Driven by incremental improvement in macroeconomic drivers, a brighter consumer outlook, aggressive operator menu innovation and LTO experimentation, quick-service (including fast casual) and snack and beverage restaurant sales are on track for moderate growth. But among consumers, price sensitivity is still top of mind: 68% of limited-service restaurant (LSR) users say low price would influence their decision to go to a fast food restaurant and 24% citing it as “most important.” Operators, also constrained by highly competitive grocery aisle pricing, will have limited pricing power even while they will continue to face guest traffic challenges into 2014. In an environment in which stealing share remains the key to growth, menu innovation and keeping up with broader consumer trends remains essential.

This study analyses the industry and consumer trends shaping this highly competitive environment, focusing on the quick-service, fast casual, and snack and beverage restaurant segments.

Key content includes:

• Studying the degree to which 26 different factors influence consumers’ decisions to go to a “fast food restaurant”” and which are the most important factors in that decision, with accompanying demographic analysis and industry responses/examples.
• Limited-service restaurant menu trending, focusing on menu item penetration by restaurant segment, including depth of menu items, limited-timed offers, mini-size menu items, top proteins, preparation methods, and beverages.
• Guest traffic analysis for quick-service restaurants and snack and beverage restaurants, with daypart and chain vs. independent share, including 2008-2013 QSR guest traffic trending for the segment’s key consumer groups, and a strong focus on HH income trending by restaurant brand, including leading LSR beef/burger, chicken, pizza, and fast casual chains.
• How technology trends are shaping the limited-service restaurant industry, with a focus on increasingly mobile consumers and emerging mobile payment technologies.
• Health and wellness trending, including calorie count trends and impact; healthy menu claim trends; clean food trends; kids’ menu health; and healthful restaurant concepts to watch. We also present analysis of two consumer groups with divergent views regarding the importance of nutritional value, regular exercise, healthy diet and weight management. We gauge their restaurant, health and diet preferences, and the relationship to their restaurant brand choices.
• Studying the impact of macro-economic drivers on limited-service restaurant industry growth, including an economic forecast through 2014, with supporting macroeconomic analysis; the effect of HH income and employment trends on limited-service restaurants; and the effect of consumer and commodity price trends on limited-service restaurants; with price trends and forecasts.
• A market size and forecast through 2015 for full-service restaurants, limited-service restaurants, cafeteria/buffets and snack/beverage establishments; same-store sales analysis of major brands by limited-service segment; and consumer restaurant spend trending, by segment.

The report also provides analysis of leading restaurant brands operating in four limited-service restaurant segments: snack and beverage, quick service, fast casual and cafeteria/buffet. For each brand, we assess competitive differentiation; growth strategy; menu development and trending; consumer food lifestyle consumer segmentation analysis; guest traffic trending, by demographic; and sales performance and outlook.

Brands analyzed, by segment, include:

• Baskin-Robbins, Dunkin’ Donuts, Jamba Juice, Starbucks
• Burger King, Chick-fil-A, KFC, McDonald’s, Pizza Hut, Sonic, Wendy’s
• Chipotle Mexican Grill and Qdoba
• Old Country Buffet

Table Of Contents

Chapter 1: Executive Summary
Report Scope
Share of stomach: limited-service restaurant sales analysis
Limited-service restaurant macroeconomic analysis
Limited-service restaurant industry guest traffic trends
Limited-service restaurant menu trends
Limited-service restaurant health and wellness trends
Limited-service restaurant technology trends
Factors influencing the decision to go to a fast food restaurant
Leading snack and beverage restaurant chains
Leading quick-service restaurant chains
Leading fast casual restaurant chains
Leading limited-service cafeteria/buffet restaurant chains

Chapter 2: Share of Stomach Restaurant Sales Analysis
Summary analysis
Market size and forecast

Graph 2-1: Restaurant Sales, 2007-2015

Graph 2-2: Restaurant Performance Index, 2007-2015


Restaurant Performance Index trending positive


Graph 2-3: Restaurant Performance Index, 2007-2013



Same-store sales and guest traffic trends


Graph 2-4: Restaurant Industry Same-Store Sales and Customer Traffic Trends, 2007-2013



Guest traffic trends


The National Restaurant Association’s take

NPD Group’s CREST point of view
Table 2-1: Restaurant Industry Guest Traffic Share and Guest Traffic Growth, by Restaurant Segment,2011-2013


Unit growth

Same-store sales trends, by brand and restaurant segment

Reading the graphs



Snack and beverage restaurant performance and outlook


Graph 2-5: Snack and Beverage Restaurant Annual Same-Store Sales Index: 2007-2012, 2007-2009 and 2010-2012



