New U.K. Foodservice Consumer Report P r e p a r e d f o r : And Its Members April 2011
Session Objectives The UK Foodservice Consumer Economic Impact 2011 Foodservice Outlook Consumer Drivers Where Do We Go From Here? 2
Methodology Technomic utilized primary and secondary research for this study: Primary Research Online survey in U.K., January 2011 1,500 consumers 20 minute survey Representative for gender, age, region, ethnicity Proprietary And Secondary Research Mining of Technomic Research Databases Access Online UK Consumer Trend Database MenuMonitor - Global Menu Analysis Platform Digital Resource Library Chain Restaurant Profile Tool 3
The UK Foodservice Consumer: 4
Why Consumer Segmentation? Allows marketers to increase revenues and lower costs by: Identifying groups of similar customers and potential customers. Prioritizing the best group (or groups) to target. Understanding the attitudes and behaviours of the targeted group. Responding with appropriate marketing strategies that satisfy the needstates, values, preferences and lifestyles of the group. 5
Over half of consumers in the U.K. are Heavy or Moderate Foodservice Users Foodservice User Groups Light User 31% Lapsed User 10% Heavy User 34% Heavy User Characteristics: Male 18-34 Report moderate impact from recession Eat what they want and disregard health and cost Moderate User 24% Base: 1,500 Consumers Ages 18+ 6
Heavy Foodservice Users Foodservice Behaviour Visits restaurants once a week +. Lives with children. Is more likely to eat what they feel like without regard to health or cost. Recessionary Behaviour Visits restaurants as often as they used to, but spends less per visit. Is now avoiding extras, ordering combo meals, using coupons. Finds it more difficult than other user groups to have to cut back on restaurant meals. Is the most optimistic user group about the future. 7
Moderate Foodservice Users Foodservice Behaviour Visits restaurants once every 2-3 weeks. Often mixes new foods, flavours, and restaurants in with their old mainstays. Is more likely to eat at fast food once a month or so and visit pubs on occasion. Recessionary Behaviour Visits restaurants less often, spending the same per visit. Is now avoiding extras and splitting entrées to cut costs. Is now bringing meals from home to work more often. Is optimistic about the future. 8
Light Foodservice Users Foodservice Behaviour Visits restaurants once every 1-3 months. Typically return to restaurants to purchase items they have had before, but likes trying new flavours from time-to-time. Recessionary Behaviour Stopped visiting new restaurants, sticking familiar favourites. Cut back on non-essentials, putting more into savings. 9
Lapsed Foodservice Users Foodservice Behaviour Visits restaurants less often than once every 3 months. Most likely to live alone. Not on a diet, but eats healthy most of the time. Recessionary Behaviour Is buying only the necessities. Prefers familiar restaurants and menu items. Is the least likely to miss restaurant meals. 10
Attitudinal clusters help define the motivations for foodservice usage Attitudinal clusters On-the-Go Consumers (27%) Busy lives View restaurants as indispensible in their quest for balance Adventurous Consumers (25%) Experimental in their food choices Enjoy trying new restaurants and cuisines Health-Conscious Consumers (20%) Health eating defines food purchases View organic and sustainable as healthy Value-Driven Consumers (16%) Feel guilty if they eat out too much Use coupons, do not order extras 11
On-the-Go Consumers Foodservice Behaviour Time-strapped, multi-tasker, that often eats on the run and orders takeaway. Relies on foodservice to support busy lifestyle. Usage is especially high at fast food, fastcasual. Recessionary Behaviour Is most likely to have experienced some impact from the recession. Goes to restaurants less often, but spends the same per meal. Has stuck to familiar restaurants since the beginning of the recession. 12
