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Restaurants Look to Trends -- Like a Boom in Snacking -- to Generate Business

While consumers quickly cut their expenditures on eating out when the economy turned bad, there are now signs they're slowly easing away from such austerities. Recent research shows the movement is anything but robust, though. As restaurant marketers try to lure diners back and to wean them from a single-minded focus on price, they'll look to trends like a boom in snacking to give business a boost.

Given the breadth of consumers' tendency to cut back on eating out as the economy soured, it has to count as good news when there's a slowing in the rate of decline in restaurant traffic and revenues "compared to steeper declines in previous quarters." That's what a report this month from The NPD Group noted for the first quarter of 2010. At commercial restaurants (i.e., excluding food service at schools, hospitals, lodging and so on), traffic was down 2 percent and consumer spending down 0.3 percent from year-earlier levels. At fast-food restaurants, the 2 percent decline in traffic was just half as bad as the 4 percent slide seen as recently as last year's third quarter.

Overall, says NPD, traffic for the morning-meal daypart was flat compared to the same quarter a year earlier, while the dinner daypart (which had been in decline even before the recession struck) was down 4 percent and lunch slipped 2 percent. This relative strength in morning meals is expected to persist. "We've studied the past four or five recessions, and the morning meal is what comes back first," says Bonnie Riggs, NPD's restaurant-industry analyst.

Meanwhile, a Harris Poll released last month, based on April fieldwork, confirms that consumers aren't rushing to resume their bygone eating-out habits. While 14 percent said they're eating more often at fast-food chain restaurants than they did a year earlier, 31 percent said they're doing so less frequently. The pattern was similar for casual-dining chain restaurants (13 percent more frequently vs. 34 percent less frequently).

Giving priority to price
If and when consumers pick up the frequency of their restaurant visits, it won't necessarily mean they've become free and easy about the amount they spend on eating out. The Harris polling gives a hint of this. Among the respondents who said they'd increased their visits to fast-food chain restaurants in the past six months vs. a year earlier, 62 percent said price was "extremely important" or "very important" in their choice of restaurant. Among those who'd increased their visits to casual-dining chain restaurants, 57 percent said the same.

Concern about price guides consumers once they're in the restaurant, too. At fast-food chains, the most influential factor in Harris respondents' menu choices was that "the price was within my budget" (cited by 44 percent). At casual-dining chains, this was also the top factor (again cited by 44 percent). (These figures are based on respondents who'd gone to each type of restaurant in the month before being surveyed.) Restaurant marketers will have their work cut out for them in trying to deflect consumers from economizing. "Given that two-thirds of consumers are still trying to decrease this type of spending over the next six months, and the current economic pessimism, it is unlikely that we will see a massive change in the near future," says Mary Bouchard, Harris Interactive's vp of research for the restaurant industry.

One of NPD's reports sees restaurants making use of combo meals and value meals in an effort to give a boost to "check size." It also notes activity in product introductions, since new items often carry higher prices than the restaurants' ongoing fare. Most notably, while consumers remain cautious about dining out, a predilection for snacking out is taking up some of the slack.

'Redefining the snack'
"People are redefining the snack," says Riggs. "When we talk to people, they'll say they had a burger or a chicken sandwich in the afternoon as a snack, not just some salty tidbit." Burgers have been a particularly strong menu item. This may seem odd, notes Riggs, since burgers have been around for so long. "But there are some new concepts," she says. "There's a lot you can do with it." And the underlying familiarity of the burger category has its own advantages these days. "It's a kind of comfort food," notes Riggs, "and we're looking for that in these tough times."

Research by Mintel has also noted strong interest in snacking, and a bulletin last month from this research firm declared that "snacking is the new way to order at restaurants," with the phenomenon evident in restaurant categories ranging from fast food to fine dining. It identified the period 3 p.m. to 6 p.m. as prime time for snacking out. This is often an occasion for people to indulge themselves, with 52 percent of Mintel's respondents going for an "indulgent" snack, vs. 32 percent seeking a "healthy" one.

