Battle for Foodservice Market Share Expected to 'Get Ugly'

NATIONAL REPORT -- Foodservice operators should be cautious when planning for the future, as 29 percent of Americans say they intend to spend less on dining out over the next year, according to a new consumer study by global business advisory firm AlixPartners.

This figure is the highest of 14 categories the study covers, including travel, entertainment and leisure activities.

Diners also expect to spend 9.1 percent less per restaurant compared to what they spent last year, which marks a significant jump from AlixPartners' 2013 study, when diners predicted they would spend 5 percent less during the year ahead.

"This could well be the year that the market-share battles in lunch, but also elsewhere, really get ugly," stated Molly Harnishfeger, a director in the AlixPartners Restaurant & Foodservice Practice. "And the competition won't be coming just from other restaurants, but from convenience and grocery stores as well."

Consumer preference is much more divided across segments, as Americans are more willing to adopt new channels and be more flexible in their eating patterns, Harnishfeger told CSNews Online.

Participants in this year's study indicated they would likely eat out slightly more often at c-stores and grocery stores. At the same time, they intend to dine less at other channels, such as fast food and casual dining.

"This could point to a real opportunity for grocery and convenience stores, especially as they adapt more restaurant-style marketing tactics, as they are already doing. They likely could present an increased threat to traditional restaurants," Harnishfeger added.

Currently, consumers prefer to visit grocery and c-stores for breakfast 13 percent of the time; for lunch, 6 percent of the time; for dinner, 4 percent of the time; for late-night food, 24 percent of the time; and for snacks, a staggering 49 percent of the time.

Other c-store specific findings of the study include:

• Convenience stores are the second preferred "restaurant" type for snacks, behind fast food.
   
• Consumers most frequently buy meals at c-stores when they are there to buy something else; 73 percent report they buy a meal because it is convenient compared to the 27 percent who specifically visit to do so.
   
• Thirty-five percent of coffee drinkers prefer fast-casual restaurants that place an emphasis on coffee, but c-stores are catching up, going from 17 percent during the third quarter of 2013 to 21 percent during the first quarter of 2014.
   
• Frequency of meal purchases at c-stores declined slightly during Q1 2014 compared to one year ago.
   
• Key trends at c-stores include an enhanced focus on fresh and prepared food platforms, manned food station bars, Wi-Fi with comfortable seating, and a theatrical approach to displaying products.

Regarding what consumers order, this latest study found that 84 percent of consumers listed healthy menu options as at least somewhat important to them when choosing where to dine out, but only 20 percent said such options are very or extremely important.

Fifty-two percent stated that nutritional information printed on menus does not impact their ordering decisions, and only 16 percent said they would be willing to pay a premium for certified organic food at restaurants.

"It is somewhat paradoxical that operators are focused on rolling out healthful offerings that consumers say they want, but in many cases don't seem willing to order or pay a premium price for," said Eric Dzwonczyk, managing director at AlixPartners and co-lead of the firm's Restaurant & Foodservice Practice.

The AlixPartners North America Restaurant and Foodservice Review was conducted in January and comprised a survey of 1,046 adults in the United States, aged 18 or older. The survey focused on consumers' current and planned frequency of dining occasions across the restaurant, convenience store and ready-to-eat categories; expected spending on meals outside the home; preferred types of restaurants; and key criteria for restaurant selection. It also asked participants for their opinions on selective topics including health and wellness, marketing tactics, and innovation in restaurant and foodservice offerings.