Adventurous Consumers Foodservice Behaviour Enjoys going to new restaurants and trying new foods. High interest in ethnic foods and flavours. Willing to pay more for menu items featuring innovative flavours. Recessionary Behaviour The recession has had an impact on them, but slightly less so than others. Have changed their purchasing patterns at full-service restaurants, especially fine and casual-dining. A large majority are cooking at home more often in response. 13
Healthy Consumers Foodservice Behaviour Health and nutrition are a top priority. Believes restaurants can offer flavourful, healthy food. Likely to visit restaurants offering healthy options. Recessionary Behaviour Is the least likely consumer to have felt an impact from the recession. Most likely to have not changed behaviour regarding foodservice, though this is less true for fine-dining. Those that have been impacted, are going to restaurants less often and cooking at home instead. 14
Value-Driven Consumers Foodservice Behaviour Driven by coupons, specials, and combo meals. Skips extras in order to save (appetizers, desserts, sides, etc.). Most likely to save eating out for special occasions. Recessionary Behaviour The recession has had the biggest impact on them. Has cut back at pubs, casual and fine-dining, and fast food. Most likely to be eating less food in general and to have stopped going to restaurants all together. 15
Economic Impact 16
Very few consumers in the U.K. have been unscathed by the recession Recession Related Market Segments Moderately Impacted Characteristics: Female Younger and older Low to middle income Getting by but managing money more carefully Moderately Impacted 45% Minimally Impacted 13% Not Impacted 8% Strongly Impacted 30% Strongly Impacted Characteristics: Female Middle aged Lower income Lighter users of foodservice On a tight budget and struggling to make ends meet Base: 1,500 Consumers Ages 18+ 17
Consumers of all ages have been impacted by the recession, but to varying degrees To what extent has the current recession directly impacted you/your household? (by age) 18 to 24 24 to 34 35 to 44 44 to 54 55 and Older 22% 13% 28% 10% 30% 10% 32% 7% 18% 14% 65% 62% 59% 61% 69% Major Impact Some Impact No Impact Base:1,500 consumers aged 18+ 18
Low income consumers have been most severely hit by the recession To what extent has the current recession directly impacted you/your household? (by income) Under 10,000 7% 39% 53% 10,000 to 19,999 6% 29% 65% 20,000 to 29,999 20% 11% 68% 30,000 to 39,999 12% 22% 66% 40,000 to 49,999 16% 13% 70% 50,000 or More 14% 23% 63% Major Impact Some Impact No Impact Base:1,500 consumers aged 18+ 19
Foodservice usage and impact of the recession are strongly correlated Recession-Related Market Segments User Group % of total Strongly Impacted Moderately Impacted Minimally Impacted Not Impacted Heavy Users 34% 33% 35% 35% 40% Moderate Users 24 21 24 31 25 Light Users 31 34 31 27 29 Lapsed Users 10 12 10 7 7 Base:1,500 consumers aged 18+ 20
Increased debt is most commonly experienced In what ways has the recession impacted you/your household? Debt 30% Demographic Trends Investment Value 27% Lost Job Pay Cut - Ages 25 to 34 and 45 to 54 - Earning Under 30,000 - Ages 35 to 54 - Earning Over 30,000 Home Value 27% Home Value Declined - Ages 45 and Up - Earning over 30,000 Pay Cut 14% Investment Value Declined - Ages 55 and Up - Earning over 20,000 Lost Job 14% Increased Debt - Ages 54 and Younger - All Income Levels Base:1,500 consumers aged 18+ 21
Prolonged changes in foodservice usage behavior among U.K. consumers is imminent Thinking back over the past two years and your use of restaurants (including dine-in, takeaway, and delivery), has the recession impacted your visit behaviour to any of the following types of restaurants? 17% 22% 27% 31% 32% 37% 36% Fast-Casual Coffee Cafés Fast-Food Pubs Casual-Dining Fine-Dining None of the Above Base:1,500 consumers aged 18+ 22
Consumers purchase less expensive meals across all LSRs in order to save Fast Food Fast Casual More meal deals Making meals at home Fewer/no sides Fewer/no beverages Sharing meals No entrées; only sides Purchasing ready-made meals from retail Fewer/no alcoholic drinks Purchasing less expensive meals Using coupons more Fewer/no desserts Fewer/no espressobased drinks Making coffee at home Coffee Shops 23
