raising tear

Table 13-1: Morton’s Restaurant Group, Selected Metrics, 2008-11

Ruth’s Chris Steak House

On the menu

Demographic

Revenue building strategies and menu moves

Promotional activity

Gift cards

Private dining

Sales performance

Table 13-2: Ruth’s Chris Steak House, Selected Metrics, 2007-11

APPENDIX

Appendix on food lifestyle segmentation charts