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Breakfast Trends in the U.S. Foodservice Market

August 1, 2010


The recession is reshaping how consumers interact with the restaurant industry, and the
breakfast daypart is no exception: value pricing remains at the forefront of menu
strategies, as growing guest checks often takes a backseat to generating guest traffic.
However, unlike the lunch and dinner dayparts, breakfast benefits from long-term
untapped guest traffic potential, and it can generate healthy margins, factors that are
drawing major new players into the market.

Packaged Facts‟ Breakfast Trends in the U.S. Foodservice Market estimates that
breakfast daypart restaurant sales reached $37.2 billion in 2009, and forecasts that they
will reach $37.0 billion in 2010 and $37.7 billion in 2011. While these figures may
appear tepid at first glance, when viewed against the backdrop of lower overall
restaurant sales, the breakfast daypart has fared relatively well, taking share from lunch
and dinner. In the final analysis, we believe that near-term challenges will give way to
long-term opportunity.

Breakfast Trends in the U.S. Foodservice Market provides unique insights into
consumers‟ evolving relationship with the breakfast daypart, helping restaurant
operators position their brands—and menus—for consumers today and tomorrow.

Highlights of the study include:

        Directional consumer behavioral and attitude analysis via Packaged Facts‟
        proprietary Consumer Restaurant Outlook Tracker, which assesses restaurant
        breakfast users current and planned restaurant-related behavior;
        Proprietary analysis of average meal spend by restaurant type and by daypart,
        with a focus on the breakfast daypart, to help target consumers who can bring in
        higher guest check averages;
        “Share of Stomach” sales analysis that trends limited-service and full-service
        sales by daypart, and provides in-depth spending patterns for the breakfast
        daypart by region, income, and race/ethnicity (analysis includes comparisons to
        food-at-home spending);
        Meal “pricing threshold” analysis: $3, $5, and $10 consumer-imposed breakfast
        spend limits;
Restaurant and menu selection analysis, driven by our proprietary consumer
      survey results;
      A custom “demographic drilldown” on frequent coffee drinkers;
      Industry-leading restaurant brand analyses of top restaurant breakfast players,
      including 2010-2011 breakfast strategy and demographic analysis according to
      “core customers,” low- and high-frequency guest traffic, and “food lifestyle”
      segmentation;
      Thorough, investment-grade macroeconomic analysis that helps industry
      participants understand current consumer restaurant spending behavior.

Themes and topics covered in the report also include:

      Breakfast daypart market size and forecast, including limited-service and full-
      service restaurant segments;
      Value, convenience, menu item, and health innovations, strategies and trends
      Restaurant usage by daypart, according to restaurant segment (coffeehouse, fast
      food restaurant, smoothie shop, family restaurant, casual restaurant, fine dining,
      convenience store, and grocery store)
      Breakfast value menus and meal bundles
      The importance of who accompanies the breakfast restaurant user to dine in and
      pick up a meal
      Importance of health-related factors to the purchase decision, including food
      advertised as all-natural and healthy and calorie/nutrition information.

Data Methodology

Our methodology rests on a balance of data-centric expertise and holistic
understanding, maximizing accuracy and depth of analysis. Report data is derived from
thorough analysis of a host of sources, including the following:

      Proprietary company interviews
      Proprietary consumer surveys
      The Experian Simmons National Consumer Study
      The U.S. Census Bureau
      The Bureau of Labor Statistics Consumer Expenditure Survey
      The U.S. Department of Agriculture
      The U.S. Securities and Exchange Commission
      The Bureau of Labor Statistics Retail Trade Survey
      Company presentations
      Trade associations and trade magazines
      Academic journals
      Industry conferences
      Restaurant menus
Additional Information

Market Insights: A Selection From The Report



Share of Stomach: Sales Analysis

Packaged Facts estimates that breakfast daypart restaurant sales reached $37.2 billion
in 2009, and forecasts that they will reach $37.0 billion in 2010 and $37.7 billion in 2011.
While these figures may appear tepid at first glance, when viewed against the backdrop
of lower overall restaurant sales, the breakfast daypart has fared relatively well, taking
share from the lunch and (especially) dinner dayparts.
Growth in the breakfast daypart faces near-term challenges:

   1. higher unemployment means fewer people hooked into restaurant breakfast via
      work-driven routine, as well as reduced paychecks to support a desire to have
      breakfast outside of the home;
   2. a more cost-conscious consumer who may more practically weigh the cost of an
      inexpensive breakfast at home against the lifestyle benefits of eating it outside
      the home (convenience, menu item interest, and indulgence to name a few); and
   3. an industry environment in which players are chasing foot traffic at the expense
      of guest check. But with only 34% of restaurant goers eating restaurant breakfast
      in the past month (according to our proprietary survey) and an even smaller
      percentage of the general population, the industry can woo the more than 150
      million adult consumers who do not use restaurant breakfast.

U.S. Bureau of Labor Statistics Consumer Expenditures Survey data suggests that the
bulk of food expenditure spending growth during 2005-08 has come from spending on
food at home, with food-away-from home expenditures as a percentage of food
expenditures actually dropping 2.5 share points.

However, share of breakfast and brunch expenditures rose from 9.5% of restaurant-
related expenditures per “consumer unit” in 2005 to 10.2% in 2008, with dollars spent
on breakfast and brunch per “consumer unit” up 11.2% during the three-year period.

Frequent Coffee Drinkers: Custom Usage, Attitudes and Behavior Drilldrown

       Frequent coffee uptake is closely associated with age, as it often becomes a “rite
       of passage,” used by many adults as they wind through their careers to stay on
       task. Usage often becomes habitual, and, as people age, it continues to be used
       while other (less healthy or more calorie-laden) beverages go by the wayside.
       Coffee and breakfast go together—at least from the perspective of frequent
       coffee drinkers. Whereas 49% of adult respondents to Packaged Facts‟ June
2010 proprietary survey agree with the statement “breakfast is the most
       important meal of the day,” 55% of frequent coffee drinkers think so.
       This supports current restaurant operator strategies to enhance their coffee
       platforms and leverage coffee/food bundles. Coffee drinkers, fixated to varying
       degrees on getting their coffee to start the day, can be led into the restaurant,
       where they can then be sold an entrée, breakfast sandwich or side to go with it.
       Some 65% of respondents who have gotten breakfast from a restaurant in the
       past month have gotten it from a fast food restaurant, but among those who are
       frequent coffee drinkers, usage stays about the same.
       Drinking a lot of coffee also correlates with higher average breakfast meal spend:
       $6.87 versus $6.51, or 5.6% higher.



In The News



   Value Pricing Breakfast Menus Helps Steady Daytime Restaurant Spending,
                         Bodes Well for Future Growth

New York, August 3, 2010 — The most important meal of the day continues to face
short-term challenges related to the recession, but market research publisher Packaged
Facts‟ Breakfast Trends in the U.S. Foodservice Market predicts consumer spending
on breakfast at restaurants will rebound from an anticipated downturn in 2010 to
approach $38 billion in 2011, as current value menu pricing strategies influence future
spending habits.