Consumers cut back on extras across all FSRs in order to save Pubs Casual Dining Fewer/no sides Sharing entrées Fewer/no starters Buying low-priced specials Making more meals at home Purchasing less expensive meals Fewer/no alcoholic drinks Fewer/no desserts Purchasing meal deals Using coupons more Visiting casual dining or pubs instead Eating at less overall Fine Dining 24
Consumers are not optimistic about the future of the United Kingdom s economy Over the next year the U.K. s economy will improve 16% 31% 18% the E.U. s financial situation will improve 9% 38% 19% national unemployment will be less of a concern 8% 53% 13% Agree Disagree Uncertain Base:1,500 consumers aged 18+; Top 2 & Bottom 2 box rating on a scale from 1-6 where 6 = agree completely and 1=disagree completely 25
Consumers are equally as concerned about improvement of their personal finances Over the next year my personal finances will improve 17% 28% 12% our household will be able to spend more on dining out 13% 36% 11% Agree Disagree Uncertain Base:1,500 consumers aged 18+; Top 2 & Bottom 2 box rating on a scale from 1-6 where 6 = agree completely and 1=disagree completely 26
Consumers may cut back even more at restaurants Are you cutting back on your spending now in order to prepare for a decrease in finances in 2011? I have cut back already and cannot cut back anymore 41% Don't know 8% No 20% Yes 31% Base:1,500 consumers aged 18+ 27
Consumer Drivers 28
Cleanliness and service are the most important drivers of limited-service traffic Service and Atmosphere - LSR How strong of a role do each of the following attributes play in your decision to visit a limited-service restaurant? (% indicating very big role ) Average importance across limited service: 73% 56% 54% 48% 75% 71% 73% 54% 58% 57% 54% 55% 53% 44% 47% 53% Restaurant Cleanliness Friendliness of Service Speed of Service Atmosphere Suited to Mood Fast-Food Fast-Casual Coffee Café Base: 529 Base: 321 Base: 526 29
Low prices are more important at fast food and fast-casual than at coffee cafés Menu - LSR How strong of a role do each of the following attributes play in your decision to visit a limitedservice restaurant? (% indicating very big role ) Average importance across limited service: 60% 56% 49% 32% 58% 63% 59% 55% 56% 56% 54% 51% 41% 32% 31% NA Fresh ingredients High quality ingredients Inexpensive Food and Beverage Menu variety Fast-Food Fast-Casual Coffee Café Base: 529 Base: 321 Base: 526 30
Full-service consumers also expect cleanliness and quality service Service and Atmosphere - FSR How strong of a role do each of the following attributes play in your decision to visit a fullservice restaurant? (% indicating very big role ) Average importance across full service: 77% 67% 58% 54% 80% 74% 76% 76% 61% 65% 66% 50% 57% 54% 53% 56% Restaurant Cleanliness Friendliness of Service Atmosphere Suited to Mood Speed of Service Fine-Dining Casual-Dining Pub Base: 317 Base: 439 Base: 611 31
Full-service restaurant consumers expect fresh, high quality ingredients Menu - FSR How strong of a role do each of the following attributes play in your decision to visit a fullservice restaurant? (% indicating very big role ) Average importance across full service: 65% 65% 44% 44% 75% 78% 59% 60% 59% 58% 47% 54% 31% 54% 34% 32% High-Quality Ingredients Fresh Ingredients Inexpensive Food and Beverage Wide Variety Fine-Dining Casual-Dining Pub Base: 317 Base: 439 Base: 611 32
The menu mix adds differentiation and minimizes the veto vote How would you best describe your attitude toward trying new flavours? I actively seek out new flavours to try on a regular basis 13% I prefer sticking to my favorite flavours and rarely try new ones 17% I like trying new flavours of food from time to time 70% Base:1,500 consumers aged 18+ 33
Comfort fare and ethnically-inspired menus equally drive value depending on your customer s needs When you plan a dinner out, what cuisines are you most likely to look for? (respondents chose top 5) British Chinese Italian Indian 70% 64% 59% 53% American Thai Mexican French Meditteranean Spanish 25% 24% 19% 19% 15% 13% Base:1,500 consumers aged 18+ 34
