Operators Battle for Lunch Dollars

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Restaurants have struggled with declining lunch numbers for years but there’s a light at the end of the tunnel. For the most part, total restaurant visits for lunch on a per-capita basis in Canada are now holding steady, with NPD CREST Canada showing consumers made 1.7 billion visits to restaurants for lunch during the year ending July 2015, accounting for 26 per cent of all visits.

The chart below presents a long-term view of lunch performance and shows the impact of the economic situation — high unemployment in particular. However, the times “they are a changing” and lunch traffic is improving, with gains up strongly during the most recent quarter (May, June, July ’15 versus May, June, July ’14). However, it will be a battle for restaurant operators to capture those visits as all industry segments attempt to capitalize on consumers’ renewed interest in visiting restaurants for lunch. Not only are traditional QSRs and FSRs competing with one another for lunch business, but also with retail, on-site and fast-casual. So what will it take to drive more traffic at lunch?

Bring on the Burgers
The burger, which has racked up nearly 375 million orders at foodservice outlets in Canada, meets a wide variety of restaurant customers’ needs. Burgers go from simple and classic to high-end gourmet and their perennial popularity, affordability and flexibility means they will become heavy artillery in the battle for lunch visits. Additionally, operators can still offer a beef menu item while offsetting higher beef costs.

In the U.S., burgers are also the catalyst for driving increased lunch visits, with even greater interest than in the past for ordering burgers from full-service restaurants, while at casual-dining restaurants, burgers have allowed operators to level the playing field on price. For example, the average price of a burger at casual-dining is $9.02 compared $5.62 at fast-casual. However, the gap closes when considering fries typically come with a burger order at casual-dining restaurants and need to be purchased separately at QSRs and fast-casual restaurants (at an average cost of $2.89, based on NPD’s Checkout Tracking research). At casual-dining restaurants, consumers also factor in the value of a full-service sit-down lunch.

In Canada, burgers represent the largest increase in lunch sales, with overall servings up three per cent for the year ending July 2015, compared to 2014. Furthermore, consumers were more interested in ordering burgers at nearly all foodservice venues; casual dining was the only concept where burger servings did not increase although they are holding steady. In contrast, burgers ordered at QSRs, which account for the vast majority of burger servings, grew by two per cent.

The casual-dining segment began marketing burgers more aggressively and became much more price-competitive considering the value received.

The burger military offensive did, in fact, help casual-dining restaurants in the U.S. gain ground at lunch in the year ending June 2015 — the segment’s first lunch-time traffic increase in five years. On the other hand, QSR lunch visits increased by only one per cent in the same period compared to a year ago. Clearly, FSRs in Canada, casual-dining in particular, can take a cue from this marketing initiative and capitalize on consumers’ growing interest in burgers, which should
go a long way in winning the lunch war battle.

Volume 48, Number 8

Written By: Robert Carter 

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