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Mired in what we’ve termed “entrenched pessimism,” the U.S. consumer’s penchant for increasing savings and reducing debt at a time when incomes have stagnated only serves to depress foodservice spending in the short run. For the dinner daypart, the ramifications are dramatic: Packaged Facts estimates that dinner daypart restaurant sales dropped 4.6% to $174.4 billion in 2009, and we forecast a 2.8% drop in 2010.
But during an era when consumers are viewed more than ever by their debt-to-income ratios, we believe that a spending renaissance among consumers with stable household balance sheets may already be underway. At the dinner hour, we expect full-service dinner to benefit from the return of the fiscally confident—more affluent consumers with strong household balance sheets. We expect limited-service restaurants, on the other hand, to face the prospect of modest trading up in restaurant choices while weaning extreme affordability customers from low-margin menu items intended to drive traffic but not sales.
By combining investment-grade industry analysis with key trend analysis, Dinner Trends in the U.S. Foodservice Market not only helps foodservice industry participants address challenges unique to the dinner daypart but also helps participants contour their strategies to meet consumers’ evolving needs. By providing insight on the dinnergoer’s decision-making process, this report provides direction on how and why the consumer decides on a specific restaurant from which to obtain dinner, and how and why that consumer decides what to order from the menu. Selection factors are analyzed according to the following categories: convenience; dinner menu items; meal cost thresholds; dine-in partner; and takeout partner; menu positioning and advertising; health positioning; and bundled offers.
Key coverage includes but is not limited to:
“Share of stomach” restaurant dinner sales analysis, which includes 5-year sales trends for the fast food/quick-service restaurant and full-service restaurant segments, with forecasts for 2010 and 2011.
Guest traffic frequency analysis of leading dinner-centric restaurant brands, giving a directional perspective on current sales trends.
Trended analysis of demographic dinner daypart expenditures, including 4-year sales historical sales trends and spending according to key demographics, such as age, income, region, and race/ethnicity.
Thorough psychographic analysis of Budgeters, Alcohol Indulgers and Healthy Eaters, key psychographic groups shaping the dinner daypart.
The report also conducts trend analysis on key dinner-centric restaurant brands, including menu strategies and new menu item introductions, core users; snacking tendencies; food, diet and health attitudes; as well as trends sales metrics. We focus on recession-driven responses and menu strategies taking the brands into 2011.
Coverage extends to fast food/QSR, coffeehouse, smoothie shop, ice cream shop, family restaurant, casual restaurant, and fine dining restaurant segments; as well as prepared foods segments at convenience stores/gas stations and grocery stores/supermarkets.
Table of Contents:
Chapter 1: Executive Summary
Scope and Methodology
Scope
Methodology
Consumer survey methodology
Macroeconomic Analysis
Fast facts
Industry drivers, trackers, and sales trends
Fast facts
Consumer outlook and restaurant tracker
Fast facts
Share of stomach: dinner sales analysis
Fast facts
Dinner trends and competitive climate
Dinner restaurant selection analysis
Dinner menu selection analysis
Alcohol Indulgers: usage, attitudes & behavior drilldrown
Budgeters, Alcohol Indulgers & Healthy Eaters: usage, attitudes & behavior drilldrown
Fast facts
Dinner on the Menu: Restaurant Brand Analysis
Brinker International Inc
Chili’s Bar & Grill
Menu updates
Chili’s Consumer Universe
A middle-of-the-road range of food, health, and diet attitudes
Negative momentum
Maggiano’s Little Italy
Dinner strategy
Menu mix improvement
Buffalo Wild Wings, Inc.