“Fast food and QSR (quick-service restaurant) operators are playing the „price equals
value‟ card for everything it‟s worth. By pushing the envelope with $1 deals, they risk
enabling a pool of „extreme affordability‟ customers. But the upshot for breakfast is that
it remains a relatively untapped daypart, so that traffic gained today may translate into
additional revenue tomorrow,” says Don Montuori, publisher of Packaged Facts. “We
believe that decisions by the likes of Denny‟s and Bob Evans to place everyday value
for quality food at the forefront of their branding initiatives make a great deal of sense.
Value pricing meets the reality of today‟s and tomorrow‟s lower-to-middle and middle-
income consumers who frequent family restaurants. For breakfast, they are spinning
full-service value menus and value in portion size.”

Packaged Facts expects McDonald‟s foray into $1 breakfast menus to create pressure
among other fast food/QSR players to match its lead—an industry-wide trend previously
glimpsed with the proliferation of non-breakfast $1 value menus. Burger King, Wendy‟s
and Subway have already made major breakfast moves. The bottom line is that low
cost resonates with restaurant breakfast users, with 31% of respondents to Packaged
Facts‟ proprietary survey claiming they have been influenced by a maximum $3 price
when selecting a restaurant for breakfast, versus 16% who placed a limit at $10.
Convenience influences consumer breakfast decisions, with convenience to work or
errands, routine, and the need to get somewhere else quickly factoring in. Also relevant
are breakfast menu features, such as getting a favorite menu item, wide variety, and
healthy menu items. And, because more than half of U.S. adults drink coffee,
restaurants have created value bundles that offer coffee with breakfast food to increase
foot traffic.

Even though restaurant sales fell during the recession and initial recovery, breakfast
has fared relatively well and has taken market share away from both the lunch and
dinner dayparts. Packaged Facts found that only 34% of restaurant goers had eaten
breakfast at a restaurant in the past month and an even smaller percentage of the
general population said the same, which means the industry has an opportunity to woo
the more than 150 million adult consumers who do not use restaurant breakfast.

Breakfast Trends in the U.S. Foodservice Market provides unique insights into
consumers‟ evolving relationship with the breakfast daypart, helping restaurant
operators position their brands and menus for consumers in 2010 and beyond.
Highlights of the study include directional consumer behavioral and attitude analysis via
Packaged Facts‟ proprietary Consumer Restaurant Outlook Tracker; proprietary
analysis of average meal spend by restaurant type and by daypart, with a focus on the
breakfast daypart, to help target consumers who can bring in higher guest check
averages; restaurant and menu selection analysis, driven by Packaged Facts‟
proprietary consumer survey results; and much more.

About Packaged Facts - Packaged Facts, a division of MarketResearch.com,
publishes market intelligence on a wide range of consumer market topics, including
consumer goods and retailing, foods and beverages, demographics, pet products and
services, and financial products. Packaged Facts also offers a full range of custom
research services.



Table of Contents

Chapter 1: Executive Summary
     Scope and Methodology
     Scope
     Methodology
     Macroeconomic Analysis
     Fast Facts
     Restaurant Usage & Outlook Tracker
     Fast Facts
     Share of Stomach: Sales Analysis
     Fast Facts
     Breakfast Trends, Innovations & Strategies
     Fast Facts
Breakfast Restaurant Selection Analysis
      Fast Facts
      Breakfast Menu Selection Analysis
      Frequent Coffee Drinkers: Custom Usage, Attitudes and Behavior Drilldrown
      Breakfast on the Menu: Restaurant Brand Analysis
      McDonald‟s
      Breakfast strategy: sales growth = guest count growth
      Breakfast menu mix
      Other snippets
      Burger King
      Refocusing on breakfast
      Other snippets
      Wendy‟s
      Wendy‟s reenters breakfast wars with premium QSR differentiation
      Starbucks
      Recession strategy pays dividends
      Brand extensions: VIA and Seattle‟s Best
      On the food and coffee front
      Bob Evans
      On the menu: off-premises growth, remodeling, and quickening service
      Menu trends
      Breakfast in a big way
      Cracker Barrel
      Menu item innovation
      Other snippets
      Denny‟s
      Recession challenges: region, lower-middle income demographic and late-night
      2009-2010 breakfast menu strategy
      $2 $4 $6 $8, who do we appreciate?
      Other moves

Chapter 2: Macroeconomic Analysis
     Restaurant sales show life, but we believe positive news is transitory
     Restaurant industry rebound still not in cards
     February, March and April 2010 food services & drinking places sales
     sequentially improve
     May advance sales point to grocery growth
     Graph 2-1: Non-Adjusted Monthly Sales, 12-Month % Change, Grocery Stores &
     Food Services and Drinking Places, 2009-2010
     Packaged Facts‟ Consumer Restaurant Tracker: Gloomy Near-Term Outlook
     In-home breakfast and dinner trend remains significant
     Graph 2-2: Consumer Restaurant Tracker: Current Behavior: A Top Line View
     Looking ahead: Saving & grocery spending trumps limited service and full-
     service restaurant spend
     Graph 2-3: Consumer Restaurant Tracker: Next 3 Months: A Top Line View
     National Restaurant Association index contracts after transitory spike
     Graph 2-4: Restaurant Performance Index, 2006-2010
Macroeconomic factors affecting restaurant sales
      Consumer confidence still in a trough
      Present Situation Index decreases as perceptions of business conditions, job
      prospects darken
      Expectations Index dips as job prospect optimism dims
      Unemployment picture stabilizes
      Some perspective
      Graph 2-5: Unemployment Rate and Consumer Confidence: 2007-2010
      Unemployment rate not one-size-fits-all
      Disparity in unemployment rates by education level
      Young adults, minorities and men also find harder going
      Graph 2-6: Unemployment Rate, Selected Demographics, 2007-2010
      Graph 2-7: Unemployment Rate, by Race/Ethnicity, 2007-2010
      How can increasing personal savings and reducing the debt burden be bad?
      Transitory Spring 2010 restaurant benefit driven by reduced savings
      Chipping away at the debt burden
      Graph 2-8: Consumer Debt Burden, 2000-2010
      Graph 2-9: Savings Rate & Debt Service Ratio & Financial Obligations Ratio,
      2007-2010
      Unemployment and GPD forecast
      Slow employment rebound to coincide with slow rebound in consumer spending
      Graph 2-10: Unemployment and GDP Forecast, 2010-2012
      Stock & housing declines deflate household wealth; rebound to record 2006
      levels a long way off
      Q1 2009 to Q1 2010 sees uptick in household wealth, but still $10 trillion off 2006
      high
      Graph 2-11: Household Net Worth, 2005-2010
      Case-Shiller and FOMC housing pessimism
      Q2 2010 summary equities analysis
      Graph 2-12: Wealth Effect: Wilshire 5000 and Case-Shiller Index: 2007-2010
      Food at home maintains pricing edge
      Graph 2-13: CPI: Food at Home vs. Food Away from Home, 2005-2010
      Farm value comes back down to earth
      Graph 2-14: Market Basket of Farm Foods, Annual % Change, 2006-2010
      Food inflation forecast revised downward
      Food CPI returns to positive annual growth rate
      Proteins on the upswing
      Dairy prices normalize
      Fruits and vegetables
      Other

