Restaurants lowering prices to entice more consumers
October 30, 2008
by FoodBusinessNews.net Staff
CHICAGO — Restaurants are promoting value on menus with various deals from $5 meals to special menus featuring lower-priced offerings, according to Mintel International’s Menu Insights.
"Food service has been hit hard by people cutting back," said Maria Caranfa, director of the Menu Insights database. "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. 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."
Examples of $5 items include Subway foot long subs, Quizno’s large deli favorites, Pizza Hut’s Pizza Mia Pizzas and Boston Market meals.
In addition, T.G.I. Friday’s offers the "Right Portion, Right Price" menu featuring smaller servings for lower prices, and Ruth’s Chris Steak House has "Economy Proof" offerings.
"Dining out is a choice, not an obligation," Ms. Caranfa said. "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."
The NPD Group released similar research finding the restaurant industry has been using discounted prices, dollar menus and other promotions in order to stay profitable. NPD said total restaurant industry traffic is up 1% for the quarter ended in August, and the slight growth is driven entirely by special deals.
Value menus, coupons, discounted prices and buy-one-get-one-free promotions are all methods restaurants have used to drive traffic, NPD said. For the quarter ended in August, 23% of all restaurant visits were promoted by consumer-perceived deals. This represented an increase of 9% compared with the same quarter of the previous year. Traffic not driven by deals was down 1%.