QSR performance and outlook


Beef/burger

Graph 2-6: Quick-Service Burger Restaurant Annual Same-Store Sales Index: 2007-2012, 2007-2009 and 2010-2012
Chicken and Mexican
Graph 2-7: Quick-Service Chicken and Mexican Restaurant Annual Same-Store Sales Index: 2007-2012,
2007-2009 and 2010-2012
Pizza
Graph 2-8: Quick-Service Pizza Restaurant Annual Same-Store Sales Index: 2007-2012, 2007-2009 and
2010-2012


Fast casual performance and outlook


Graph 2-9: Fast Casual Restaurant Annual Same-Store Sales Index: 2007-2012, 2007-2009 and 2010-2012




Consumer limited-service restaurant spending trends

Food at home versus food away from home

Food at home spending accelerates

Table 2-2: HH Income and Expenditures, Food, Food at Home, Food Away from Home: 2007-2011 Growth
Table 2-3: HH Income and Expenditures, Food, Food at Home, Food Away from Home: 2007-2011 Share


Consumer restaurant spending trends


Limited-service share of spend increases

Table 2-4: Consumer Expenditures on Limited-Service and Full-Service Meals and Drinks: 2007-2011 Growth
Table 2-5: Consumer Expenditures on Limited-Service and Full-Service Meals and Drinks: 2007-2011 Share


Limited-service restaurant spending trends


Table 2-6: Consumer Expenditures on Limited-Service Meals, Non-Alcoholic Drinks and Alcoholic Drinks: 2007-2011 Growth

Table 2-7: Consumer Expenditures on Limited-Service Meals, Non-Alcoholic Drinks and Alcoholic Drinks: 2007-2011 Share


Limited-service restaurant spending trends, by HH Income


“Trading down” of consumer household incomes influences LSR spend

Graph 2-10: Household Number/Share and Household Limited-Service Restaurant Spend/Share,by HH Income: 2007 v. 2011
Table 2-8: Number of Households and Household Limited-Service Restaurant Spending,by HH Income: 2007 v. 2011


Limited-service restaurant spending trends: day part analysis


Table 2-10: Consumer Expenditures on Limited-Service Meals and Non-Alcoholic Drinks,by Daypart: 2007-2011 Growth

Table 2-11: Consumer Expenditures on Limited-Service Meals and Non-Alcoholic Drinks,by Daypart: 2007-2011 Share


Breakfast spend trending by HH income


Graph 2-11: Household Number/Share and Household Limited-Service Restaurant Breakfast Spend/Share,by HH Income: 2007 v. 2011

Table 2-12: Number of Households and Household Limited-Service Restaurant Breakfast Spending,by HH Income: 2007 v. 2011
Lunch spend trending by HH income
Graph 2-12: Household Number/Share and Household Limited-Service Restaurant Lunch Spend/Share,by HH Income: 2007 v. 2011
Table 2-13: Number of Households and Household Limited-Service Restaurant Lunch Spending,by HH Income: 2007 v. 2011


Dinner spend trending by HH income


Graph 2-13: Household Number/Share and Household Limited-Service Restaurant Dinner Spend/Share,by HH Income: 2007 v. 2011

Table 2-14: Number of Households and Household Limited-Service Restaurant Dinner Spending,by HH Income: 2007 v. 2011


Snack spend trending by HH income


Graph 2-14: Household Number/Share and Household Limited-Service Restaurant Snack Spend/Share,by HH Income: 2007 v. 2011

Table 2-15: Number of Households and Household Limited-Service Restaurant Snack Spending,by HH Income: 2007 v. 2011



Chapter 3: Limited-Service Restaurant Macroeconomic Analysis
Summary analysis
The Big Picture: Moderate economic growth
Continued gradual rates of improvement expected

Graph 3-1: Unemployment, GDP and Inflation Forecast, 2013-2015



Supported by consumer confidence and employment gains


Graph 3-2: Monthly Unemployment Rate and Consumer Confidence, 2007-2013



Supported by wealth and debt trends

Household wealth continues to rebound

Wealth bedrocks follow two different paths

Stock market doubles in value
Home prices remain depressed but gains noted
Graph 3-3: Wealth Effect: Wilshire 5000 and Case-Shiller Index: 2007-2013
And households see almost 40% gain in real estate value
Graph 3-4: Wealth Effect: Household Net Worth and Mortgage Equity: 2007-2013


Improving consumer debt picture: total consumer debt down by 12%


Graph 3-5: Consumer Debt Balance and Its Composition: Q2 2006- Q2 2013

Skyrocketing student loan debt; lower credit card and mortgage debt
Table 3-1: Consumer Debt Balance, by Type: Amounts, Share and Year Year-Over-Year Comparisons:Q2 2007- Q2 2013