Chapter 3: Restaurant Usage & Outlook Tracker
     Note on reading charts
     Packaged Facts‟ Consumer Restaurant Tracker: at-home food spend trumps out-
     of-home spend
     February 2010 trend continues in June 2010
     Graph 3-1: Consumer Restaurant Tracker: Current Behavior: A Top Line View
Looking ahead: Consumers more likely to save & spend on groceries than spend
at restaurants
Graph 3-2: Consumer Restaurant Tracker: Next 3 Months: A Top Line View
Eating breakfast at home had significant traction
Students, 18-24s and parents more likely to eat breakfast at home
Graph 3-3: Consumer Restaurant Tracker: Present Behavior: Eating Breakfast at
Home
Restaurant breakfast users as likely as restaurant goers in general to eat
breakfast at home
Graph 3-4: Consumer Restaurant Tracker: Present Behavior: Eating Breakfast at
Home, Restaurant Breakfast Users
Higher-income versus lower-income fast food, family restaurant and coffeehouse
breakfast users
Graph 3-5: Consumer Restaurant Tracker: Present Behavior: Eating Breakfast at
Home, Restaurant Breakfast Users, HH Income Splits
Planned spending on fast food appears grim
Graph 3-6: Consumer Restaurant Tracker: Future Behavior: Fast Food
Restaurant Spending
Intended full-service spend lacks promise
Graph 3-7: Consumer Restaurant Tracker: Future Behavior: Full-Service
Restaurant Spending
Intention to save money remains high
Graph 3-8: Consumer Restaurant Tracker: Future Behavior: Saving Money
Restaurant breakfast users more likely to plan higher fast food and full-service
spending
Graph 3-9: Consumer Restaurant Tracker: Future Behavior: Restaurant
Spending, by Restaurant Breakfast Type
Restaurant usage and usage frequency
Overview
Graph 3-10: Mean Restaurant Usage in Last Month, by Restaurant Type, 2010
Graph 3-11: Restaurant Usage in Last Month, by Restaurant Type, 2010
18-34s drive guest counts
Graph 3-12: Mean Restaurant Usage in Last Month, by Restaurant Type, 2010,
by Age
And exhibit higher usage
Graph 3-13: Restaurant Usage in Last Month, by Restaurant Type, 2010, by Age
HH income
Graph 3-14: Mean Restaurant Usage in Last Month, by Restaurant Type, 2010,
by HH Income
Graph 3-15: Restaurant Usage in Last Month, by Restaurant Type, 2010, by HH
Income
Employment status
Graph 3-16: Mean Restaurant Usage in Last Month, by Restaurant Type, 2010,
by Employment Status
Graph 3-17: Restaurant Usage in Last Month, by Restaurant Type, 2010, by
Employment Status
Restaurant breakfast use
      Breakfast day part accounts for less than 10% of all usage
      Graph 3-19: Day Part Usage on Last Visit, 2010
      Restaurant breakfast use in past month
      Graph 3-20: Restaurant Breakfast Usage in Last Month, Type of Restaurant,
      2010
      Gender bias?
      Graph 3-21: Restaurant Usage in Last Month for Breakfast, 2010, by Gender
      Food retail may be siphoning sales from younger restaurant goers
      Graph 3-22: Restaurant Usage in Last Month for Breakfast, 2010, by Age
      HH income: Fast food as the great equalizer
      “Great coffee”: aspiration or reality?
      Graph 3-23: Restaurant Usage in Last Month for Breakfast, 2010, by HH Income
      Employment status: sense of routine and daily obligation
      Graph 3-24: Restaurant Usage in Last Month for Breakfast, 2010, by
      Employment Status
      Appendix: Consumer Survey

Chapter 4: Share of Stomach: Sales Analysis
     Market size and overview
     Flat sales—but read between the lines
     Near-term challenges
     Long-term outlook
     Growth factors
     Full-service caveat
     Graph 4-1: Limited-service and full-service breakfast sales, 2005-2011
     Breakfast daypart traffic growth outpaces industry
     Fast food/QSR segment accounts for 80% of breakfast daypart purchases
     Restaurants sales trends by daypart
     Consumer food expenditure trends suggest migration to food at home spend
     Graph 4-2: Consumer Food Expenditures, 2005-2008
     Breakfast share of spend increases by 11% during 2005-2008
     Graph 4-3: Meals Away From Home Expenditures, by Daypart, 2005-2008
     Spending on breakfast away from home, by region
     Graph 4-4: Breakfast Away From Home Expenditures, by Region, 2008
     Spending on breakfast away from home, by age
     Graph 4-5: Breakfast Away From Home Expenditures, by Age, 2008
     Spending on breakfast away from home, by income
     Graph 4-6: Breakfast Away From Home Expenditures, by Income, 2008
     Spending on breakfast away from home, by race/ethnicity
     Graph 4-7: Breakfast Away From Home Expenditures, by Race/Ethnicity, 2008
     Daypart meal spend analysis
     Breakfast meal spend approaches that for lunch at fast food & family restaurants
     Graph 4-8: Consumer Restaurant Meal Spend, by Daypart and Restaurant Type,
     2010
     Breakfast meal spend, fast food versus family restaurants
Graph 4-9: Breakfast Meal Spend, Fast Food Versus Family Restaurants,
      Selected Demographics
      Meal spend by daypart, fast food restaurants
      Graph 4-10: Meal Spend by Daypart, Fast Food Restaurants, Selected
      Demographics

Chapter 5: Breakfast Trends, Innovations & Strategies
     Fast food/QSR pushes breakfast value envelope
     Extreme affordability strategy extends to breakfast
     McDonald‟s $1 value menu to pressure competition
     Burger King addresses breakfast challenges
     A subversive BK Breakfast Muffin
     BK Breakfast Bowl for under $3
     Seattle's Best-branded coffee program
     Wendy‟s to reenter breakfast wars
     Subway rolls out nationwide breakfast program
     Fast casual breakfast players results a mixed bag
     Au Bon Pain grows breakfast year-over-year
     Einstein Noah and Panera Bread tread water
     Atlanta Bread does breakfast to the tune of 20% of sales
     Other fast casual breakfast moves
     Family restaurants push everyday value
     Full-service value menus
     Value in portion size
     Convenience trends
     All-day breakfast
     Breakfast catering
     Customization
     I said, “Coffee!”
     Coffeehouses embrace value bundling
     And Starbucks cashes in on mid-tier Seattle‟s Best
     Sandwiches rule the breakfast menu
     Health on menu
     Dunkin‟ Donuts sprinkles health onto the menu
     Chick-fil-A adds yogurt parfait
     A comforting healthful breakfast
     Fruits and smoothies