Ethnic cuisines are clearly established, emerging or experimental Cuisine Greek Descriptor Order ocassionally American Caribbean Spanish German French Mexican Japanese/sushi Turkish Moroccan Haven't tried and do not like Mediterranean Thai Lebanese Have not tried but would Indonesian Vietnamese Latin Unfamiliar Korean African Cuban Ethiopian Order/eat often Perceptual mapping is way present the relationship between a set of items and their common attributes. This map displays the use and popularity of various ethnic foods. See methodology section for how to use this map. Indian Chinese Italian
Ethnic fusions drive value by providing can t make at home appeal I like foods that feature a fusion of flavours from more than one cuisine 18 24 18% 25 34 20% 35 44 24% 45 54 19% 55+ 12% Base:1,500 consumers aged 18+, Top 2 & Bottom 2 box rating on a scale from 1-6 where 6 = agree completely and 1=disagree completely 36
Authenticity will drive visits among adventurous and healthy consumers If I am ordering foods featuring ethnic flavours, I want the food to be authentic Adventurous 67% Healthy 58% Value-Driven 20% On-the-Go 17% Total Sample 46% Base:1,500 consumers aged 18+; Top 2 box rating on a scale from 1-6 where 6 = agree completely and 1=disagree completely 37
Flexible portions provide a strong point of difference and allow for greater customization You mentioned that you would like to see different portion sizes or options. What would you like to see restaurants offer? Flexible Portions 80% Smaller Portions 14% Bigger Portions 20% Will Not Influence Visit 6% Base: 218 Consumers aged 18+ 38
Consumers seek out better-for-you positioning and integrate healthy behaviours How often do you do the following at restaurants as a way to eat more healthfully? Skip Dessert Skip Appetizer 37% 43% Integrate Healthy Item(s) into Meal 30% Cut Back on Beverages 23% Choose Items from Healthy Menu Section Choose Items Described as Healthy Share Entrée Order Smaller Portion Size 16% 15% 15% 11% Base: 1,500 Consumers Ages 18+ 39
Where Do We Go From Here? 40
Increased disposable income in 2011 most likely to go into savings or to pay down bills Are there any things in particular you plan to spend your money on should you have more disposable income in 2011? Put more in savings Paying bills Long distance travel Restaurants New home/home repair Shopping New car/car repair Short distance travel Grocery stores Local activities Technology Don t know 24% 21% 20% 18% 18% 16% 16% 16% 15% 32% 31% 30% Base:1,500 consumers aged 18+ 41
Emerging and Affluent Consumers will lead us out of the recession Emerging consumers Younger Experimental and value driven Prefer affordable new flavours and menu items. Behave creatively to save money Seek variety and authenticity at restaurant Enjoy a wide selections of adult beverages Affluent consumers Older Make over 50,000 per year Prefer new and unique flavours Experimental in their foodservice usage Motivated to act by high quality Expect friendly and timely service Source: Institute for Fiscal Studies. (2011) Where do you fit in? http://www.ifs.org.u.k./wheredoyoufitin/ 42
Three in four are open to trying new foods but most still want an element of the familiar Which statement best describes the menu items you are choosing when eating out? Equally Likely to Choose New or Traditional 50% Stopped Eating New Foods 3% Will Stick to Traditional Foods 23% Enjoy Trying New Foods 24% Base: 1,500 Consumers Ages 18+ 43
Consumers anticipate healthier options and growth in ethnic fare Trends on the horizon: Healthier options with an emphasis on grilled, local food and smaller portions Growth in ethnic fare, particularly Asian and Mexican cuisines
Full-view preparation, customization and value will continue to influence behaviour Trends on the horizon: An open-kitchen format, where consumers can see their food being prepared and customize their options. More value, with consumers expecting to see more promotions, deals and lower prices.
Questions? Darren Tristano Executive Vice President David Henkes Vice President dtristano@technomic.com (001) 312.506.3850 dtristano@technomic.com dhenkes@technomic.com (001) 312.506.3927 dtristano@technomic.com 46