Restaurant Delivery Two Tier Pricing Continues to Evolve

Economic upheaval continues to linger with employment instability from Germany too Spain, too the United States, Africa, and Australia. In developed countries the whipsaw stock market is creating uncertainty and disillusionment.  Fast Food restaurants are still aspirational for many consumers around the globe and delivery is fast becoming the option of choice for many and a tool for increased pricing velocity according to Steven Johnson, Grocerant Guru® at Tacoma, WA based Foodservice Solutions®.

All the while the underlining global goal for most countries is growth and employment stability.  In Brazil, China, Africa the goals are the same a stable or growing economy too powered lower-level economic groups to the “new middle.” 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. In most cases delivery of fresh fast food simply cost more than picking the food up at the location in person.

Chain restaurants specifically branded fast food restaurants are leveraging and expanding Two Tier Pricing to first garner trial and secondly build brand loyalty.  They offer entry level branded products like McDonalds dollar menu that allow existing customers trial and existing customers trade up either with LTO’s or specials on branded menu items.

The Euromonitor put it this way.  “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 …

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 flavors 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.

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 integral to the success of any new fast food concept….

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 pricing strategy? What is your growth rate? Do you know the current Value, Price, Service Equilibrium that will drive top line growth and bottom-line profits?  

Invite Foodservice Solutions® to complete a Grocerant Scorecard or a Grocerant Program Assessment.  Since 1991 Foodservice Solutions® of Tacoma, WA has been the global leader in the Grocerant niche.  Visit us on LinkedIn, Twitter, or Facebook.  Steve@FoodserviceSolutions.us