Sales by daypart
Expansion plans
Menu diversity
Menu additions
Late night menu innovation
California Pizza Kitchen
Menu item innovation
Small Cravings
Tweaking wine strategy
California Pizza Kitchen consumer universe
Sales declines led by guest declines
The Cheesecake Factory Inc
Menu and pricing
Off-premises push
Dinner strategy
Menu price increases
Category introductions
Alcohol and dessert
Promotional offers
Cheesecake Factory consumer universe
Guest interest in dieting, youthful aspiration, and exercise
Keeping the guests coming
Darden Restaurant Group
Olive Garden
Menu pricing
Sales and guest check trends
Dinner strategy: menu revitalization
Olive Garden consumer universe
LongHorn Steakhouse
Menu pricing
Dinner strategy: menu offerings/redesign
Longhorn Steakhouse consumer universe
Middle-of-pack health/diet attitudes; a penchant for fast food
Red Lobster
Menu pricing
Sales and guest check trends
Brand refresh
Red Lobster consumer universe
Morton’s Restaurant Group Inc
Daypart, food/beverage and boardroom sales
Dinner strategy: increasing wine sales
Bar 12-21 Initiative
Pummeling comes to an end
Chapter 2: Macroeconomic Analysis
Macroeconomic factors shaping restaurant sales
Oh, for a bit of confidence!
Analysis: Entrenched pessimism a very serious problem
Present Situation Index decreases as perceptions of job prospects continue to darken
Expectations Index weighed down by dimmer outlook on job prospects
Unemployment rate stagnates
Some perspective: 7.7 million jobs still lost
Graph 2-1: Unemployment Rate, Savings Rate and Consumer Confidence: 2007-2010
By demographic, unemployment trends undergoing a shift
Graph 2-2: Unemployment Rate, Selected Demographics, 2007-2010
Disparity in unemployment rates by education level is reversing
Application
Less educated making a comeback
Graph 2-3: Unemployment Rate, by Education Level, 2007-2010
Gender gap closes and young adults get a reprieve
Graph 2-4: Unemployment Rate, by Age, 2007-2010
We’ve become a nation of savers again
Saving swipes almost $500 billion from the economy
But household balance sheets are on the mend
Decade in review: quite a debt party
Bottom line: bad timing
Graph 2-5: Consumer Income vs. Debt in Trillions, Quarterly Metrics, 2000-2010
Ratios for debt junkies
Analysis
Trend continues
A healthier consumer
Graph 2-6: Savings Rate & Debt Service Ratio, 2007-2010
Unemployment and GPD forecast: expect recovery to take several years
Forecast
Pace of hiring to remain low
Quite a dilemma: skills mismatch
Slow employment rebound to coincide with a slow rebound in consumer spending
Adjusted projections
Graph 2-7: Unemployment and GDP Forecast, 2010-2012
Stock & housing declines deflate household wealth; rebound to record 2006 levels a long way off
Three quarters of relative stasis
Graph 2-8: Household Net Worth in Trillions, 2005-2010
Case-Shiller and FOMC housing pessimism
Bottom line: recent growth, but weakening trends
What will tomorrow bring?
Summary equities analysis
Bottom line analysis
Graph 2-9: Wealth Effect: Wilshire 5000 and Case-Shiller Composite-20 Index: 2007-2010
Consumer prices too low?
