Discount dining

by Eric Schroeder
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KANSAS CITY — Downsizing was a significant menu trend in 2008, according to Mintel Menu Insights. Specifically, mini-food, value pricing and lighter food options were all top trends during the year.

"2008 was an extremely difficult year for the restaurant industry," said Maria Caranfa, director of Mintel Menu Insights. "Many Americans were trying to save money by going out to eat less, so restaurants were looking for ways to attract diners. Many food service establishments focused on providing targeted value, the exact food people wanted at prices they could afford."

Downsizing is expected to continue as a trend in 2009, Ms. Caranfa said, as consumers remain focused on stretching their dollars. A little less than two months into the year, it appears Mintel’s forecast is coming to fruition.

Kentucky Fried Chicken, Louisville, Ky., a division of Yum! Brands, Inc., is launching a value menu, which includes an assortment of 10 menu items priced at 99c, $1.49 or $1.99.

"In these economic times, KFC understands that Americans crave great value, and the new KFC Ultimate Value Menu provides many of our priceless KFC favorites, including the Original Recipe KFC Snacker, starting at 99c."

The menu includes KFC Snacker Sandwiches, two biscuits and two apple turnovers as 99c products; a side salad and the KFC Toasted Wrap as $1.49 products; and Snack Boxes (including Popcorn Chicken with Potato Wedges and Three Hot Wings with Potato Wedges), Snack Size Bowls and the Honey BBQ Sandwich as $1.99 products.

Seattle-based Starbucks Coffee Co., which has built its business on an image of premium products, last week said it will be joining the value menu fray. The company unveiled plans to introduce a $3.95 combination meal. Beginning March 3, Starbucks said it will offer coffee and a choice of egg sandwiches or a caffe latte and coffee cake or oatmeal. The combination, which Starbucks is marketing as "pairings," will be available all day and provide customers with an average savings of as much as $1.20, according to Starbucks.

"During these tough economic times, customers need to know they’re making a smart choice when they come to Starbucks," said Michelle Gass, executive vice-president of marketing and category. "That they’re getting the world’s finest coffee, delicious food made with quality ingredients, and an experience they can’t get anywhere else."

In line with the launch, Starbucks will debut two new breakfast sandwiches. The Artisan Bacon Sandwich consists of an egg frittata, bacon slices and Gouda cheese on an artisan roll, while the Artisan Ham Sandwich consists of an egg frittata, three slices of ham and mild cheddar on an artisan roll.

Starbucks’ announcement came just a few days after International Dairy Queen, Inc., Minneapolis, said it would take its Sweet Deals value menu

nationwide. The new initiative, which was first initiated in 2007, will allow customers to mix and match nine menu items, choosing two for $3, three for $4 or four for $5.

Items included in the menu program include a cheeseburger, hot dog, chicken wrap, french fries, onion rings, a side salad, a medium beverage or a small sundae or cone. The company emphasized that the items included in the value menu initiative are not smaller portions than the company’s regular menu items.

"Sweet Deals combines both food and treats in a way that gives our customers the opportunity to customize their orders, a freedom of choice, so to speak, not only in terms of what they would like to order but also how much they would like to order, how much they would like to spend and how much they would like to save," said Michael Keller, chief brand officer for International Dairy Queen, Inc.

Mr. Keller said the Sweet Deals menu already accounts for 7% of store sales before national advertising runs in March and is expected to help drive same store sales 2% to 3%.

The introduction of value menus comes at a time when industry observers are revising their forecasts for the food service industry. Citing further contraction in the economy, a continuing slowdown in consumer spending, and accelerating job losses, food service consultancy Technomic, Inc., Chicago revised its 2009 U.S. food service industry nominal growth forecast downward to -2.2%. With both real and nominal growth now dipping into negative territory, the firm expects 2009 will be the worst year for food service since it began tracking performance in 1972.

In comments delivered to clients at its Foodservice Planning meeting in Newport Beach, Calif., Technomic acknowledged that lower commodity prices will help operators reduce the need to take price increases in this tough economic environment.

"However, even if the economy were to improve quickly in the second half of 2009, real growth is expected to remain negative," added Joe Pawlak, Technomic vice-president.

This article can also be found in the digital edition of Food Business News, February 17, 2009, starting on Page 16. Click here to search that archive.

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