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Study: Diners cautious regardless of financial situation

Consumers surveyed by The NPD Group have different reasons for dining out less

Regardless of whether consumers identify themselves as financially comfortable or strained, many of them continue to cut back on visits to restaurants and to seek deals and discounts whenever they dine out, according to a new report from The NPD Group.

The Port Washington, N.Y.-based research firm found that while the majority of lost restaurant traffic comes from consumers who identify as economically struggling, even customers who are more financially secure have their reasons for dining out less.

“It is presumed financially stressed consumers have kept the industry from realizing growth, but that’s not the case,” said Bonnie Riggs, The NPD Group’s restaurant industry analyst and author of the new report. “For this reason, it’s important that foodservice marketers understand the behavior of both groups in order to align both short- and long-term marketing strategies appropriately against the correct target.”

According to the study, “The Growing Divide: Restaurant Behaviors of the Financially Comfortable and Financially Strained,” 56 percent of survey respondents identified as financially strained and 44 percent classified themselves as comfortable. NPD polled 5,251 adult consumers for the report.

Even customers with higher incomes can identify themselves as financially strained, which could complicate how restaurants try to market to their core customers, the report found. For example, 30 percent of people who consider themselves financially strained have incomes of more than $150,000 per year. Only 19 percent of people earning that much per year call themselves financially comfortable.

Self-described “haves” and “have-nots” list different reasons for cutting back their spending in restaurants, the report found. Financially strained consumers cited price and affordability of restaurant meals as the top reasons for visiting restaurants less, while financially secure guests said health concerns were the leading reason.

Similarly, the two groups each reported an increased use of deals when dining out, but in different forms, the report found. Coupons, for example, appealed to both financially strained and secure customers, but the former group cited coupons and discounts more frequently as an enticement for return visits. Financially comfortable diners were more likely to use frequent-diner cards or loyalty programs, the study found.

Chains of all sorts have made big investments in loyalty programs not only to drive sales but also to collect as much customer data as possible.

Panera Bread recently disclosed that between 40 percent and 45 percent of all transactions at its 1,500 bakery-cafés are linked to its MyPanera loyalty program. [/article/panera-loyalty-program-approaches-10m-members] In just one year of existence, MyPanera has signed up nearly 10 million members. Red Robin’s Red Royalty program features freebies for registering loyalty cards and customers’ birthdays, in addition to a free entree with the purchase of nine entrees. And Papa John’s Pizza has made its last two Super Bowl promotions a tie-in to its Papa Rewards online loyalty program.

The study also found that younger consumers, who were more likely to classify themselves as financially struggling, were especially interested in value menus and “dollar menus” at quick-service restaurants.

The brand that coined the term, McDonald’s, continues to advertise its Dollar Menu and Breakfast Dollar Menu, but recently made changes aimed at making the popular menus more profitable. McDonald’s recently removed a small drink and small order of French fries from the Dollar Menu, replacing them with cookies and small ice cream cones. The chain also added another value tier, the Extra Value Menu, as a way to regroup items that are already priced between $1 and the chain’s combo meals, up to a 20-piece order of Chicken McNuggets for $4.99.

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

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