Chapter 3: Industry Drivers, Trackers, and Sales Trends
Restaurant upturn hinges on strong household balance sheets
Spending upturn to benefit casual restaurants; fast food/QSR may stagnate
Analysis
Supporting metrics
Table 3-1: Restaurant Usage in Last Month,
by Restaurant Type and Daypart, 2010
Tendency toward non-discretionary spending a recession rule
But affluent may help drive growth in discretionary spend
Analysis: credit card trends
Packaged Facts’ Consumer Restaurant Tracker: Gloomy Near-Term Outlook
At-home breakfast and dinner trending remains significant
Moving forward: Saving & grocery spending trumps limited service and full-service restaurant spend
Graph 3-1: Consumer Restaurant Tracker: Next 3 Months: A Top Line View
Food services & drinking places sales trends
February to June food services & drinking places monthly sales sequentially improve
2010 monthly foodservice growth outpaces year-earlier sales through August 2010
Catching up on food retail
But August grocery sales growth closes gap
Graph 3-2: Monthly Adjusted Sales, 12-Month % Change, Grocery Stores
& Food Services & Drinking Places, 2009-2010
Full-service restaurant growth outpaces limited-service growth
Graph 3-3: Monthly Non-Adjusted Sales, 12-Month % Change, Grocery Stores, Food Services
& Drinking Places, Full-Service Restaurants and Limited-Service Eating Places, 2009-2010
Thank God for February
Graph 3-4: Monthly Adjusted Sales, Month-to-Month % Change,
Grocery Stores and Food Services & Drinking Places, 2009-2010
Restaurant Performance Index contracts for fourth straight month
Graph 3-5: Restaurant Performance Index, Monthly Metrics, 2006-2010
Same-store sales trends
Customer traffic trends
Going forward
Food at home maintains pricing edge
Graph 3-6: CPI: Food at Home vs. Food Away from Home, 2005-2010
Graph 3-7: CPI: Food at Home vs. Food Away from Home, 2008-2010
Food inflation forecast remains muted
A series of downward revisions, with an away-from-home caveat
Latest analysis
Consumer food price trends
Retail meat prices: beef and pork inflation a strong possibility
Eggs and dairy: farm milk price increases to hit dairy sector
Fresh fruit and vegetable prices stable
Cereals and bakery expected to rise 1% to 2%
Other
Commodities pricing analysis
Q2 1020 crude foodstuffs and feedstuffs decline wipes out Q1 2010 gain
Finished consumer foods index also declines
Intermediate foods and feeds ticks upward
Chapter 4: Restaurant Usage & Outlook Tracker
Note on reading charts
Packaged Facts’ Consumer Restaurant Tracker: at-home food spend trumps out-of-home spend
February 2010 trend continues in June 2010
Graph 4-1: Consumer Restaurant Tracker: Current Behavior: A Top Line View
Looking ahead: Consumers more likely to save & spend on groceries than spend at restaurants
An attempt to find a silver lining: saving and debt analysis
But trickle-down spending may not land in restaurant cash registers
Graph 4-2: Consumer Restaurant Tracker: Next 3 Months: A Top Line View
Dinner-at-home trend stronger than that for breakfast
Cost differential and share of food budget weighs against dinner
Table 4-1: Restaurant Breakfast, Lunch & Dinner: Dinner Cost Burden
Practical versus aspiration
Demographic impact
Graph 4-3: Consumer Restaurant Tracker: Present Behavior: Eating Dinner at Home
Grocery store/supermarket prepared foods investment paying competitive dividends
A growing threat driven by a confluence of events
Serving two distinct populations
A threat to both fast food and casual/fine dining
Graph 4-4: Consumer Restaurant Tracker: Present Behavior: Eating Dinner at Home, Restaurant Dinner Users, by Restaurant Type
Higher-income versus lower-income dinner users, by foodservice type
Graph 4-5: Consumer Restaurant Tracker: Present Behavior: Eating Dinner at Home, Restaurant Dinner Users, by Restaurant Type, HH Income Splits
Planned foodservice spending
Fast food picture appears grim
