Consumers spend more for 'higher quality' menu items
October 14, 2008
by FoodBusinessNews.net Staff
CHICAGO — Many consumers are willing to spend more on "higher quality" menu items at food service outlets if they include premium ingredients, according to Technomic.
In the study "The Consumer Pricing Strategy Report," Technomic said more than 6 out of 10 consumers said they would spend more for a higher quality sandwich if it contained premium meat with 41% saying they would spend more if it were made with premium cheese and 34% if it contained premium bread.
"Consumers are spending less on dining out and feel they have to allocate restaurant spending more wisely," said Darren Tristano, executive vice-president of Technomic. "Restaurant operators must offer a strong value equation to compete successfully for those dollars. Knowing when, how and how much to raise prices requires research into consumer intentions and behaviors as well as a close examination of industry practices."
The study also found 25% of consumers said restaurants are increasing prices because they want to make more money, but 75% of consumers attributed higher menu prices to increased cost of gasoline and ingredients.
Ninety-one per cent of consumers who are cutting back on restaurant spending said they are dining out less frequently, but one-third are buying less expensive food when eating out and one-fifth are ordering smaller amounts and portions. Consumers also are cutting back more at full-service than limited-service restaurants with lower income consumers decreasing spending at both types of restaurants. In addition, 56% of consumers would prefer restaurants increase prices gradually to meet a specific price instead of raising prices all at once or by substantially increasing pricing on certain items.