How to play continuing economic improvement


Addressing Millenials challenges



Influence of HH income trends on limited-service restaurants

Economic recovery bypasses lower-income restaurant consumer
$150K+ income household growth explodes
Middle class shrinks and low-income group rises

Table 3-2: 2009 vs. 2013 HH Income Segment Comparison, by Number of Households and

Percentage Change


Additional context


Graph 3-6: HH Income Trends, by Income Segment: Number of Households and Percentage Share:July 2006 - July 2013




Influence of employment trends on limited-service restaurants

Rise in the unemployment rate results in lower restaurant engagement
Too many part-time jobs, not enough full-time jobs

Reliance on restaurant extreme affordability

Graph 3-7: Full-Time, Part-Time and Total Employment: January 2007 - July 2013
Table 3-3: Full-Time, Part-Time and Total Employment: Number, Share and Year Year-Over-Year Comparisons: July 2007- July 2013


Demographic trouble spots persist


Trouble areas and restaurant industry ramifications

Table 3-4: National Employment Rate, by Demographic, w/ Year Year-Over-Year Comparisons: July 2007- July 2013



Food price outlook


Ask McDonald’s: Food at home index keeps menu pricing in check

Graph 3-8: Food at Home vs. Food away from Home Price Trends, 2007-2013
Food at home prices grow at meager rate
Graph 3-9: Food at Home and Alcoholic Beverages at Home, 2007-2013
Limited-service restaurant price increases track overall inflation rate
Graph 3-10: Food and Alcoholic Beverages Away from Home, Full-Service and Limited-Service Meals/Snacks Price Trends, 2007-2013


Wholesale food and beverage price trends


Where we’ve been

Table 3-5: Producer Price Index, by Food and Beverage Type, w/ Year-Over-Year Comparisons: 2007-2013
Where we’re going
Table 3-6: Livestock, Dairy, and Poultry Price Outlook: 2012-2014



Chapter 4: Limited-Service Restaurant Industry Guest Traffic Trends
Summary analysis
Guest traffic volume and share analysis

Quick-service restaurant guest traffic volume
Daypart and chain/independent status

Graph 4-1: Quick-Service Restaurant Guest Traffic Share, by Daypart and Chain/Independent Status: 2013



Key demographics


Table 4-1: Quick-Service Restaurant Guest Traffic Volume Comparisons, by Demographic: 2013



Guest traffic volume: daypart and chain/independent status, by demographic


Table 4-2: Quick-Service Restaurant Guest Traffic Volume Comparisons by Daypart and Chain Status,by Demographic: 2013



Key demographic guest visit drivers: detailed analysis


Guest traffic frequency in decline

Table 4-3: Limited-Service Restaurant Monthly and High-Frequency Use by LSR Segment: 2008-2013


18-24s: more economically pressed, but visits are up


Table 4-4: 2013 Monthly and High-Frequency Use by LSR Segment among 18-24s, w/ 2008-2013 Usage Share Change



Blacks: visits are up, but trading up a looming issue?


Table 4-5: 2013 Monthly and High-Frequency Use by LSR Segment among Blacks, w/ 2008-201 Usage Share Change



After post-recession growth, Hispanic traffic trends suggest trouble afoot


Table 4-6: 2013 Monthly and High-Frequency Use by LSR Segment among Hispanics, w/ 2008-2013

Usage Share Change
Table 4-7: 2013 Monthly and High-Frequency Use by LSR Segment among andlt;$50K HH Income Consumers,w/ 2008-2013 Usage Share Change
Table 4-8: 2013 Monthly and High-Frequency Use by LSR Segment among andlt;$50K HH Income Consumersw/Kids, w/ 2008-2013 Usage Share Change


Brand analysis: usage share by HH income


LSR beef/burger chains a mixed bag

Table 4-9: 2013 Limited-Service Beef/Burger Chain Usage Share by HH Income and Percentage Usage,by Restaurant Brand
Chick-fil-A draws a different consumer than other LSR chicken chains?
Table 4-10: 2013 Limited-Service Beef/Burger Chain Usage Share by HH Income and Percentage Usage,by Restaurant Brand
Lower- and middle-income consumers important to pizza chains
Table 4-11: 2013 Limited-Service Pizza Chain Usage Share by HH Income and Percentage Usage,by Restaurant Brand
Fast causal chains continue to be buoyed by higher-income patrons
Table 4-12: 2013 Fast Casual Chain Usage Share by HH Income and Percentage Usage, by Restaurant Brand


Snack and beverage guest traffic volume


Daypart and chain/independent status

Graph 4-2: Snack and Beverage Guest Traffic Share, by Daypart and Chain/Independent Status: 2013



Chapter 5: Limited-Service Restaurant Menu Trends
Summary analysis

Menu depth and variety: Reaching the breaking point?