Graph 4-6: Consumer Restaurant Tracker: Future Behavior: Fast Food Restaurant Spending
Intended full-service spend lacks promise
Graph 4-7: Consumer Restaurant Tracker: Future Behavior: Full-Service Restaurant Spending
Intention to save money remains high
Graph 4-8: Consumer Restaurant Tracker: Future Behavior: Saving Money
Coffeehouse & smoothie shop users lead planned foodservice dinner spending
Graph 4-9: Consumer Restaurant Tracker: Future Behavior: Restaurant Spending,
by Restaurant Dinner Type
Restaurant usage and usage frequency
Overview
Graph 4-10: Restaurant Usage in Last Month, by Restaurant Type, 2010
Gender rules
Table 4-2: Mean Restaurant Usage in Last Month, by Restaurant Type, 2010, by Gender
Graph 4-11: Restaurant Usage in Last Month, by Restaurant Type, 2010, by Gender
18-34s drive guest counts
Table 4-3: Mean Restaurant Usage in Last Month, by Restaurant Type, 2010, by Age
And 18-34s exhibit higher usage
Key smoothie shop and street stand users
Graph 4-12: Restaurant Usage in Last Month, by Restaurant Type, 2010, by Age
HH income
Table 4-4: Mean Restaurant Usage in Last Month, by Restaurant Type, 2010,
by HH Income
Graph 4-13: Restaurant Usage in Last Month, by Restaurant Type, 2010, by HH Income
Employment status
Employment status: having a job pays the bills but also fits restaurant lifestyle
Table 4-5: Mean Restaurant Usage in Last Month, by Restaurant Type, 2010,
by Employment Status
Full-time workers and students also compare favorably regarding overall usage
Graph 4-14: Restaurant Usage in Last Month, by Restaurant Type, 2010, by Employment Status
Restaurant dinner use
Dinner runs the show
Graph 4-15: Day Part Usage on Last Visit, 2010
Full-service a dinner stronghold
Graph 4-16: Restaurant Usage in Last Month for Dinner, 2010
Convenient foodservice solutions create gender differences
Graph 4-17: Restaurant Usage in Last Month for Dinner, 2010, by Gender
Quick pick-up and grab-and-go options have youthful appeal
Graph 4-18: Restaurant Usage in Last Month for Dinner, 2010, by Age
HH income validates importance of disposable income to dinner choices
Graph 4-19: Restaurant Usage in Last Month for Dinner, 2010, by HH Income
Employment status casts unique usage shadow
Graph 4-20: Restaurant Usage in Last Month for Dinner, 2010, by Employment Status
Chapter 5: Share of Stomach: Sales Analysis
Market size and overview
A daypart in decline
Near-term challenges
Dinner daypart sales peak in 2007, dip through 2010
Full-service restaurant dinner takes it on the chin; growth possible
Limited-service dinner sales to fall in 2010
Rough going ahead
Graph 5-1: Dinner Daypart Sales: Limited-Service and Full-Service Restaurants, 2005-2011
Graph 5-2: Dinner Daypart Sales: Limited-Service and Full-Service Restaurants, % Growth, 2005-2011
Terminology and sourcing note
Restaurant dinner a significant factor in HH food spend
Graph 5-3: Food at Home versus Food Away from Home Daypart Spend
Restaurants sales trends by daypart
Consumer food expenditure trends suggest migration to food at home spend
Table 5-1: Consumer Food Expenditures, 2005-2008
Dinner share of restaurant spend remains stable
Table 5-2: Meals Away From Home Expenditures, by Daypart, 2005-2008
Spending on dinner away from home, by restaurant segment
Table 5-3: Dinner Expenditures: Selected Metrics & Fast Food, Full-Service, Vending Machines Cafeteria Spend, 2005-2008
Dinner restaurant expenditures lowest in Midwest
Northeast a full-service spend stronghold
Table 5-4: Dinner Expenditures: Selected Metrics & Fast Food, Full-Service, Vending Machines and Cafeteria Spend, by Region
Dinner out takes more out of younger consumers’ pockets
Full-service trend
Table 5-6: Dinner Expenditures: Selected Metrics & Fast Food, Full-Service, Vending Machines and Cafeteria Spend, by Age
Spending on dinner away from home, by income
Share of spend versus absolute spend