Chapter 6: Breakfast Restaurant Selection Analysis
     Note on reading charts
     Breakfast restaurant selection influencers
     Overview: coffee, routine and low price significantly shape restaurant breakfast
     decision
     Graph 6-1: Breakfast Restaurant Selection Influencers, 2010
     Restaurant selection: convenience influencers
     Gender: men = linear routine; women = task balancing routine?
Graph 6-2: Restaurant Selection: Breakfast Convenience Influencers, by Gender,
2010
Age: work life holds the key
Graph 6-3: Restaurant Selection: Breakfast Convenience Influencers, by Age,
2010
HH income breeds breakfast routine
Graph 6-4: Restaurant Selection: Breakfast Convenience Influencers, by HH
Income, 2010
Employment status
Graph 6-5: Restaurant Selection: Breakfast Convenience Influencers, by
Employment Status, 2010
Urban, Suburban, or Rural location
Graph 6-6: Restaurant Selection: Breakfast Convenience Influencers, Urban,
Suburban, Rural, 2010
Restaurant selection: breakfast menu item influencers
Gender: women more likely to have value orientation; men as inclined to want
healthful offerings
Graph 6-7: Restaurant Selection: Breakfast Menu Influencers, by Gender, 2010
Age: younger patrons seek a difficult balancing act
Graph 6-8: Restaurant Selection: Breakfast Menu Influencers, by Age, 2010
HH income: healthy options and small portions
Graph 6-9: Restaurant Selection: Breakfast Menu Influencers, by HH Income,
2010
Employment status
Graph 6-10: Restaurant Selection: Breakfast Menu Influencers, by Employment
Status, 2010
Restaurant selection: breakfast cost threshold influencers
Gender: women more likely to gravitate to lower price points
Graph 6-11: Restaurant Selection: Breakfast Cost Threshold Influencers, by
Gender, 2010
Age: $3 is a hit across the board
Graph 6-12: Restaurant Selection: Breakfast Cost Threshold Influencers, by Age,
2010
HH income
Graph 6-13: Restaurant Selection: Breakfast Cost Threshold Influencers, by HH
Income, 2010
Employment status
Graph 6-14: Restaurant Selection: Breakfast Cost Threshold Influencers, by
Employment Status, 2010
Restaurant selection: breakfast dinein partner influencers
Gender: it‟s a work thing
Graph 6-15: Restaurant Selection: Breakfast Dine-in Partner Influencers, by
Gender, 2010
Age: 65+ not interested in eating alone
Graph 6-16: Restaurant Selection: Breakfast Dine-in Partner Influencers, by Age,
2010
Restaurant selection: breakfast takeout partner influencers
      Gender
      Graph 6-17: Restaurant Selection: Breakfast Takeout Partner Influencers, by
      Gender, 2010
      Age
      Graph 6-18: Restaurant Selection: Breakfast Takeout Partner Influencers, by
      Age, 2010
      Employment status
      Graph 6-19: Restaurant Selection: Breakfast Cost Threshold Influencers, by
      Employment Status, 2010

Chapter 7: Breakfast Menu Selection Analysis
     Note on reading charts
     Menu selection influencers, by daypart
     Graph 7-1: Menu Selection Influencers, by Daypart, 2010
     Breakfast restaurant menu selection influencers, by demographic
     Gender
     Graph 7-2: Breakfast Menu Selection Influencers, by Gender, 2010
     Age
     Graph 7-3: Breakfast Menu Selection Influencers, by Age, 2010
     HH income
     Graph 7-4: Breakfast Menu Selection Influencers, by HH Income, 2010
     Employment status
     Graph 7-5: Breakfast Menu Selection Influencers, by Employment Status, 2010
     Urban, suburban, or rural location
     Graph 7-6: Breakfast Menu Selection Influencers, by Rural/Urban/Suburban,
     2010

Chapter 8: Frequent Coffee Drinkers: Custom Usage, Attitudes and Behavior
Drilldrown
       Frequent coffee drinkers
       Graph 8-1: Frequent Coffee Drinkers: Selected Demographics
       Importance of breakfast to frequent coffee drinkers
       Bring on better coffee
       Graph 8-2: Importance of Breakfast, Frequent Coffee Drinkers, Selected
       Demographics
       Restaurant types visited by frequent coffee drinkers
       Coffeehouses maintain an edge on fast food
       Graph 8-3: Restaurant Types Visited for Breakfast, Frequent Coffee Drinkers,
       Selected Demographics
       Restaurant selection factors, mean restaurant use and average spend
       It‟s all about the coffee
       More coffee means more coffeehouse visits—but not fast food visits
       Coffee drinkers help enrich coffers
       Graph 8-4: Restaurant Breakfast Selection Factors, Mean Restaurant Use, and
       Average Spend, Frequent Coffee Drinkers
Chapter 9: Breakfast on the Menu: Restaurant Brand Analysis
     Note on food lifestyle segmentation charts
     McDonald‟s
     A $7.5 billion breakfast behemoth rolls dice on high-volume, low-ticket breakfast
     Breakfast strategy: sales growth = guest count growth
     Breakfast menu mix
     Core customers: Convenience and Ease and Weekend Cooks
     Graph 9-1: McDonald‟s Usage Frequency Analysis, Food Lifestyle Segmentation
     McDonald‟s core low- and high-frequency users
     Graph 9-2: McDonald‟s Core Demographics: Low- and High-Frequency Users
     McDonald‟s by the numbers
     Graph 9-3: McDonald‟s by the Numbers
     Burger King
     Barbell strategy
     Reinvigorating breakfast
     Brunch in testing stage
     Longer breakfast hours
     Convenience and Variety on a Budget
     Graph 9-4: Burger King Usage Frequency Analysis, Food Lifestyle Segmentation
     Burger King core low- and high-frequency users
     Graph 9-5: Burger King Core Demographics: Low- and High-Frequency Users
     Burger King by the numbers
     Same-store sales dip during nine months ending March 2010
     Graph 9-6: Burger King by the Numbers
     Wendy‟s
     2009-2010 strategy: “Real” food at a real value
     Coming up in 2010 and 2011
     Wendy‟s reenters breakfast wars with premium QSR differentiation
     Local pricing
     Acquire or be acquired?
     “Food Lifestyle” segmentation groups a blend of McDonald‟s and Burger King
     Graph 9-7: Wendy‟s Usage Frequency Analysis, Food Lifestyle Segmentation
     Wendy‟s core low- and high-frequency users
     Graph 9-8: Wendy‟s Core Demographics: Low- and High-Frequency Users
     Wendy‟s by the numbers
     Graph 9-9: Wendy‟s by the Numbers
     Starbucks
     Recession strategy pays dividends
     Menu pricing strategies and customer incentives
     Pricing and bundling
     Brand extensions: VIA and Seattle‟s Best
     Rewards, technology and new retail formats
     On the food and coffee front
     Core Starbucks users a relatively healthful bunch
     Graph 9-10: Starbucks Usage Frequency Analysis, Health Attitudes
     Graph 9-11: Starbucks Usage Frequency Analysis, Food Lifestyle Segmentation
Starbucks core low- and high-frequency users
Graph 9-12: Starbucks Core Demographics: Low- and High-Frequency Users
Starbucks by the numbers
Graph 9-13: Starbucks by the Numbers
Bob Evans
On the menu: off-premises growth, remodeling, and quickening service
Menu trends
New on the menu
Breakfast in a big way
Emphasizing value for money
Bob Evans by the numbers
Graph 9-14: Bob Evans by the Numbers
Cracker Barrel Old Country Store, Inc.
Restaurant operations
Retail operations
2009-2010 strategy: couponing, promotions & Seat to Eat
Menu item innovation
Guest count demographics
Reformed Traditional users may look to Cracker Barrel to meet them halfway on
health
Graph 9-15: Cracker Barrel Usage Frequency Analysis, Food Lifestyle
Segmentation
Cracker Barrel core low- and high-frequency users
Graph 9-16: Cracker Barrel Core Demographics: Low- and High-Frequency
Users
Cracker Barrel by the numbers
Graph 9-17: Cracker Barrel by the Numbers
Denny‟s
Recession challenges: region, lower-middle income demographic and late-night
2009-2010 breakfast menu strategy
Build Your Own Grand Slam continues to deliver
But other rollouts round out the menu
2010 shift to everyday value supported with LTO entrees
$2 $4 $6 $8, who do we appreciate?
Post-Super Bowl free Grand Slam promotions continue
Convenience moves
Courting older consumers and students
Weekend Cooks help drive sales
Graph 9-18: Denny‟s Usage Frequency Analysis, Food Lifestyle Segmentation
Store-made, per-cooked meal cross-tie?
Graph 9-19: Denny‟s Usage Frequency Analysis, Food Competition
Denny‟s core low- and high-frequency users
Graph 9-20: Denny‟s Core Demographics: Low- and High-Frequency Users
Denny‟s by the numbers
Graph 9-21: Denny‟s by the Numbers
Appendix on food lifestyle segmentation charts
Available immediately for Online Download at
http://www.marketresearch.com/product/display.asp?productid=2718792




