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Industry Info
INDUSTRY INFO: CUSTOMER TRENDS WILL CONTINUE TO DRIVE ZOUP!’S GROWTH
Americans Love to Eat Out
Today’s restaurants are benefiting from a long-term trend toward eating out. According to the U.S. Department of Agriculture, consumption of food away from the home accounted for 46.1% of total food expenditures in 2002 up from 44.6% in 1990 and 26.3% in 1960.
This trend is being fueled by factors that are likely to continue, including:
- A significant decline in the cost difference between dining out and cooking at home. According to 2002 estimates reported in Investor’s Business Daily, the average price of a restaurant meal was only 25% more than what its ingredients would cost if purchased in a supermarket.
- Americans have less free time than ever. More than 50% of U.S. families had two income earners in 2002, according to the Bureau of Labor Statistics. And, in many families, both parents hold full-time jobs. Clearly, this leaves less time to prepare meals at home and makes dining out the most convenient option.
- The steady growth in disposable income. Americans can more readily afford to eat out. According to the U.S. Department of Commerce, disposable income per household increased 2.3% between 1998 and 2003. With the aging of the baby boom generation, the country’s population will become older and wealthier, and quite able to support restaurant growth for many years. The National Restaurant Association estimates that by 2010, total sales in the restaurant industry will exceed $577 billion. At that time, consumers will spend 53% of every food dollar on meals, snacks, and beverages prepared away from home.
Quick-Casual’s Growth Outpaces Other Segments
While quick-casual dining currently accounts for 3.5% of food service sales, it’s expected to double within four to five years. This means a growth of 15% to 20% annually versus fast food’s growth of 2% annually. (Source: Mitchell Speiser, Lehman Brothers analyst)
Some of the factors that will contribute to the category’s growth include:
consumer trends, such as less discretionary time; longer “to-do” lists; a more “planless” society; blurring day parts; demand for value and convenience; and pursuit of more pragmatic pleasures.
As statistics demonstrate, restaurants aren’t a luxury anymore. Restaurant dining has gone from a special occasion event to a convenient and economical solution to getting a meal. At the same time, consumers are more focused on quality and are willing to pay a few dollars more for a better dining experience. And, baby boomers are growing increasingly dissatisfied with traditional fast food. (According to the U.S. Census Bureau, the 45-to-64- year-old population will grow at 30% annually, while the five-to-24-year-old group – fast food’s traditional market — is only expected to grow by 5%.)
Other evidence that the quick-casual category will continue to grow is demonstrated by these facts: cuisine literacy is high and overall interest in food continues to rise; cookbook sales are at an all time high; and food TV reaches 48 million homes. And, all of this interest – in fresh, nutritious and sophisticated food – is skyrocketing while real cooking is at an all time low.
Customers Know What They Want – And They Want What They Want
When it comes to quick-casual’s growing role in the marketplace, research shows that today’s customers know what they want: larger portions of upscale, freshly prepared food served in a convenient setting versus the food and experience they’ve been getting at traditional fast food restaurants.
According to Technomic, Inc., Chicago-based food service consultants, today’s customers also want:
- A limited service format in which they control how much time they spend dining
- Upscale décor
- Check average of $6 to $9