Table 5-7: Dinner Expenditures: Selected Metrics & Fast Food, Full-Service, Vending Machines and Cafeteria Spend, by Income
Dinner share of wallet highest among Hispanics
Full-service versus limited-service spending trends
Table 5-8: Dinner Expenditures: Selected Metrics & Fast Food, Full-Service, Vending Machines and Cafeteria Spend, by Race/Ethnicity
Guest Traffic Analysis
Daypart traffic growth saved by breakfast
Frequency counts: definition
Occasional users dominate casual restaurant guest traffic patterns
Overall guest traffic declines among establishments where occasional use dips
Outback Steakhouse and Red Lobster
Table 5-9: Guest Traffic: Casual Restaurants, Selected Dinner Players, 2008-2010
Little Caesar’s engaged use rises while rivals falter
Table 5-10: Guest Traffic: Limited-Service Pizza Restaurants,
Selected Dinner Players, 2008-2010
Daypart meal spend analysis
Dinner meal spend leads all dayparts—at all restaurant types
Graph 5-4: Consumer Restaurant Meal Spend, by Daypart and Restaurant Type, 2010
Dinner meal spend, family versus casual restaurants
35-44s and married respondents key spenders
Graph 5-5: Dinner Meal Spend, Family versus Casual Restaurants, Selected Demographics
Dinner meal spend: casual versus fine dining
Graph 5-6: Dinner Meal Spend, Casual versus Fine Dining Restaurants,
Selected Demographics
Chapter 6: Dinner Trends and Competitive Climate
Consumers remain gun shy about restaurant dinner
Tales from the blogosphere
Online advice to help consumers stay out of restaurants
Prepared foods flex muscle
At-home dinner satisfaction
The downscaling of upscale food retail
Whole Foods injects brand with price/value message
The upscaling of traditional food retail
Aiming squarely at restaurants
Setting price according to restaurant segment counterpart
Even social congregation
Whole Foods prepared foods store audit and observations
12 restaurant/food kiosk options in one supermarket?
Convenience and price hold keys to competing with dinner at home
Convenience trends
Drive thru and curbside pick-up
Technology
Chili’s pay-at-the table
Upscale Next Restaurant leverages website
Hand-held devices the mainstream wave of the future
Pay with your smartphone
Restaurant Innovations - Value Pricing
Fast Food and value pricing
Casual dining and value pricing
Fine dining and value pricing
Chapter 7: Dinner Restaurant Selection Analysis
Note on reading charts
Dinner restaurant selection influencers
Graph 7-1: Dinner Restaurant Selection Influencers, 2010
Restaurant selection: convenience influencers
Gender: routine and work play roles
Graph 7-2: Restaurant Selection: Dinner Convenience Influencers, by Gender, 2010
Age: in deference to convenience
Graph 7-3: Restaurant Selection: Dinner Convenience Influencers, by Age, 2010
HH income and routine
Graph 7-4: Restaurant Selection: Dinner Convenience Influencers, by HH Income, 2010
Employment status and students
Graph 7-5: Restaurant Selection: Dinner Convenience Influencers,
by Employment Status, 2010
Urban, Suburban, or Rural location
Graph 7-6: Restaurant Selection: Dinner Convenience Influencers,
Urban, Suburban, Rural, 2010
Restaurant selection: dinner menu item influencers
Gender holds a health surprise
Graph 7-7: Restaurant Selection: Dinner Menu Influencers, by Gender, 2010
Age and small portion question
Graph 7-8: Restaurant Selection: Dinner Menu Influencers, by Age, 2010
HH income
Graph 7-9: Restaurant Selection: Dinner Menu Influencers, by HH Income, 2010
Employment status - small portions to save on cost
Graph 7-10: Restaurant Selection: Dinner Menu Influencers, by Employment Status, 2010
Restaurant selection: dinner cost threshold influencers
Age and bundled meals
Graph 7-11: Restaurant Selection: Dinner Cost Threshold Influencers, by Age, 2010
HH income - meals under $3
Graph 7-12: Restaurant Selection: Dinner Cost Threshold Influencers, by HH Income, 2010
Employment status - thrifty students
Graph 7-13: Restaurant Selection: Dinner Cost Threshold Influencers,
