The “$5 phenomenon” gripping quick service restaurants
Restaurants may be moving beyond big steaks and even bigger spenders. As financial woes grip the US and consumers tighten their purse strings Mintel Menu Insights reports that more restaurants are promoting “value” on the menu.
Through Mintel’s newly enhanced Menu Insights* database, director and registered dietitian Maria Caranfa sees more restaurants from fast food to fine dining promoting quality menu items for lower prices. She thinks it’s a wise move:
“Foodservice has been hit hard by people cutting back. When we surveyed Americans last January, over half said they were trying to reduce restaurant spending because of the economy. Many people’s finances have worsened since then, so it’s smart for restaurants to advertise lower prices,” Ms Caranfa said. “The key to making these lower prices work, however, is maintaining food quality and making sure every customer’s experience is optimal. Restaurants need to make cheap chic.”
Ms Caranfa highlights the “$5 phenomenon” taking place in quick service restaurants. For example:
* Subway Footlong subs for $5
* Quizno’s Large Deli Favorites for $5
* Pizza Hut’s Pizza Mia Pizzas for $5 each (when you order three or more)
* Boston Market meals for $5
“Many quick-service restaurants are permanently lowering regular menu prices to draw in customers,” Ms Caranfa commented. “They’re giving people more for their dining dollar, offering good quality food at a reasonable price. For restaurants, the $5 deal is a happy medium between satisfying the customer and staying competitive within the industry.”
Earlier in the year there was a “$1 phenomenon” in the US fast-food sector, with McDonald’s introducing a small menu of items at this figure and Wendy’s and Burger King selling double cheeseburgers for the same amount. The logic behind such moves, which stretch margins to the limit and can often be ‘loss leaders’, is that they draw customers into the store at a time when sales are under pressure and competitors are struggling. Not only can it help retain current customers and lure new ones – a positive for when more prosperous times return – but it may also lead to sales of other goods that provide a greater margin.
Family and fine dining restaurants are also finding innovative ways to help diners stretch a dollar:
* T.G.I. Friday’s “Right Portion, Right Price” smaller servings of regular entrees, value-priced between $5.99 and $9.99
* Ruth’s Chris Steak House’s “Economy Proof” meal soup or salad, entrée and side dish from a limited menu of items for $35.95
“Dining out is a choice, not an obligation,” Ms Caranfa stated. “By offering people the prices they can afford with the food quality and experience they crave, restaurants can stay vibrant and current in today’s economy.”