Wednesday, August 19, 2020

Within the Grocerant Niche Two-Tiered Pricing is a Stumbling Block

Grocerant niche customers don’t like two-tiered pricing according to Steven Johnson, Grocerant Guru® at Tacoma, WA based Foodservice Solutions®. While consumers embrace food when they Dine-In, or opt for Take-Out, while using Online Ordering / mobile ordering or even a App, even when electing Delivery, Curbside Pick-up, or something in between.   
Economic upheaval continues to linger with employment instability in the U.S to Germany, India, Greece, to South Africa. In developed countries the unstoppable stock market is creating uncertainty and disillusionment as restaurant same store sales lag well behind last year’s numbers in most cases.  Fast Food restaurants are still aspirational for many consumers around the globe.
Recently Foodservice Solutions® grocerant scorecards found consumers are confused with the price of a many food items.  When asked about the price of a single entrée 73.1% of consumers responded the entrée was priced High.  When asked about a bundled meal deal 46.9% of consumers said the price was high.
However; let’s not get confused about two-tiered pricing.  What is Two-Tiered Pricing within the food space in the minds-eye of the consumer.
Two-Tiered Pricing A: When the price a food outlet sells an entrée for within the store is different that when they order it online or for takeout. Not a good thing.
Two-Tiered Pricing B: When the menu or grocerant niche Ready-2-Eat and Heat-N-Eat meal components offered by the retailer not within the set range.  Here is an example a Dollar Menu with 10 items and the rest of the menu 20 items that sell for $ 4+. Not a good thing.
Johnson notes that over the years Foodservice Solutions® grocerant scorecards have indicated that brands do the best that have one set pricing focus. Consumers are looking at brands that have “the same or stable pricing with all entrees or bunded meal deals to be within a “new middle” for that brands menu options and messaging.
While two tier pricing was once required by global brands.  Today branded food retailers need to garner new customer’s they have learned that it is best not to focus on the either end of spectrum to sustain growth to sustain growth.  It is more important for the brand messaging and menu or meal component pricing to consistent with each other.
While the 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 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. “
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 Reay-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?  Everyone needs to think about global food growth leader Aldi says daily “Poor People Must Save, Rich People Like To”. What your brands price messaging?
For international corporate presentations, regional chain presentations, local educational forums, or keynotes contact: Steven Johnson Grocerant Guru® at Tacoma, WA based Foodservice Solutions.  His extensive experience as a multi-unit restaurant operator, consultant, brand / product positioning expert and public speaking will leave success clues for all. For more information visit, FoodserviceSolutions.US or call 1-253-759-7869

Battle for Share of Stomach

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