by Employment Status, 2010
Restaurant selection: dinner dine-in partner influencers
Age
Graph 7-14: Restaurant Selection: Dinner Dine-in Partner Influencers, by Age, 2010
HH income
Graph 7-15: Restaurant Selection: Dinner Dine-in Partner Influencers, by Income, 2010
Restaurant selection: dinner takeout partner influencers
HH income
Graph 7-16: Restaurant Selection: Dinner Takeout Partner Influencers, by Income, 2010
Chapter 8: Dinner Menu Selection Analysis
Note on reading charts
Dinner menu selection influencers
Graph 8-1: Dinner Menu Selection Influencers, 2010
Healthful menu positioning and bundles attract youth
Graph 8-2: Dinner Menu Selection Influencers, by Age, 2010
HH income
Graph 8-3: Dinner Menu Selection Influencers, by HH Income, 2010
Employment status
Graph 8-4: Dinner Menu Selection Influencers, by Employment Status, 2010
Urban, suburban, or rural location
Graph 8-5: Dinner Menu Selection Influencers, by Rural/Urban/Suburban, 2010
Chapter 9: Alcohol Indulgers: Usage, Attitudes & Behavior Drilldrown
Alcohol Indulgers
Overview
Note on trending feature
Casual and fine dining dinner usage and spend, by gender and HH income
Male Alcohol Indulgers versus Non-Indulgers, by HH income
Female Alcohol Indulgers versus Non-Indulgers, by HH income
Table 9-1: Alcohol Indulgers: Casual and Fine Dining Dinner Use and Spend, by Gender & HH Income
Casual and fine dining dinner usage and spend, by age
Table 9-2: Alcohol Indulgers: Casual and Fine Dining Dinner Use and Spend, by Age
Menu selection influencers among female Alcohol Indulgers, by HH income
Table 9-3: Female Alcohol Indulgers: Menu Selection Influencers, by HH Income
Menu selection influencers among female Alcohol Indulgers, by HH income
Table 9-4: Male Alcohol Indulgers: Menu Selection Influencers, by HH Income
Menu selection influencers among Alcohol Indulgers, by age
Table 9-5: Alcohol Indulgers: Menu Selection Influencers, by Age
Chapter 10: Budgeters, Alcohol Indulgers & Healthy Eaters: Usage, Attitudes & Behavior Drilldrown
Meet the Psychographic Groups
Note on trending feature
Restaurant selection factors
Overview
Psychographic analysis
Table 10-1: Restaurant Selection Factors: Psychographic Groups, Selected Responses
Menu selection factors
Overview
Psychographic analysis
Table 10-2: Menu Selection Factors: Psychographic Groups, Selected Responses
Average dinner meal spend
Table 10-3: Mean Dinner Spend, Per Restaurant Type, Psychographic Groups
Chapter 11: Dinner on the Menu: Restaurant Brand Analysis
Brinker International Inc
Company growth strategy
Franchising/joint ventures
International expansion
Marketing
Chili’s Bar & Grill restaurant operations
On the menu
Entrée pricing
Chili’s dinner strategy
Menu updates
Negative momentum
Internet initiatives
Chili’s Consumer Universe
Table 11-1: Chili’s Users: Selected Demographics
A middle-of-the-road range of food, health, and diet attitudes
Table 11-2: Chili’s Users: Food, Health and Diet Attitudes
Maggiano’s Little Italy restaurant operations
On the menu
Pricing
Dinner strategy
National & local promotions
Increased alcohol sales
Menu mix improvement
Table 11-3: Brinker International, Selected Metrics, 2007-2009
Table 11-4: Brinker International, Selected Quarterly Metrics, 2009-2010
Buffalo Wild Wings, Inc.
Layout, clientele, service and pricing
Restaurant operations
Sales by daypart
2009-10 strategy
Expansion plans
Marketing/promotions
Dinner & late night strategy
Menu diversity
Menu additions
Late night menu innovation
Positive sale momentum tapers
Table 11-5: Buffalo Wild Wings, Selected Metrics, 2007-2009
Table 11-6: Buffalo Wild Wings, Selected Quarterly Metrics, 2009-2010
California Pizza Kitchen
Pizza, of course
Limited-service innovation
Restaurant operations
Licensing and franchising operations
2009-10 strategy
Thank You Card affects sales
Store expansion
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