This skew reflects what Eric Giandelone, director of research for Mintel Foodservice, refers to as "the behavioral drivers of snack occasions." Says Giandelone, "For 68 percent of consumers, snacking at restaurants is a way to 'treat' oneself, while nearly half -- 49 percent -- snack socially, with friends and/or co-workers. Certainly, if you are out with friends, you may be more inclined to disregard your healthy commitments. And if you view your snacks as a way to treat yourself, then you are more likely going to indulge when snacking."

The mid-afternoon happy hour
With traffic still sluggish for lunch and dinner, restaurant marketers are moving to capitalize on the interest in snacking. "We have seen restaurants start to get more aggressive about their snacking advertising," notes Giandelone. "Perhaps the most recent and most well-known example comes from Starbucks. As part of its new customizable frappuccino rollout, locations were hosting Frappuccino Happy Hours, where from 3 p.m. to 5 p.m., frappuccinos were half off. At one level, this type of promotion is meant to generate buzz and trial around a new product, but at another it's meant to get customers in the store during those normally quiet hours. In this instance, how many co-workers tagged along with another co-worker and ordered a different beverage? That's hard to quantify, but it was a likely benefit of the promotion."

Starbucks has not been alone in acting to grab share-of-snacking. "Taco Bell is another big player here, with its 'fourth meal' concept," says Giandelone. "Overall though, the advertising and marketing of the snacking menu has not really focused on particular store hours, but on strengthening the connection between the menu offerings and snacking. For instance, items are more likely to be characterized as appetizers and snacks, desserts and snacks. That's where we are seeing the most activity."

With consumers pinching their pennies, price clearly provided impetus for the growth of snacking out as an alternative to eating a full-fledged restaurant meal. "Initially, restaurants started introducing these 'snack-priced' menu options as a way to get recession-affected consumers into their restaurants with a low-price point in the hopes that once in the restaurant, consumers would opt to buy a higher-priced menu item," says Giandelone. "In fact, among those consumers who reported snacking at restaurants more this year than last year, price was one of the top considerations." Looking beyond the current recession and to a recovery in employment, adds Giandelone, restaurants are hoping that "consumers will continue to snack as a break in the workday."

Anyhow, the price factor could be joined in consumer thinking by another consideration: calories. Laws mandating that chains post calorie counts for menu items could be the catalyst here. "We believe that some consumers are going to be in for quite a surprise when they see these calorie numbers posted so prominently," says Giandelone. "And as a way to cope with these calorie counts, they may opt for the snack-sized options, which, while still high in calories and still indulgent, are relatively lower in calories than the core menu items."

Gauging the health factor
This points toward the broader question of how much consumers care about making healthy choices when they're eating out. In the abstract, consumers routinely claim they do care. But the story changes when it's a matter of weighing healthiness against other considerations. When the Harris polling asked respondents to say how important various factors are to them on the most recent occasion when they chose a fast-food chain restaurant, 19 percent said it was extremely or very important that the place "offered healthy menu items that fit my dietary needs." That was less than half the number who said they were influenced as strongly by prices "in the range of what I wanted to spend" (50 percent), a convenient location (48 percent) or the lure of a specific kind of food for which they were "in the mood" (41 percent). The pattern was similar when respondents were asked about their most recent choice of a casual-dining chain restaurant.

In any case, it's not a simple matter for restaurants to focus a marketing message that emphasizes healthy eating. After all, the concept means different things to different consumers. "It is important to understand that the term 'healthy food' can have a broad range of definitions, ranging from simple and fresh, through low-calorie, sodium, fat, etc., all the way to organic, depending on the focus of the individual consumer," says Bouchard.

And then there's the distinction Giandelone makes between "absolutely healthy" and "relatively healthier," which also sheds light on the convolutions in consumers' intentions and behavior when it comes to healthy (or not-so-healthy) eating at restaurants. "We are seeing that consumers want to eat healthier when dining out," he says. "I think the key is the comparative use of 'healthy.' Consumers aren't willing to sacrifice flavor and taste when dining out, but they are interested in those items that are healthier in some manner. For example, grilled chicken appears healthier than fried, and that may be something consumers would be interested in. Additionally, yogurt parfaits may actually contain the same number of calories as an indulgent menu item, but yogurt benefits from a healthier positioning. So, overall, consumers are looking for healthier options but not totally low-calorie, low-fat and no-taste options."

(Source: Nation's Restaurant News, 06/14/10)

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