By Vince Sgabellone
I recently attended an information session hosted by the Japan Livestock Products Export Promotion Council (J-LEC). Its mandate is the promotion of Japanese livestock products around the world. On the day I attended, the focus was Wagyu, which literally translates as Japanese beef. Many chefs and consumers consider this to be the ultimate variety of beef, characterized by intense marbling with a unique flavour and aroma. Wagyu isn’t just a breed of cattle; it involves an entire system by which the cattle are bred and raised, certified, and even named. This was my first opportunity to taste this premium product offering and I wasn’t disappointed.
This event got me thinking how marketers can promote premium products during economic uncertainty. Three-quarters of consumers reported in our latest Omnibus study (September 2023) that they plan to reduce their overall spending, while 71 per cent of them intend to cut back on restaurant spending. This is the highest of any spending category, and the highest we have recorded since we began tracking in early 2022. Backing up this assertion, our CREST restaurant industry tracker reports that visits for the year ending August 2023 were up eight per cent compared to the same period a year ago, but the growth rate has slowed steadily in recent quarters. Additionally, the average eater check has increased just two per cent to four per cent depending on the occasion, well below the rate of menu inflation. Consumers are clearly cutting back on their restaurant spending, even if they aren’t necessarily cutting back on visits.
Amid all this austerity, fine-dining restaurant traffic has grown more than 20 per cent for the year ending August 2023, the fastest of any restaurant channel. Representing less than one per cent of total visits, this channel is clearly not a high-traffic generator. With the highest average eater check, it captures four per cent of all restaurant spending. To put this into perspective, this is a bit less than the total amount Canadians spent last year in all QSR sandwich shops combined.
It should come as no surprise fine dining skews to the highest-income group, representing more than 50 per cent of all consumers. If we flip this data point around, we begin to understand the behaviours of this affluent consumer. Most importantly, CREST reports QSR restaurants account for two-thirds of their visits, showing even fine-dining customers enjoy the pleasures of fast food. This creates a tremendous opportunity for all operators and manufacturers to appeal to the foodservice consumers with the most ability to spend.
Growing visits 10 per cent in the past year, this cohort advanced faster than all others. Their flavour preferences lean towards global cuisines such as Asian, Italian and Mexican. Interestingly, their share of QSR pizza, QSR burger and QSR sandwich visits are aligned with every other income cohort. Their morning meal visits are over-indexed along with drive-thru, while afternoon and late-night snacks are under-indexed. Lunch and supper shares are on par with others. This is entirely consistent with the older age cohort most prevalent in this income bracket.
Most of the samples offered during the J-LEC event came from the shoulder cuts. These lower-priced cuts are not as sought-after as the loin cuts, which may make them the right premium product to promote for these times. These cuts could help a casual-dining restaurant elevate some menu items to fine-dining status, or a fine-dining establishment to provide high-quality menu offerings at a more accessible price.
Higher-income groups may have more ability to spend, but that doesn’t mean they are foolish with their money. This explains why the dealing rate across all income groups varies by just a few points around the 28 per cent average, and reinforces that dealing is about providing value for money, not discounts. That applies to every consumer, including those who would be most inclined to consume Wagyu in a fine-dining restaurant.
