Restaurant Value and Pricing - US - January 2021

OVERVIEW
What you need to know
Key issues covered in this Report
Definition
The COVID-19 pandemic: restaurant value and pricing context
EXECUTIVE SUMMARY 
Top takeaways
Target audience overview
Figure 1: Value consumer segmentation, November 2020
Figure 2: Total US sales and forecast of restaurants and eating places, by segment, at current prices, 2015-25
Impact of the COVID-19 crisis on restaurant value and pricing 
Figure 3: Short-, medium- and long-term impact of COVID-19 on restaurant value and pricing, January 2021
Opportunities and challenges  
FSRs must win back middle-income households 
Figure 4: Value behaviors, by household income, November 2020
Retail foodservice steals occasions from operators
Figure 5: Prepared food purchasing frequency year over year, September 2020
Deliver convenience first 
Figure 6: Value definition – NET any rank, by generation, November 2020
Focus price incentives on adding value, not shrinking margins 
Figure 7: Value attitudes, by household income, November 2020
Drive digital channel usage with digital-only deals
THE MARKET – KEY TAKEAWAYS 
Serious Value Seekers tend to be younger, middle-income and financially strained
Gap widens in US between the haves and have nots
Restaurant sales losses, rising food prices make low prices harder to compete on
VALUE DINERS BY THE NUMBERS  
Most Americans are Value Seekers 
Figure 8: Value consumer segmentation, November 2020
Figure 9: Value consumer segmentation, November 2020
Figure 10: Value consumer segmentation – Serious Value Seekers, November 2020
Divide grows between haves and have nots
This divide factors more into price needs than value ones
Figure 11: Share of aggregate income received by each fifth and top 5% of households, 1970-2019
Figure 12: Restaurant ordering methods – Any dined at a restaurant NET, by household income, July-September 2020
Impact of the COVID-19 crisis on restaurant value and pricing 
Figure 13: Short-, medium- and long-term impact of COVID-19 on restaurant value and pricing, January 2021
The COVID-19 pandemic: US context
MARKET FACTORS 
The 2020 recession will have worse outcome for restaurants than Great Recession 
Figure 14: US restaurant sales, at current prices, 2008-13
FSRs must make extra investments to compete with LSRs on value
Figure 15: Total US sales and forecast of restaurants and eating places, by segment, at current prices, 2015-25
Figure 16: Market share of total US sales and forecast of restaurants and eating places*, by segment, 2019-25
Unemployment rates remain high, especially among Black and Hispanic Americans
Figure 17: Hispanic, Black and overall US labor unemployment rates, January 2007-November 2020
High food costs force restaurants to consider raising prices 
Figure 18: Changes in Consumer Food Price Indexes, 2018-2021
Retail foodservice threat grows as value-friendly option with more people grocery shopping 
Figure 19: Prepared food purchasing frequency year over year, September 2020
MARKET OPPORTUNITIES 
Make convenience the top priority 
Home in on smart, budget-friendly deals during recession recovery
Flexible formats satisfy varied daypart needs 
Drive demand with LTOs
COMPANIES AND BRANDS – KEY TAKEAWAYS 
Drive digital usage with digital-only deals
Offer more budget-friendly options outside of core dayparts
Encourage repeat purchases with subscription services
COMPETITIVE STRATEGIES
Loyalty programs make mainstream debut
Figure 20: Value behaviors – CHAID – Tree output, November 2020
Family meal deals proliferate 
Figure 21: Chick-fil-A email “Introducing easy meal ordering to feed your family,” April 3, 2020
Subscription programs drive repeat purchases
Off-peak dayparts boost incremental revenue
THE CONSUMER – KEY TAKEAWAYS  
Taste and quality are cornerstones of restaurant value
Appeal to women with budgeting and men with convenience
Two adult entrées for a discounted price tops value option interest
VALUE CONSUMER SEGMENTATION 
The vast majority of Americans prioritize value when dining out 
Figure 22: Value consumer segmentation, November 2020
Gen Zs are the least likely of any generation to care about value 
Figure 23: Value consumer segmentation, by generation, November 2020
VALUE DEFINITION 
Taste/quality is more important than price to good restaurant value 
Figure 24: Value definition – NET – Any rank, November 2020
Value Rejecters are most likely to prioritize easy ordering options
Figure 25: Value definition – NET – Any rank, by value consumer segmentation, November 2020
Women equate fresh preparations with a good value
Figure 26: Value definition – NET – Any rank, by gender, November 2020
Young consumers prioritize speed and convenience for value equation 
Figure 27: Value definition – NET – Any rank, by generation, November 2020
Higher-earning Americans associate good value most with taste, quality
Figure 28: Value definition – NET – Any rank, by household income, November 2020
VALUE PERCEPTION BY FOODSERVICE SEGMENT 
Casual dining restaurants have strongest value perception 
Figure 29: Value perception by foodservice segment, November 2020
Millennials have highest value perception of foodservice overall 
Figure 30: Value perception by foodservice segment – NET – Any good, by generation, November 2020
White consumers are least likely to consider c-stores a good value
Figure 31: Value perception by foodservice segment – NET – Any good, by race and Hispanic origin, November 2020
Dads have best value perception of fast food and c-store prepared foods 
Figure 32: Value perception by foodservice segment – NET – Any good, by parental status and gender, November 2020
VALUE BEHAVIORS 
Recession further slows down foodservice recovery 
Figure 33: Value behaviors, November 2020
Figure 34: Value behaviors – CHAID – Tree output, November 2020
Men more likely to want premium ingredients, will pay for them
Figure 35: Value behaviors, by gender, November 2020
Millennials are the most engaged with restaurant loyalty programs
Figure 36: Value behaviors, by generation, November 2020
Lower-income consumers not dining out less due to recession, despite financial constraints
Figure 37: Value behaviors, by household income, November 2020
VALUE OPTION INTEREST BY RESTAURANT SEGMENT 
Discounted entrées at full-service restaurants have widespread appeal
Figure 38: Value option interest by restaurant segment, November 2020
Figure 39: Value option interest by restaurant segment – NET – Any restaurant segment, November 2020
Young consumers want off-peak daypart value options
Figure 40: Value option interest by restaurant segment – NET – Any restaurant segment, by generation, November 2020
Dads are by far the most interested in restaurant subscription programs 
Figure 41: Value option interest by restaurant segment – NET – Any restaurant segment, by parental status and gender, November 2020
VALUE ATTITUDES
Consumers aren’t very interested in a new tipping structure at restaurants
Figure 42: Value attitudes, November 2020
Young consumers rely on social media for restaurant deals
Figure 43: Value attitudes, by generation, November 2020
FSRs must work extra hard to appeal to lower-income consumers with budget-friendly options 
Figure 44: Value attitudes, by household income, November 2020
APPENDIX – DATA SOURCES AND ABBREVIATIONS
Data sources
Consumer survey data
Direct marketing creative
Abbreviations and terms
Abbreviations
Terms
APPENDIX – THE MARKET
Figure 45: Total US sales and forecast of limited-service eating places*, at inflation-adjusted prices, 2015-25
Figure 46: Total US sales and forecast of full-service restaurants, at inflation-adjusted prices, 2015-25
APPENDIX – THE CONSUMER
CHAID Methodology
Figure 47: Dine-in intentions, by household income, September 2020
Figure 48: Value perception by foodservice segment – NET – Any good, by value consumer segmentation, November 2020
Figure 49: Value option interest by restaurant segment – NET – Any restaurant segment, by value consumer segmentation, November 2020
Figure 50: Value attitudes, by value consumer segmentation, November 2020