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How casual dining can capture Hispanic market share

How casual dining can capture Hispanic market share

Two studies shed light on opportunities to tap into the growing consumer group

The Hispanic consumer market is growing, and casual-dining restaurants have opportunities to capture a larger share of that spending, according to two studies released last month.

Hispanic customers tend to spend more than non-Hispanics at both quick-service and casual-dining restaurants, according to Burke Inc. research sponsored by Univision Communications Inc. Their parties tend to be larger as well.

Ninety percent of so-called “Upscale Latinos,” in households earning between $50,000 and $100,000, reported visiting casual-dining restaurants in the past 12 months, compared with 82 percent of “Non-Hispanic Upscales,” according to Nielsen surveys conducted for AHAA: The Voice of Hispanic Marketing, a McLean, Va.-based trade group.

Peter Filiaci, vice president of strategy and insights at Univision Communications Inc., told Nation’s Restaurant News that casual dining has been slower to embrace the Hispanic consumer than quick service.

“In terms of QSR vs. casual dining, it’s kind of a ‘Tale of Two Cities’ in terms of frequency,” Filiaci said. “On the QSR side, Hispanics are more frequent visitors and Spanish-dominate is the most frequent in all of QSR. But on the casual-dining front, Hispanic tend to go less frequently than non-Hispanics.”

Filiaci said his theory is that quick-service chains have been advertising in Spanish and targeting Hispanic customers for many years, creating greater awareness in that segment.

The Hispanic market has grown along with the demographic increases in the general population. The Pew Research Center reported earlier this year, based on U.S. Census Bureau data, that the Hispanic population grew to 53 million in 2012, a 50-percent increase since 2000, and nearly six times the population in 1970. The overall U.S. population increased by only 12 percent from 2000 to 2012.

“The Spanish-dominate consumer has a much higher average check in both the QSR and casual-dining spaces,” said Filiaci. “Once they get in, they are spending at higher levels than non-Hispanics are.”

In the Burke research, Univision found that in casual dining, non-Hispanics have a $13.70 average check, compared with Hispanics, $13.75; bilingual (those comfortable in both Spanish and English), $14.02; and Spanish-speaking dominant, $14.21.

An NPD/CREST study on quick-service conducted for Univision two years ago noted similar trends, finding that the non-Hispanic average check was $8.18, compared with Hispanics, $9.08; bilingual, $8.71; and Spanish dominant, $9.88.

“We see in CREST and the Burke studies that Hispanics have a higher number of items per order,” Filiaci said. “In both QSR and casual dining, nearly every occasion includes food and beverage. About 90 percent of visits included food and beverage; on the non-Hispanic side, it’s more like three-quarters. Beverages in particular, which drive a lot of profitability, are more likely to be order by Hispanics.”

Filiaci said the recent survey also found Hispanics were more likely to order alcoholic beverages than non-Hispanics.

The AHAA study noted that its “Upscale Latino” cohort was influenced by “new” and “in-style” restaurants, which often include alcoholic beverages.

Filiaci said full-service restaurants haven’t traditionally reached out to Hispanics in their language and culture, with several brands like Olive Garden, Denny’s and IHOP being exceptions.

“Last year, there were a couple of new players,” he said. “Red Lobster and Outback started advertising in Spanish. But many of the bar and grill chains have not advertised in Spanish.”

Operationally, casual dining takes several tactics to cater to the Hispanic customers, Filiaci added.

Univision’s research found Hispanic party size is larger than for non-Hispanics: 4.2 people per party, versus 3.3 for non-Hispanics, he noted.

“Let the Hispanic consumers know you are able to accommodate those large parties,” Filiaci said. “They can celebrate there with family and friends for social occasions.”

Desserts are very important, which might drive the higher check as well, he said.

In addition, Hispanic customers tend to be younger and savvy users of technology.

“Our Burke research found they like to engage with restaurants in digital because of the high rate of smartphone adoption among Hispanic consumers,” Filiaci said.

That extends to using mobile coupons, checking a restaurant’s menu via smartphone and downloading a restaurant app, he said.

In addition, the Univision research found daypart traffic distribution differences.

“We saw this in QSR,” Filiaci said. “Hispanics tend to over-index in the morning meal, so breakfast is big.”

The afternoon snacking and late-night dayparts had strength as well.

“Consumers said that it was important to them for a restaurant to be open very early and very late,” he said.

Contact Ron Ruggless at [email protected].
Follow him on Twitter: @RonRuggless

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