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Fax: 240.747.3004

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Breakfast Trends in the U.S. Foodservice Market

  • 1. Get more info on this report! Breakfast Trends in the U.S. Foodservice Market August 1, 2010 The recession is reshaping how consumers interact with the restaurant industry, and the breakfast daypart is no exception: value pricing remains at the forefront of menu strategies, as growing guest checks often takes a backseat to generating guest traffic. However, unlike the lunch and dinner dayparts, breakfast benefits from long-term untapped guest traffic potential, and it can generate healthy margins, factors that are drawing major new players into the market. Packaged Facts‟ Breakfast Trends in the U.S. Foodservice Market estimates that breakfast daypart restaurant sales reached $37.2 billion in 2009, and forecasts that they will reach $37.0 billion in 2010 and $37.7 billion in 2011. While these figures may appear tepid at first glance, when viewed against the backdrop of lower overall restaurant sales, the breakfast daypart has fared relatively well, taking share from lunch and dinner. In the final analysis, we believe that near-term challenges will give way to long-term opportunity. Breakfast Trends in the U.S. Foodservice Market provides unique insights into consumers‟ evolving relationship with the breakfast daypart, helping restaurant operators position their brands—and menus—for consumers today and tomorrow. Highlights of the study include: Directional consumer behavioral and attitude analysis via Packaged Facts‟ proprietary Consumer Restaurant Outlook Tracker, which assesses restaurant breakfast users current and planned restaurant-related behavior; Proprietary analysis of average meal spend by restaurant type and by daypart, with a focus on the breakfast daypart, to help target consumers who can bring in higher guest check averages; “Share of Stomach” sales analysis that trends limited-service and full-service sales by daypart, and provides in-depth spending patterns for the breakfast daypart by region, income, and race/ethnicity (analysis includes comparisons to food-at-home spending); Meal “pricing threshold” analysis: $3, $5, and $10 consumer-imposed breakfast spend limits;
  • 2. Restaurant and menu selection analysis, driven by our proprietary consumer survey results; A custom “demographic drilldown” on frequent coffee drinkers; Industry-leading restaurant brand analyses of top restaurant breakfast players, including 2010-2011 breakfast strategy and demographic analysis according to “core customers,” low- and high-frequency guest traffic, and “food lifestyle” segmentation; Thorough, investment-grade macroeconomic analysis that helps industry participants understand current consumer restaurant spending behavior. Themes and topics covered in the report also include: Breakfast daypart market size and forecast, including limited-service and full- service restaurant segments; Value, convenience, menu item, and health innovations, strategies and trends Restaurant usage by daypart, according to restaurant segment (coffeehouse, fast food restaurant, smoothie shop, family restaurant, casual restaurant, fine dining, convenience store, and grocery store) Breakfast value menus and meal bundles The importance of who accompanies the breakfast restaurant user to dine in and pick up a meal Importance of health-related factors to the purchase decision, including food advertised as all-natural and healthy and calorie/nutrition information. Data Methodology Our methodology rests on a balance of data-centric expertise and holistic understanding, maximizing accuracy and depth of analysis. Report data is derived from thorough analysis of a host of sources, including the following: Proprietary company interviews Proprietary consumer surveys The Experian Simmons National Consumer Study The U.S. Census Bureau The Bureau of Labor Statistics Consumer Expenditure Survey The U.S. Department of Agriculture The U.S. Securities and Exchange Commission The Bureau of Labor Statistics Retail Trade Survey Company presentations Trade associations and trade magazines Academic journals Industry conferences Restaurant menus
  • 3. Additional Information Market Insights: A Selection From The Report Share of Stomach: Sales Analysis Packaged Facts estimates that breakfast daypart restaurant sales reached $37.2 billion in 2009, and forecasts that they will reach $37.0 billion in 2010 and $37.7 billion in 2011. While these figures may appear tepid at first glance, when viewed against the backdrop of lower overall restaurant sales, the breakfast daypart has fared relatively well, taking share from the lunch and (especially) dinner dayparts. Growth in the breakfast daypart faces near-term challenges: 1. higher unemployment means fewer people hooked into restaurant breakfast via work-driven routine, as well as reduced paychecks to support a desire to have breakfast outside of the home; 2. a more cost-conscious consumer who may more practically weigh the cost of an inexpensive breakfast at home against the lifestyle benefits of eating it outside the home (convenience, menu item interest, and indulgence to name a few); and 3. an industry environment in which players are chasing foot traffic at the expense of guest check. But with only 34% of restaurant goers eating restaurant breakfast in the past month (according to our proprietary survey) and an even smaller percentage of the general population, the industry can woo the more than 150 million adult consumers who do not use restaurant breakfast. U.S. Bureau of Labor Statistics Consumer Expenditures Survey data suggests that the bulk of food expenditure spending growth during 2005-08 has come from spending on food at home, with food-away-from home expenditures as a percentage of food expenditures actually dropping 2.5 share points. However, share of breakfast and brunch expenditures rose from 9.5% of restaurant- related expenditures per “consumer unit” in 2005 to 10.2% in 2008, with dollars spent on breakfast and brunch per “consumer unit” up 11.2% during the three-year period. Frequent Coffee Drinkers: Custom Usage, Attitudes and Behavior Drilldrown Frequent coffee uptake is closely associated with age, as it often becomes a “rite of passage,” used by many adults as they wind through their careers to stay on task. Usage often becomes habitual, and, as people age, it continues to be used while other (less healthy or more calorie-laden) beverages go by the wayside. Coffee and breakfast go together—at least from the perspective of frequent coffee drinkers. Whereas 49% of adult respondents to Packaged Facts‟ June
