Growing foodservice sales of chicken in today’s challenging business environment requires paying attention to price and consumer resistance, said Bonnie Riggs of NPD Group, speaking at the 2017 Chicken Marketing Summit.
Why is the foodservice market situation making sales and profit growth so difficult?
- Foodservice traffic at 15 billion in Q1 was down 0.4 percent
- Spending as measured by guest check was $7.52 per eater, up only 1.6 percent
- Total dollars at $111 billion was up a meager 1.3 percent
“To drive growth, foodservice operators – with the help of their supplier partners – must reverse the decline in purchase frequency and increase frequency among both heavy and lighter buyers,” Riggs said.
How you can grow revenue: increase reach, drive purchase frequency and increase checks? It revolves, first, around, price, which is the No. 1 driver of restaurant traffic.
Consumers shifting dollars to at-home eating
“Food inflation is the “story of the year,” Riggs said, “and one of the biggest challenges facing the restaurant industry. There is a 5-point gap between away-from-home vs. at-home food inflation, and with that gap, the convenience of purchasing a meal from a restaurant flies out the window. All of sudden, cooking doesn’t seem to be such a big chore.”
Evaluation of menu pricing is warranted, and she offered three recommendations:
- Determine which foods drive your customers strongest value proposition
- Understand what parts of the menu require attention
- Know the price ranges at which your customers are most satisfied
Evaluate foodservice menus
“Now is the time to understand and evaluate your menu along with your supplier partners to determine how and where to take price, she said. “For example, look at your menu and determine which foods and beverages drive a strong value proposition.”
- High profitability and high popularity – no brainer, these should be promoted
- Low profitability and high popularity – create more profitable versions
- High profitability and low popularity - talk to your customers, what is not appealing
- Low profitability and low popularity – consider omitting some
Understand what parts of the foodservice menu need attention, she advised listeners.
For example, price satisfaction for a QSR burger lunch is in the $3 to $5 range. The reality is that these meals cost $5 to $10 or more, up 68 percent.
Similarly, price satisfaction for the casual dining dinner in the range of $10 to $15, while in reality prices are $15 to $20 or more, up 50 percent.
Who’s to blame for slow growth?
Chicken marketers should understand how dependent the restaurant industry is on these buyer groups based on their frequency of visits, Riggs said. Heavy buyers (three or more purchases a week) were most responsible for the industry’s recent traffic woes. What is an effective response? Target heavy and light users in menu pricing and make appeals other than price to all groups.
Foodservice establishments may also increase restaurant visits by offering price discounts and loyalty/rewards programs. What’s more, polite staff/service is also very important and can encourage more visits. While all groups are interested in rewards programs, they are most appealing to heavy buyers.
Chicken Marketing Summit 2018
Chicken Marketing Summit uniquely explores issues and trends in food marketing and consumer chicken consumption patterns and purchasing behavior. In addition to educational sessions, attendees have numerous networking opportunities to foster interaction between speakers and fellow poultry industry peers. Chicken Marketing Summit 2018 will take place at the Four Seasons Resort Orlando at Disney World in Orlando, Florida, July 22-24, 2018.
