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Consumer knowledge key to success

Technomic: In post-recession environment, operators should focus on creating value, catering to specific generations

Chain restaurant operators must understand consumer motivation for dining out, rather than observing what customers like to order, to continue post-recession sales momentum, a Technomic presentation finds.

The “Insights Beyond Trends” presentation by Matthew Mandeltort, senior consultant for the Chicago-based research firm, was given at the Wisconsin Restaurant Expo in Milwaukee, Wis.

“Trends are great, but have a limited utility,” Mandeltort said. “For a while, lobster mac and cheese was all the rage, but if you’re a Mexican concept … putting it on the menu won’t help you succeed.”

Fast-casual chains have propelled much of the industry’s recent sales growth, he said, and that segment’s differentiating qualities play to new post-recession consumer needs.

“One thing people really love to do nowadays is customize, which drives the pizza guys crazy,” Mandeltort said. “They invented customization. … Now, at Chipotle, customers tell them what platform they want and what filling they want to make something perfect for themselves.”

But all restaurants, including quick-service and full-service concepts, can increase sales and traffic by figuring out what consumers like about fast-casual restaurant menus, designs and service styles, and applying those insights to their brands.

Points of difference, not price points

Restaurant customers became more value-conscious during the recession and remain that way, Mandeltort said, but brands must understand that the value equation is not solely about price.

“Back in the day, ‘value’ meant price, and it was very simple,” he said. “The post-recessionary mind-set has exacerbated the fact that it’s also been about service, convenience, atmosphere and quality, which is great news for operators. Price is a noncompetitive, nonsustainable advantage.”

Yet, the perception that a restaurant is too expensive still factors heavily into the “veto vote,” Mandeltort said, so restaurants should improve perceived value any way they can. Denny’s did so with the tiered pricing of its $2 $4 $6 $8 Value Menu, and Sonic did so by offering free sides with the purchase of a premium sandwich, he said.

Other efforts that restaurants can use to garner more traffic revolve around the consumer trend that guests want restaurants to be more accessible and convenient, he added.

McDonald’s remodeling hundreds of units with double drive-thrus not only increases the chain’s through-put, but also gets consumers their food faster, he noted. The same dynamic is at play when a chain like Mama Fu’s experiments with a “flex-casual” hybrid of counter service at lunch and table service at night. For that reason, Mandeltort speculated, consumers are likely to see more fast-casual variant prototypes, like IHOP’s “express” unit, or more drive-thrus at fast-casual locations, as Panera has started to do.

Daypart expansion, like a breakfast test for Taco Bell and new lunch sandwiches for Caribou Coffee, also lets restaurants address more consumers’ needs, Mandeltort said.

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“Convenience is the key to this whole thing,” he said. “How do you do what you do best and leverage what customers want to make it pay off for you? It’s appealing to the consumer mindset of convenience, because that creates value for those folks.”

Healthfulness is one aspect of dining where people think much differently from how they act in restaurants, Mandeltort said.

“As a society, we talk thin but eat fat,” he said. “I’ll save you the trouble: Should you put healthy things on your menu? Yes. Put one healthful thing on there. That will tell your guests you care about them. But they will never order it.”

Consumers associate words like “fresh,” “real” and “seasonal” with healthfulness, he added, to the point where “you could have a sign that says, ‘Fresh lard,’ and people will think it’s better for them than fried food.”

Minding the generation gap for opportunities

Definitions of health and wellness are especially pronounced among different generations of diners, Mandeltort said. Older diners look for signals on the menu like “low-calorie” or “low-sodium” when seeking a healthful meal, while young diners are more concerned with the provenance of their food and watch for words like “organic,” “local” or “sustainable.”

Older diners are far more likely to count calories, avoid dessert or cut carbohydrates to eat healthfully than younger guests, although the younger cohort is much more likely to eat gluten-free foods, Mandeltort said.

Recognizing age-based differences in dining preferences is important for operators because population growth is most pronounced among older demographic groups, while younger Americans are the heavier users of restaurants — 41 percent of people between ages 18 and 34 dine out two to three times per week.

Also, diners who are 45 or older not only eat differently than younger consumers, but also differently than older diners from previous generations, Mandeltort said.

“Now, for younger generations, dining out is how you eat,” he said. “Which bodes well for restaurants. You should be able to tell me who your core customer is. That’s the first thing to help you understand what you have to do to bring in core guests and more people.”

That also will help restaurants determine the right investments in technology for marketing, he added, as Millennials and Generation X far outpace baby boomers in their use of social media, text messaging and online video.

Another key point of difference between generations is their preferences for restaurants that are “relatively quiet,” Mandeltort noted. While 68 percent all consumers surveyed by Technomic said they prefer restaurants to be “relatively quiet” compared with the 32 percent who liked them to be “lively with conversations from other diners in the background,” the preference for serenity jumped to 80 percent of baby boomers, compared with 56 percent of Millennials.

Mandeltort concluded that restaurants likely would sustain the modest growth projected for 2012 by focusing on insights rather than trends, and addressing everything in the value equation from convenience and food quality to service and atmosphere.

“Grab and run with what works for you,” he said. “You don’t have to do all these things at the same time. But adaptation is key, and you have to change. Don’t be afraid to innovate.”

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

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