  • 4. 2010 proprietary survey agree with the statement “breakfast is the most important meal of the day,” 55% of frequent coffee drinkers think so. This supports current restaurant operator strategies to enhance their coffee platforms and leverage coffee/food bundles. Coffee drinkers, fixated to varying degrees on getting their coffee to start the day, can be led into the restaurant, where they can then be sold an entrée, breakfast sandwich or side to go with it. Some 65% of respondents who have gotten breakfast from a restaurant in the past month have gotten it from a fast food restaurant, but among those who are frequent coffee drinkers, usage stays about the same. Drinking a lot of coffee also correlates with higher average breakfast meal spend: $6.87 versus $6.51, or 5.6% higher. In The News Value Pricing Breakfast Menus Helps Steady Daytime Restaurant Spending, Bodes Well for Future Growth New York, August 3, 2010 — The most important meal of the day continues to face short-term challenges related to the recession, but market research publisher Packaged Facts‟ Breakfast Trends in the U.S. Foodservice Market predicts consumer spending on breakfast at restaurants will rebound from an anticipated downturn in 2010 to approach $38 billion in 2011, as current value menu pricing strategies influence future spending habits. “Fast food and QSR (quick-service restaurant) operators are playing the „price equals value‟ card for everything it‟s worth. By pushing the envelope with $1 deals, they risk enabling a pool of „extreme affordability‟ customers. But the upshot for breakfast is that it remains a relatively untapped daypart, so that traffic gained today may translate into additional revenue tomorrow,” says Don Montuori, publisher of Packaged Facts. “We believe that decisions by the likes of Denny‟s and Bob Evans to place everyday value for quality food at the forefront of their branding initiatives make a great deal of sense. Value pricing meets the reality of today‟s and tomorrow‟s lower-to-middle and middle- income consumers who frequent family restaurants. For breakfast, they are spinning full-service value menus and value in portion size.” Packaged Facts expects McDonald‟s foray into $1 breakfast menus to create pressure among other fast food/QSR players to match its lead—an industry-wide trend previously glimpsed with the proliferation of non-breakfast $1 value menus. Burger King, Wendy‟s and Subway have already made major breakfast moves. The bottom line is that low cost resonates with restaurant breakfast users, with 31% of respondents to Packaged Facts‟ proprietary survey claiming they have been influenced by a maximum $3 price when selecting a restaurant for breakfast, versus 16% who placed a limit at $10.
  • 5. Convenience influences consumer breakfast decisions, with convenience to work or errands, routine, and the need to get somewhere else quickly factoring in. Also relevant are breakfast menu features, such as getting a favorite menu item, wide variety, and healthy menu items. And, because more than half of U.S. adults drink coffee, restaurants have created value bundles that offer coffee with breakfast food to increase foot traffic. Even though restaurant sales fell during the recession and initial recovery, breakfast has fared relatively well and has taken market share away from both the lunch and dinner dayparts. Packaged Facts found that only 34% of restaurant goers had eaten breakfast at a restaurant in the past month and an even smaller percentage of the general population said the same, which means the industry has an opportunity to woo the more than 150 million adult consumers who do not use restaurant breakfast. Breakfast Trends in the U.S. Foodservice Market provides unique insights into consumers‟ evolving relationship with the breakfast daypart, helping restaurant operators position their brands and menus for consumers in 2010 and beyond. Highlights of the study include directional consumer behavioral and attitude analysis via Packaged Facts‟ proprietary Consumer Restaurant Outlook Tracker; proprietary analysis of average meal spend by restaurant type and by daypart, with a focus on the breakfast daypart, to help target consumers who can bring in higher guest check averages; restaurant and menu selection analysis, driven by Packaged Facts‟ proprietary consumer survey results; and much more. About Packaged Facts - Packaged Facts, a division of MarketResearch.com, publishes market intelligence on a wide range of consumer market topics, including consumer goods and retailing, foods and beverages, demographics, pet products and services, and financial products. Packaged Facts also offers a full range of custom research services. Table of Contents Chapter 1: Executive Summary Scope and Methodology Scope Methodology Macroeconomic Analysis Fast Facts Restaurant Usage & Outlook Tracker Fast Facts Share of Stomach: Sales Analysis Fast Facts Breakfast Trends, Innovations & Strategies Fast Facts
  • 6. Breakfast Restaurant Selection Analysis Fast Facts Breakfast Menu Selection Analysis Frequent Coffee Drinkers: Custom Usage, Attitudes and Behavior Drilldrown Breakfast on the Menu: Restaurant Brand Analysis McDonald‟s Breakfast strategy: sales growth = guest count growth Breakfast menu mix Other snippets Burger King Refocusing on breakfast Other snippets Wendy‟s Wendy‟s reenters breakfast wars with premium QSR differentiation Starbucks Recession strategy pays dividends Brand extensions: VIA and Seattle‟s Best On the food and coffee front Bob Evans On the menu: off-premises growth, remodeling, and quickening service Menu trends Breakfast in a big way Cracker Barrel Menu item innovation Other snippets Denny‟s Recession challenges: region, lower-middle income demographic and late-night 2009-2010 breakfast menu strategy $2 $4 $6 $8, who do we appreciate? Other moves Chapter 2: Macroeconomic Analysis Restaurant sales show life, but we believe positive news is transitory Restaurant industry rebound still not in cards February, March and April 2010 food services & drinking places sales sequentially improve May advance sales point to grocery growth Graph 2-1: Non-Adjusted Monthly Sales, 12-Month % Change, Grocery Stores & Food Services and Drinking Places, 2009-2010 Packaged Facts‟ Consumer Restaurant Tracker: Gloomy Near-Term Outlook In-home breakfast and dinner trend remains significant Graph 2-2: Consumer Restaurant Tracker: Current Behavior: A Top Line View Looking ahead: Saving & grocery spending trumps limited service and full- service restaurant spend Graph 2-3: Consumer Restaurant Tracker: Next 3 Months: A Top Line View National Restaurant Association index contracts after transitory spike Graph 2-4: Restaurant Performance Index, 2006-2010
  • 7. Macroeconomic factors affecting restaurant sales Consumer confidence still in a trough Present Situation Index decreases as perceptions of business conditions, job prospects darken Expectations Index dips as job prospect optimism dims Unemployment picture stabilizes Some perspective Graph 2-5: Unemployment Rate and Consumer Confidence: 2007-2010 Unemployment rate not one-size-fits-all Disparity in unemployment rates by education level Young adults, minorities and men also find harder going Graph 2-6: Unemployment Rate, Selected Demographics, 2007-2010 Graph 2-7: Unemployment Rate, by Race/Ethnicity, 2007-2010 How can increasing personal savings and reducing the debt burden be bad? Transitory Spring 2010 restaurant benefit driven by reduced savings Chipping away at the debt burden Graph 2-8: Consumer Debt Burden, 2000-2010 Graph 2-9: Savings Rate & Debt Service Ratio & Financial Obligations Ratio, 2007-2010 Unemployment and GPD forecast Slow employment rebound to coincide with slow rebound in consumer spending Graph 2-10: Unemployment and GDP Forecast, 2010-2012 Stock & housing declines deflate household wealth; rebound to record 2006 levels a long way off Q1 2009 to Q1 2010 sees uptick in household wealth, but still $10 trillion off 2006 high Graph 2-11: Household Net Worth, 2005-2010 Case-Shiller and FOMC housing pessimism Q2 2010 summary equities analysis Graph 2-12: Wealth Effect: Wilshire 5000 and Case-Shiller Index: 2007-2010 Food at home maintains pricing edge Graph 2-13: CPI: Food at Home vs. Food Away from Home, 2005-2010 Farm value comes back down to earth Graph 2-14: Market Basket of Farm Foods, Annual % Change, 2006-2010 Food inflation forecast revised downward Food CPI returns to positive annual growth rate Proteins on the upswing Dairy prices normalize Fruits and vegetables Other Chapter 3: Restaurant Usage & Outlook Tracker Note on reading charts Packaged Facts‟ Consumer Restaurant Tracker: at-home food spend trumps out- of-home spend February 2010 trend continues in June 2010 Graph 3-1: Consumer Restaurant Tracker: Current Behavior: A Top Line View
