Brands look to offer home meal replacement

With retail food inflation climbing at a more rapid rate than menu price increases, operators are finding that American families have yet one more reason to be receptive to such value packages as bundled dinners and home-meal replacement offers.

But while chains like KFC, Pizza Hut, Bob Evans, Long John Silver’s, Mimi’s Cafe and Zoës Kitchen are pushing the value button, they are not losing sight of the continuing need to underscore other messages like convenience and quality.

The 57-unit Zoës Kitchen recently debuted Dinners for Four, aimed at busy, value-seeking families. But the fast-casual chain’s new vice president of marketing, Rachel Phillips-Luther, said family-focused deals and home-meal replacement do more than simply attempt to capitalize on grocery store inflation.

“We’re sticking to what we do well,” Phillips-Luther said. “That trend [of grocery prices rising faster than restaurant prices] will help us, but we’ve always been committed to preparing simple, tasty and fresh food in a way that’s a value to the consumer.”

Meanwhile, inflation at the supermarket checkout is not expected to ease any time soon. 

Food-at-home prices are projected to rise between 3 percent and 4 percent in 2012, compared with 2 percent to 3 percent for food away from home, according to the Economic Research Service of the U.S. Department of Agriculture. 

That gap was even wider in 2011, with the USDA estimating that grocery store prices rose between 4.25 percent and 4.75 percent, compared with estimated menu price increases of 2 percent to 2.5 percent last year. 

Closing in

Nevertheless, chain officials and other industry experts say marketing programs should not rely on the rising tab for food at home to help drive traffic. Darren Tristano, executive vice president of Chicago-based Technomic, cautioned that higher grocery price inflation, in fact, does not necessarily equate to a pricing advantage for restaurants.

“It’s hard to find and acknowledge many cases where it’s cheaper to eat out than at home,” Tristano said. “But the gap is narrowing, and the value is increasing.”

In its most recent “Dinner & Late-Night Consumer Trend Report,” Technomic found the value equation is more important during the dinner period than other dayparts. According to the data, 40 percent of consumers have cut back on away-from-home dinner purchases in the past year. 

But while Tristano allowed that some restaurants are benefiting from growing sticker shock at the grocery store, those brands that are successfully growing carryout sales with families are capitalizing on other trends,
such as combo meals and shareable items.

“Very time-strapped consumers are still looking for convenience, so home-meal replacement still comes as a very good option,” he said. “Price points at restaurants have been very good. Restaurants are becoming an increasingly better value,” he added. “Not less expensive, but a better value.”

Price points of prevalent family offerings range widely. Long John Silver’s Chicken Family Pack and KFC’s Weekend Bucket sell for $10 and $11, respectively, while Pizza Hut’s Big Dinner Box is priced at $19.99. Carryout specials for families at sibling brands Bob Evans and Mimi’s Cafe cost under $20 and $25, respectively.

Right time to go big time

Dinners for Four had the advantage of repackaging Zoës Kitchen’s signature dishes, like kebabs with rice pilaf, Greek salad and pita bread, for less than $30, Phillips-Luther said.

“Dinners for Four evolved naturally ... because we knew our food traveled well and that we could package it in large quantities and have something appealing outside of quick service,” she said. “It wasn’t strategic in responding to grocery prices rising.”

Likewise, KFC altered its $11 Sunday Bucket, which had been promoted a few separate times in 2011, to the $11 Weekend Bucket on Saturdays and Sundays beginning in early January. But the 10-piece offer was a response to the overall economy rather than to the opportunity grocery inflation may be presenting to restaurants, spokesman Rick Maynard said.

“Primarily, this promotion is driven by the time of year,” Maynard said. “Post-holidays, consumers are in a cash crunch when January hits.”

KFC’s sibling brand, Pizza Hut, also deployed a family-focused value meal. Pizza Hut’s Big Dinner Box — a combination of two medium one-topping pizzas, eight chicken wings and five breadsticks for $19.99 — debuted the Wednesday before Thanksgiving and was featured in television advertising through the holidays.

“We think the Big Dinner Box is a tremendous value,” said David Novak, chief executive of Yum! Brands Inc., parent company of both Pizza Hut and KFC. “You’ll be seeing more of that product this year.”

Limiting cannibalization

Technomic’s Tristano said that larger price increases at grocery stores — including for packaged goods from dinnerhouses like P.F. Chang’s China Bistro or coffeehouses like Starbucks and Caribou Coffee — may slow the erosion of some in-restaurant sales if chains’ value perceptions in their dining rooms approach parity with their branded products in the freezer aisle. 

Moreover, restaurant officials said promoting carryout with families does not necessarily hurt dining room sales, either. 

“Off-premise sales account for about 40 percent for the entire restaurant industry, so this is a big pie to draw from,” Bob Evans Farms chief executive Steve Davis said during the company’s second-quarter earnings conference call. “These are two different need states, so if you go to a Bob Evans at 5 o’clock, people are coming in either for dine-in or carryout. It’s not a tradeoff.”

With its 10 Family-Size Meals for less than $20 or the Farmhouse Feast promotion during the holidays, family-dining chain Bob Evans aims to increase its carryout sales to 20 percent of its sales mix from the current 11 percent. Meanwhile, sister brand Mimi’s Cafe offers 10 meals for less than $25 through its Family Meals To-Go promotion, which launched last September. 

Phillips-Luther of Zoës Kitchen adds that sales of some Dinners for Four also replace the “home” part entirely.

“We have some families that come in and eat a Dinner for Four in the dining room,” she said. “It becomes more relevant to them when they all sit down and eat the same thing. But it’s been prepared in our scratch kitchen instead of theirs.” 

Contact Mark Brandau at [email protected] [3].
Follow him on Twitter: @Mark_from_NRN [4].