Foodservice Lunch Trends in the U.S.

To help foodservice industry participants face challenges unique to the lunch daypart, Lunch Trends in the U.S. Foodservice Market provides insight on the lunch goer’s decision-making process. By putting a finger to the lunch goer’s pulse, we provide insight on two keys factors to lunch-time foodservice: how and why the consumer decided on a specific restaurant from which to obtain lunch, and how and why that consumer decides what to order from the menu.

Introductory findings include the following: When deciding on a restaurant from which to obtain lunch, 37% of lunch goers cite a favorite menu item as influencing their choice, and some 36% cite a different menu item than what they have at home. But low cost has become the industry mantra—and is also important to many consumers. About 35% cite a meal priced under $5 as an influence when selecting a restaurant, and 31% say that a meal priced under $10 has influenced them to select a restaurant for lunch.

With proprietary consumer research laying the foundation, this report weaves consultative insight with analysis of lunchtime limited-time offer and value trends; current lunchtime guest check averages; planned restaurant spending; and guest traffic patterns at selected brands. We also shine a light on leading lunch-centric brands, by outlining menu strategies and related innovations, and then tying them to demographic analysis of the brand users’ diet, health, and food attitudes; and usage patterns. The report also trends lunch daypart sales by demographics such as income, age, region, and race/ethnicity. Analysis also focuses on consumers particularly important to the lunch daypart, such as the full-time and part-time employed.

While the restaurant industry is the primary focus of the report, consumer survey assessment incorporates prepared foods at grocery stores and convenience stores, and trend analysis incorporates both restaurants and food retail.

Market Insights: A Selection From The Report

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Restaurant usage and usage frequency

As part of our proprietary June 2010 consumer survey, Packaged Facts measured restaurant usage and mean usage frequency by restaurant type.

As expected, mean use of “fast food/quick service restaurants” was substantially higher than any other restaurant type—about two and a half times higher than the runner-up causal restaurants—a testament to fast food’s strong value, low-cost, and convenience propositions.

Consumers report an aggregate 11.2 visits in the past month to the listed restaurant types: fast food/quick-service visits represent under half (45%) of all visits, followed by casual restaurants (18%), family restaurants (15%) and coffeehouses (14%).

Lunch day part accounts for about one-third of all usage

About 34% of diners participating in Packaged Facts’ February 2010 proprietary consumer survey said they got “lunch” the “last time” they got food and/or drink from a restaurant, while 56% got “dinner/evening meal” and only 8% got “breakfast.”

Extreme affordability weighs down fast food/QSR

As we discussed in The U.S. Foodservice Landscape: Industry and Consumer Trends, Momentum and Migration (Packaged Facts, May 2010), fast food/QSR operators are playing the “price = value” card for everything its worth. By pushing the envelope with $1 deals, they do risk enabling a pool of “extreme affordability” customers hooked on products that also suck the life out of guest check averages.

The industry risks significant damage to margins and sales in the process, especially in light of our theory that trade down to QSR from more expensive restaurant alternatives has slowed considerably as the economy has stabilized. Moreover, without a way to pull new traffic into its restaurants, brand growth now relies on share taking, so the industry essentially risks cannibalizing itself.

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Restaurant Lunch Spending to Rebound in 2011:
Strategies Targeting Cost and Health-Conscious Customers Sustain Industry in the Interim

New York, September 8, 2010 — U.S. consumer spending on lunch served in restaurants is forecast to rebound 2% in 2011 to reach $114 billion following two years of recession-related declines, according to Lunch Trends in the U.S. Foodservice Market by research publisher Packaged Facts. After rising to $119 billion in 2008, lunch daypart sales declined 4% in 2009, and sales are estimated to fall another 3% in 2010 to $112 billion.

“This has been a very tough climate for lunch foodservice and its counterparts, and that won’t change overnight although change is coming,” says Don Montuori, publisher of Packaged Facts. “Growth in the lunch daypart still faces a few near-term challenges including the impact of unemployment on work-driven restaurant routines, bargain-minded consumers who weigh the cost of a bagged lunch against the indulgence of eating out, and an industry environment in which players are chasing foot traffic at the expense of guest check through the extreme push of value meal deals.”

Ironically, by pushing the envelope with $1 deals, fast food operators are enabling a pool of “extreme affordability” customers hooked on products that have indeed undermined guest check averages yet have also helped sustain the industry. Respondents to Packaged Facts’ proprietary survey reveal that interest in lunchtime meals priced under $5 and under $10 is stable across household income brackets, suggesting price sensitivity among a large segment of diners regardless of their personal wages. Respondents aged 18-24 are 60% more likely than average to choose a restaurant because it offers meals for under $3.

The nigh ubiquitous limited time offer—with its allure to attract new visits and test longer-term menu strategies—and the addition of bundling components could allow restaurants to build up guest check sizes without sacrificing foot traffic, according to the report. Notable examples include Taco Bell’s $2 Meal Deal, which by offering three items for $2 is intended as a twist on the more common 1:1 ratio of items per dollar as featured in Jack in the Box’s “Pick 3 for $3” customizable LTO value meal. Additionally, strategies by the likes of Denny’s and Bob Evan’s to place everyday value for quality food at the forefront of their branding initiatives makes a great deal of sense in the family restaurant sector, where value for the money has always been a selling point.

Ingredients are almost as important as price for many consumers when dining out, and food operators confirm guests’ growing interest in better-for-you choices. Customers seek foods offering positive health benefits (such as fiber and whole grains) and menu items featuring more vegetables or fruit but less meat. Packaged Facts’ research suggests that students are more likely than average to be influenced by healthful lunch foodservice decisions, while both men and women are likely to choose a restaurant that offers smaller portion sizes to reduce cost and control calories.

Lunch Trends in the U.S. Foodservice Market provides insight and analysis on recession-driven changes in the restaurant industry, focusing on related consumer attitudes and behaviors shaping the industry today and positioning the industry tomorrow. The report assesses key industry and consumer trends as applied to restaurant segments and restaurant brands; analysis is generally framed in terms of current trend momentum and 12-month outlook. With proprietary consumer research laying the foundation, this report also weaves consultative insight with analysis of lunchtime limited-time offer and value trends; current lunchtime guest check averages; planned restaurant spending; and guest traffic patterns at selected brands.

About Packaged Facts - Packaged Facts, a division of MarketResearch.com, publishes market intelligence on a wide range of consumer market topics, including consumer goods and retailing, foods and beverages, demographics, pet products and services, and financial products. Packaged Facts also offers a full range of custom research services.

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