  • 8. Looking ahead: Consumers more likely to save & spend on groceries than spend at restaurants Graph 3-2: Consumer Restaurant Tracker: Next 3 Months: A Top Line View Eating breakfast at home had significant traction Students, 18-24s and parents more likely to eat breakfast at home Graph 3-3: Consumer Restaurant Tracker: Present Behavior: Eating Breakfast at Home Restaurant breakfast users as likely as restaurant goers in general to eat breakfast at home Graph 3-4: Consumer Restaurant Tracker: Present Behavior: Eating Breakfast at Home, Restaurant Breakfast Users Higher-income versus lower-income fast food, family restaurant and coffeehouse breakfast users Graph 3-5: Consumer Restaurant Tracker: Present Behavior: Eating Breakfast at Home, Restaurant Breakfast Users, HH Income Splits Planned spending on fast food appears grim Graph 3-6: Consumer Restaurant Tracker: Future Behavior: Fast Food Restaurant Spending Intended full-service spend lacks promise Graph 3-7: Consumer Restaurant Tracker: Future Behavior: Full-Service Restaurant Spending Intention to save money remains high Graph 3-8: Consumer Restaurant Tracker: Future Behavior: Saving Money Restaurant breakfast users more likely to plan higher fast food and full-service spending Graph 3-9: Consumer Restaurant Tracker: Future Behavior: Restaurant Spending, by Restaurant Breakfast Type Restaurant usage and usage frequency Overview Graph 3-10: Mean Restaurant Usage in Last Month, by Restaurant Type, 2010 Graph 3-11: Restaurant Usage in Last Month, by Restaurant Type, 2010 18-34s drive guest counts Graph 3-12: Mean Restaurant Usage in Last Month, by Restaurant Type, 2010, by Age And exhibit higher usage Graph 3-13: Restaurant Usage in Last Month, by Restaurant Type, 2010, by Age HH income Graph 3-14: Mean Restaurant Usage in Last Month, by Restaurant Type, 2010, by HH Income Graph 3-15: Restaurant Usage in Last Month, by Restaurant Type, 2010, by HH Income Employment status Graph 3-16: Mean Restaurant Usage in Last Month, by Restaurant Type, 2010, by Employment Status Graph 3-17: Restaurant Usage in Last Month, by Restaurant Type, 2010, by Employment Status
  • 9. Restaurant breakfast use Breakfast day part accounts for less than 10% of all usage Graph 3-19: Day Part Usage on Last Visit, 2010 Restaurant breakfast use in past month Graph 3-20: Restaurant Breakfast Usage in Last Month, Type of Restaurant, 2010 Gender bias? Graph 3-21: Restaurant Usage in Last Month for Breakfast, 2010, by Gender Food retail may be siphoning sales from younger restaurant goers Graph 3-22: Restaurant Usage in Last Month for Breakfast, 2010, by Age HH income: Fast food as the great equalizer “Great coffee”: aspiration or reality? Graph 3-23: Restaurant Usage in Last Month for Breakfast, 2010, by HH Income Employment status: sense of routine and daily obligation Graph 3-24: Restaurant Usage in Last Month for Breakfast, 2010, by Employment Status Appendix: Consumer Survey Chapter 4: Share of Stomach: Sales Analysis Market size and overview Flat sales—but read between the lines Near-term challenges Long-term outlook Growth factors Full-service caveat Graph 4-1: Limited-service and full-service breakfast sales, 2005-2011 Breakfast daypart traffic growth outpaces industry Fast food/QSR segment accounts for 80% of breakfast daypart purchases Restaurants sales trends by daypart Consumer food expenditure trends suggest migration to food at home spend Graph 4-2: Consumer Food Expenditures, 2005-2008 Breakfast share of spend increases by 11% during 2005-2008 Graph 4-3: Meals Away From Home Expenditures, by Daypart, 2005-2008 Spending on breakfast away from home, by region Graph 4-4: Breakfast Away From Home Expenditures, by Region, 2008 Spending on breakfast away from home, by age Graph 4-5: Breakfast Away From Home Expenditures, by Age, 2008 Spending on breakfast away from home, by income Graph 4-6: Breakfast Away From Home Expenditures, by Income, 2008 Spending on breakfast away from home, by race/ethnicity Graph 4-7: Breakfast Away From Home Expenditures, by Race/Ethnicity, 2008 Daypart meal spend analysis Breakfast meal spend approaches that for lunch at fast food & family restaurants Graph 4-8: Consumer Restaurant Meal Spend, by Daypart and Restaurant Type, 2010 Breakfast meal spend, fast food versus family restaurants
  • 10. Graph 4-9: Breakfast Meal Spend, Fast Food Versus Family Restaurants, Selected Demographics Meal spend by daypart, fast food restaurants Graph 4-10: Meal Spend by Daypart, Fast Food Restaurants, Selected Demographics Chapter 5: Breakfast Trends, Innovations & Strategies Fast food/QSR pushes breakfast value envelope Extreme affordability strategy extends to breakfast McDonald‟s $1 value menu to pressure competition Burger King addresses breakfast challenges A subversive BK Breakfast Muffin BK Breakfast Bowl for under $3 Seattle's Best-branded coffee program Wendy‟s to reenter breakfast wars Subway rolls out nationwide breakfast program Fast casual breakfast players results a mixed bag Au Bon Pain grows breakfast year-over-year Einstein Noah and Panera Bread tread water Atlanta Bread does breakfast to the tune of 20% of sales Other fast casual breakfast moves Family restaurants push everyday value Full-service value menus Value in portion size Convenience trends All-day breakfast Breakfast catering Customization I said, “Coffee!” Coffeehouses embrace value bundling And Starbucks cashes in on mid-tier Seattle‟s Best Sandwiches rule the breakfast menu Health on menu Dunkin‟ Donuts sprinkles health onto the menu Chick-fil-A adds yogurt parfait A comforting healthful breakfast Fruits and smoothies Chapter 6: Breakfast Restaurant Selection Analysis Note on reading charts Breakfast restaurant selection influencers Overview: coffee, routine and low price significantly shape restaurant breakfast decision Graph 6-1: Breakfast Restaurant Selection Influencers, 2010 Restaurant selection: convenience influencers Gender: men = linear routine; women = task balancing routine?