Menu expansion at full throttle
Challenge—and Catch-22
Change in the wind
Table 5-1: Top QSR Burger Restaurants: Number of Items on the Menu, by Restaurant Brand: 2008-2012


LTOs provide opportunity for indulgent menu offerings


Regulatory exclusion a driver?

Graph 5-1: Quick-Service Restaurant Limited-Time Offer Menu Items: 2008-2012 Growth Trends


Going “mini” is still big


Table 5-2: Mini on the QSR Menu: 2010 versus 2012



Healthier proteins used in burgers


Table 5-3: Quick-Service Restaurant Burger Protein Penetration: 2010 versus 2012



Chicken sandwiches most popular, but pork is gaining traction


Table 5-4: Quick-Service Restaurant Sandwich Protein Penetration: 2010 versus 2012



Preparation methods suggest transition to premium space


Table 5-5: Quick-Service Restaurant Preparation Method Penetration: 2010 versus 2012



Growth in BFY beverages


Table 5-6: Quick-Service Restaurant Nonalcoholic Beverage Penetration: 2010 versus 2012




Chapter 6: Limited-Service Restaurant Health and Wellness Trends
Summary analysis
Health and wellness trends impact restaurant menus
Fast food is called out as contributing to the girth of Americans

Will posting calorie counts influence what consumers order?



Healthy menu claims


The growth of gluten free

Table 6-1: Quick-Service Restaurant Healthy Menu Claims: 2010 versus 2012


Clean food movement

Health on the kids’ menu
Concepts to watch: Health-focus

Energy Kitchen

Fresh Griller
Muscle Maker Grill
sweetgreen
Sushi Freak
Veggie Grill



Food Fit Consumers versus Non-Food Fit Consumers

Food Fit consumers
Not Food Fit consumers

Table 6-2: Food Fit and Not Food Fit Consumer Groups: Demographic Analysis



Food Fit members watch what they eat


Table 6-3: Food Fit and Not Food Fit Consumer Groups: Fast Food, Calories, and Nutrition Attitudes




Food Fit members over index in fast casual restaurant usage


Table 6-4: Food Fit and Not Food Fit Consumer Groups: Indexed Usage of Snack and Beverage, QSR,Fast Casual, and Limited-Service Family Restaurants


Snack and beverage brands align with health or indulgence


Table 6-5: Food Fit and Not Food Fit Consumer Groups: Indexed Usage of Baskin Robbins, Dunkin’ Donuts,Jamba Juice and Starbucks, by Frequency of Use



Wendy’s and Chick-fil-A meet the health-indulgent nexus


Table 6-6: Food Fit and Not Food Fit Consumer Groups: Indexed Usage of Burger King, Chick-fil-A, KFC,McDonald’s, Pizza Hut, Sonic and Wendy’s, by Frequency of Use



Panera and Chipotle find favor among Food Fit consumers


Table 6-7: Food Fit and Not Food Fit Consumer Groups: Indexed Usage of Chipotle Mexican Grill,Panera Bread and Qdoba, by Frequency of Use




Chapter 7: Limited-Service Restaurant Technology Trends
Summary analysis
Tech-savvy consumers demand the same from restaurants
Self-service kiosks are viable technology

Jamba Juice

Sheetz


Tablet opportunities—the next big thing


Stacked

McAlister’s Deli


Mobile scans are useful in reaching the tech consumer


Taco Bell

The Melt


Mobile apps allow for mobile payments and more


Dunkin’ Donuts

Starbucks
Pilot Flying J Travel Centers
Pizza Hut



Connecting to restaurant users via social media

Facebook use by snack and beverage restaurant brand

Jamba Juice

Starbucks
Table 7-1: Facebook Use in Last 30 Days and 16+ Times per Month, by Snack and Beverage Restaurant Brand


Facebook use by quick-service restaurant brand


Panda Express

Wingstop
Donatos Pizza
Table 7-2: Facebook Use in Last 30 Days and 16+ Times per Month, by Quick-Service Restaurant Brand


Facebook use by fast casual restaurant brand


Einstein Bros. Bagels

Chipotle
Table 7-3: Facebook Use in Last 30 Days and 16+ Times per Month, by Fast Casual Restaurant Brand


Mobile Segmentation Groups

Mobile segmentation by snack and beverage restaurant brand

Table 7-4: Mobile Segmentation Groups: Use of Snack and Beverage Restaurants, by Brand



Mobile segmentation by quick-service restaurant brand


Table 7-5: Mobile Segmentation Groups: Use of Quick-Service Restaurants, by Brand


Mobile segmentation by fast casual restaurant brand


Table 7-6: Mobile Segmentation Groups: Use of Fast Casual Restaurants, by Brand


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