Grocery Stores and Restaurants Continue Battling for Share of Stomach

 

In the continuing battle for share of stomach the consumer continues to migrate with the food price, value, service equilibrium according to Steven Johnson Grocerant Guru® at Tacoma, WA based Foodservice Solutions®.

The formula for the price, value, service equilibrium continues to evolve success was: Price + Quality + Service + Portability = Value.  That formula has evolved with Gen Z and Millennials today.  Foodservice Solutions® Grocerant Guru® has once again retooled, reevaluated, calculated then evolved the formula and here is the new formula:  Price + Quality + Social + Portability = Value.

Currently, price is top of mind for most consumers. That said Consumer Price Index for February indicated a narrowing of the gap between grocery and restaurant prices, the Bureau of Labor Statistics reported last week.

So, the index for food at home, mostly groceries, rose 10.2% over the last 12 months, and the index for food away from home, mostly restaurants, rose 8.4% over the past year. The index for full-service meals rose 8% over the last 12 months, and the index for limited-service meals rose 7.2% over the same period.

Mark Kalinowski of Kalinowski Equity Research, stated, “With grocery prices continuing to rise at a faster rate than restaurant prices, and with commodity-cost inflation remaining a huge challenge – coupled with what has been so far fairly manageable consumer resistance to menu price increases,” …“we expect that U.S. restaurants will continue to raise menu prices at a meaningfully higher-than-historical-average rate during the first half of 2023, if not for longer.”

Here is the good news for restaurants.  The Consumer Price Index data showed the gap between groceries and restaurants narrowed in February from January, when food at home rose 11.3% and food-away from home was up 8.2% in the past year.

Kalinowski added, “The 1.8 percentage-point difference between food-at-home’s 10.2% and food-away-from-home’s 8.4% nevertheless remains one of the widest gaps in 40-plus years... “However, on a monthly basis, it is 370 basis points less than the 5.5 percentage-point gap witnessed for July 2022 and August 2022. We expect the gap to continue to narrow over the next six to 12 months, meaning that the current advantage for restaurants is likely to dissipate in the not-so-distant future.”

Ron Ruggles of NRN reported, “Noah Hayes, general manager for the U.S. and Canada at Deliverect, a global software-as-a-service company for online food-delivery management, said in a statement:

“Inflation is dominating the conversation in every industry and according to the Bureau of Labor Statistics, consumer prices rose 6% for the year ending in February,” Hayes said. “With the food index increasing 0.4% over the month and 9.5% year over year, consumers have felt the impact.”

Consumers “undoubtedly” are increasing their consciousness of spending, he said, adding that restaurants can automate tasks and optimize menu pricing.

“While finding ways to boost profits and reduce costs will be imperative for the bottom line, restaurants should continue offering competitive wages to recruit and retain staff,” Hayes said. “A happy team and operationally savvy kitchen is the winning recipe when it comes to offering a high standard of service to customers.”

Consumers are time starved, looking for meal solutions.  They are looking for grocerant niche Ready-2-Eat and Heat-N-Eat fresh prepared meals according to the team at Foodservice Solutions®.

Invite Foodservice Solutions® to complete a Grocerant ScoreCard, or for product positioning or placement assistance, or call our Grocerant Guru®.  Since 1991 Foodservice Solutions® of Tacoma, WA has been the global leader in the Grocerant niche. Contact: Steve@FoodserviceSolutions.us or 253-759-7869

In a Battle For Share of Stomach

You Can WIN!

At Brinker International Focused Food Marketing Drives Virtual Restaurants Sales

Success does leave clues.  At Brinker they have collected curated brand marketing clues and it’s those clues that are driving the success of It’s Just Wings Brinker’s new virtual brand restaurants that is collocated within existing units according to Steven Johnson, Grocerant Guru® at Tacoma, WA based Foodservice Solutions®.  

Brinker has long understood driving top line sales and bottom-line profits required clear, focused, branded messaging that was continually evolving consumer touchpoints with relevance.

Back in the day when chain restaurant takeout sales were averaging 2.5% to 3.25% of sales it was Brinker that was the first casual dining restaurant to invest $30,000 per store to add takeout windows all based on data insights from within the chain and CyberMeals online ordering research of which our Grocerant Guru® played a big role. Today, the    

Brinker International, Inc’s CEO Wyman Roberts stated, “Sales at Brinker's It's Just Wings virtual brand are "highly incremental,".  So, get this, the concept is delivery-only. The sales at It’s Just Wings are posting $3 million in average weekly sales since debuting the last week of June, according to Wyman.

Brinker expects It’s Just Wings, the virtual delivery brand introduced by the Chili’s Grill & Bar parent in the last week of June, can grow into a $150-million-a-year business in its first year, according to Wyman. Let’s look back again, they were first to develop takeout windows for pick-up and carryout. 

Brinker has for years had some of the very best food marketing professionals on staff driving the growth of the brand, units, top line sales and bottom-line profits according to Johnson. Virtual brands driving by a consistent brand message with relevance consumer touchpoints will drive multiple concept types and food delivery formants according to Johnson.

Brinker knows this space well.  Here are some clues that will help you know some of what Brinker knows:

1.       60% of U.S. consumers order delivery or takeout once a week.

2.       31% say they use these third-party delivery services at least twice a week.

3.       34% of consumers spend at least $50 per order when ordering food online.

4.       20% of consumers say they spend more on off-premise orders compared to a regular dine-in experience.

5.       Digital ordering and delivery have grown 300% faster than dine-in traffic since 2014.

6.       70% of consumers say they’d rather order directly from a restaurant, preferring that their money goes straight to the restaurant and not a third party.

7.       57% of millennials say that they have restaurant food delivered so they can watch movies and TV shows at home.

8.       59% of restaurant orders from millennials are takeout or delivery.

9.       33% of consumers say they would be willing to pay a higher fee for faster delivery service.

10.   87% of Americans who use third-party food delivery services agree that it makes their lives easier.

11.   45% of consumers say that offering mobile ordering or loyalty programs would encourage them to use online ordering services more often.

12.   63% of consumers agree that it is more convenient to get delivery than dining out with a family.

13.   Americans who have not used a third-party restaurant delivery service say fast delivery (31%), restaurant selection (28%), low order minimums (27%) and first-use coupons (26%) would motivate them to try it.

14.   60% of restaurant operators say that offering delivery has generated incremental sales.

15.   Orders placed via smartphone and mobile apps will become a $38 billion industry by 2020.

16.   Pizza chains reported an 18% increase in customer spend from online/mobile orders vs. phone orders.

17.   Working with a third party delivery service has been found to raise restaurant sales volume by 10 to 20%.

18.   Delivery sales could rise an annual average of more than 20% to $365 billion worldwide by 2030, from $35 billion.

19.   43% of restaurant professionals said they believe third-party apps—many of which withhold data—interfere with the direct relationship between a restaurant/bar/pub and its customers.

20.   Customers who place an online order with a restaurant will visit that restaurant 67% more frequently than those who don’t. 

21.   It’s estimated that mobile orders will make up close to 11% of all QSR sales by 2020.

22.   Visits to U.S. restaurants where guests paid by mobile app increased by 50% from 2017-18.

Do your food marketing tactics look more like yesterday that tomorrow?  Visit GrocerantGuru.com for more information or contact: Steve@FoodserviceSolutions.us Remember success does leave clues and we just may have the clue you need to propel your continued success.