  • 11. Graph 6-2: Restaurant Selection: Breakfast Convenience Influencers, by Gender, 2010 Age: work life holds the key Graph 6-3: Restaurant Selection: Breakfast Convenience Influencers, by Age, 2010 HH income breeds breakfast routine Graph 6-4: Restaurant Selection: Breakfast Convenience Influencers, by HH Income, 2010 Employment status Graph 6-5: Restaurant Selection: Breakfast Convenience Influencers, by Employment Status, 2010 Urban, Suburban, or Rural location Graph 6-6: Restaurant Selection: Breakfast Convenience Influencers, Urban, Suburban, Rural, 2010 Restaurant selection: breakfast menu item influencers Gender: women more likely to have value orientation; men as inclined to want healthful offerings Graph 6-7: Restaurant Selection: Breakfast Menu Influencers, by Gender, 2010 Age: younger patrons seek a difficult balancing act Graph 6-8: Restaurant Selection: Breakfast Menu Influencers, by Age, 2010 HH income: healthy options and small portions Graph 6-9: Restaurant Selection: Breakfast Menu Influencers, by HH Income, 2010 Employment status Graph 6-10: Restaurant Selection: Breakfast Menu Influencers, by Employment Status, 2010 Restaurant selection: breakfast cost threshold influencers Gender: women more likely to gravitate to lower price points Graph 6-11: Restaurant Selection: Breakfast Cost Threshold Influencers, by Gender, 2010 Age: $3 is a hit across the board Graph 6-12: Restaurant Selection: Breakfast Cost Threshold Influencers, by Age, 2010 HH income Graph 6-13: Restaurant Selection: Breakfast Cost Threshold Influencers, by HH Income, 2010 Employment status Graph 6-14: Restaurant Selection: Breakfast Cost Threshold Influencers, by Employment Status, 2010 Restaurant selection: breakfast dinein partner influencers Gender: it‟s a work thing Graph 6-15: Restaurant Selection: Breakfast Dine-in Partner Influencers, by Gender, 2010 Age: 65+ not interested in eating alone Graph 6-16: Restaurant Selection: Breakfast Dine-in Partner Influencers, by Age, 2010
  • 12. Restaurant selection: breakfast takeout partner influencers Gender Graph 6-17: Restaurant Selection: Breakfast Takeout Partner Influencers, by Gender, 2010 Age Graph 6-18: Restaurant Selection: Breakfast Takeout Partner Influencers, by Age, 2010 Employment status Graph 6-19: Restaurant Selection: Breakfast Cost Threshold Influencers, by Employment Status, 2010 Chapter 7: Breakfast Menu Selection Analysis Note on reading charts Menu selection influencers, by daypart Graph 7-1: Menu Selection Influencers, by Daypart, 2010 Breakfast restaurant menu selection influencers, by demographic Gender Graph 7-2: Breakfast Menu Selection Influencers, by Gender, 2010 Age Graph 7-3: Breakfast Menu Selection Influencers, by Age, 2010 HH income Graph 7-4: Breakfast Menu Selection Influencers, by HH Income, 2010 Employment status Graph 7-5: Breakfast Menu Selection Influencers, by Employment Status, 2010 Urban, suburban, or rural location Graph 7-6: Breakfast Menu Selection Influencers, by Rural/Urban/Suburban, 2010 Chapter 8: Frequent Coffee Drinkers: Custom Usage, Attitudes and Behavior Drilldrown Frequent coffee drinkers Graph 8-1: Frequent Coffee Drinkers: Selected Demographics Importance of breakfast to frequent coffee drinkers Bring on better coffee Graph 8-2: Importance of Breakfast, Frequent Coffee Drinkers, Selected Demographics Restaurant types visited by frequent coffee drinkers Coffeehouses maintain an edge on fast food Graph 8-3: Restaurant Types Visited for Breakfast, Frequent Coffee Drinkers, Selected Demographics Restaurant selection factors, mean restaurant use and average spend It‟s all about the coffee More coffee means more coffeehouse visits—but not fast food visits Coffee drinkers help enrich coffers Graph 8-4: Restaurant Breakfast Selection Factors, Mean Restaurant Use, and Average Spend, Frequent Coffee Drinkers
  • 13. Chapter 9: Breakfast on the Menu: Restaurant Brand Analysis Note on food lifestyle segmentation charts McDonald‟s A $7.5 billion breakfast behemoth rolls dice on high-volume, low-ticket breakfast Breakfast strategy: sales growth = guest count growth Breakfast menu mix Core customers: Convenience and Ease and Weekend Cooks Graph 9-1: McDonald‟s Usage Frequency Analysis, Food Lifestyle Segmentation McDonald‟s core low- and high-frequency users Graph 9-2: McDonald‟s Core Demographics: Low- and High-Frequency Users McDonald‟s by the numbers Graph 9-3: McDonald‟s by the Numbers Burger King Barbell strategy Reinvigorating breakfast Brunch in testing stage Longer breakfast hours Convenience and Variety on a Budget Graph 9-4: Burger King Usage Frequency Analysis, Food Lifestyle Segmentation Burger King core low- and high-frequency users Graph 9-5: Burger King Core Demographics: Low- and High-Frequency Users Burger King by the numbers Same-store sales dip during nine months ending March 2010 Graph 9-6: Burger King by the Numbers Wendy‟s 2009-2010 strategy: “Real” food at a real value Coming up in 2010 and 2011 Wendy‟s reenters breakfast wars with premium QSR differentiation Local pricing Acquire or be acquired? “Food Lifestyle” segmentation groups a blend of McDonald‟s and Burger King Graph 9-7: Wendy‟s Usage Frequency Analysis, Food Lifestyle Segmentation Wendy‟s core low- and high-frequency users Graph 9-8: Wendy‟s Core Demographics: Low- and High-Frequency Users Wendy‟s by the numbers Graph 9-9: Wendy‟s by the Numbers Starbucks Recession strategy pays dividends Menu pricing strategies and customer incentives Pricing and bundling Brand extensions: VIA and Seattle‟s Best Rewards, technology and new retail formats On the food and coffee front Core Starbucks users a relatively healthful bunch Graph 9-10: Starbucks Usage Frequency Analysis, Health Attitudes Graph 9-11: Starbucks Usage Frequency Analysis, Food Lifestyle Segmentation
  • 14. Starbucks core low- and high-frequency users Graph 9-12: Starbucks Core Demographics: Low- and High-Frequency Users Starbucks by the numbers Graph 9-13: Starbucks by the Numbers Bob Evans On the menu: off-premises growth, remodeling, and quickening service Menu trends New on the menu Breakfast in a big way Emphasizing value for money Bob Evans by the numbers Graph 9-14: Bob Evans by the Numbers Cracker Barrel Old Country Store, Inc. Restaurant operations Retail operations 2009-2010 strategy: couponing, promotions & Seat to Eat Menu item innovation Guest count demographics Reformed Traditional users may look to Cracker Barrel to meet them halfway on health Graph 9-15: Cracker Barrel Usage Frequency Analysis, Food Lifestyle Segmentation Cracker Barrel core low- and high-frequency users Graph 9-16: Cracker Barrel Core Demographics: Low- and High-Frequency Users Cracker Barrel by the numbers Graph 9-17: Cracker Barrel by the Numbers Denny‟s Recession challenges: region, lower-middle income demographic and late-night 2009-2010 breakfast menu strategy Build Your Own Grand Slam continues to deliver But other rollouts round out the menu 2010 shift to everyday value supported with LTO entrees $2 $4 $6 $8, who do we appreciate? Post-Super Bowl free Grand Slam promotions continue Convenience moves Courting older consumers and students Weekend Cooks help drive sales Graph 9-18: Denny‟s Usage Frequency Analysis, Food Lifestyle Segmentation Store-made, per-cooked meal cross-tie? Graph 9-19: Denny‟s Usage Frequency Analysis, Food Competition Denny‟s core low- and high-frequency users Graph 9-20: Denny‟s Core Demographics: Low- and High-Frequency Users Denny‟s by the numbers Graph 9-21: Denny‟s by the Numbers Appendix on food lifestyle segmentation charts
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