Thursday, February 18, 2016

QSR’s Utilizing Two Tier Pricing Find Success

In the United States as of November 2015 the total number of people receiving food assistance via food stamps (SNAP) was at 45.450 Million.  That number was up 85,541 over the prior year.  It is no wonder 79% of total US restaurant sales take place within the QSR sector.

Clearly economic upheaval continues to linger, creating employment instability, and cultural uncertainty.  The whipsaw stock market is creating incremental uncertainty and disillusionment for those that are doing well.  Is it any wonder restaurants have to leverage a two tier price structure to entice retail customers?
Until the economy fully recovers and employment participation rate climes off the bottom of the chart that now reports only a 62.7% participation rate.  Today retailers will have to be mindful that the new “middle is much lower than any time in history” according to our Grocerant Guru®.
Two tier pricing is required by global brands today as they need to garner new customers at each end of the spectrum to sustain growth and profitability.  In the United States chain restaurants specifically branded fast food restaurants are leveraging and expanding Two Tier Pricing too first garner trial and secondly build brand loyalty.  They offer entry level branded products like McDonalds LTO Any 2 for $2.00 dollar menu that allow existing customers trial and existing customers can trade up with other ‘app’ LTO’s other specials on branded menu items. 
 “Fast food is changing, and not just in the category's dominant US market. Amidst fierce competition, fast food brands have been forced to differentiate themselves with broader menus, better food and higher-end outlet designs. In developed markets this has led to the popularity of the fast casual segment, but in emerging markets (most of which show a strong preference for full-service dining) it has helped fast food gain traction as a modern, lower-cost alternative to more traditional foodservice formats according to an article in EuroMonitor.
The monitor went on “The branding opportunities inherent in the fast food business model have also allowed these chains to appeal to developing market consumers' taste for exciting new dining experiences. South Africa-based chicken fast food brand Nando's, for example, has relied on strong branding, exciting flavours and a unique dining experience to set it apart from other chicken fast food chains, a fact that helped it achieve 19% value growth. Similarly, UK bakery products fast food brands EAT and Pret a Manger have both found success with a positioning of convenient, high-quality food, a modern atmosphere and quick service.” 
Foodservice Solutions® team believes that “Mix and match meal component bundling with a focus on both product and price positioning is key to drive growth in a volatile marketplace. Focusing on fresh, high-end ingredients, especially, has helped the brands compete with more traditional fast food concepts, and this kind of above-and-beyond competitive positioning will continue to be integral to the success of any new fast food concept”
Our Grocerant Guru® found that “The universal commonalities in Ready-2-Eat and Heat-N-Eat fresh prepared food are fueling retail success around the globe.”  Do you have a product positioning and pricing strategy? What is your growth rate?  It may be time to think about Outside Eyes from the Grocerant Guru®. 
Invite Foodservice Solutions® to complete a Grocerant Scorecard or a Grocerant Program Assessment.  Since 1991  of Tacoma, WA has been the global leader in the Grocerant niche visit Johnson, or Contact:

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