Chain Leader

David Farkas

Menu price perception
March 12, 2008

A new national study from Technomic Inc., the Chicago-based market research firm, shows that a significant portion of restaurant-goers believe menu prices at full-service eateries are higher than they actually are. Technomic called it a "disconcerting finding" because it suggests that customers are already looking for ways to trim the amount of money they spend in restaurants. And this is one more excuse. Among other findings:

Check out that last bulleted item. Granted, many people don't do exactly as they say but the considerable recent success of McDonald's, Burger King and Chipotle indicates the eroding of full-service's market share is underway. 

Could this lunch meeting do with one less?

NPD Groups Harry Balzer believes something something even more significant is happening. During a recent interview for a story I was writing about marketing, he brought up the subject of price, suggesting consumers always figure out a way to moderate costs. 

"They say, 'Let's not go out to eat at lunch but breakfast instead,'" he said. His proof: Menu prices climbed about 4 percent last year though overall check average grew just 2 percent, he added. 

In fact, Balzer argues that casual dining's current troubles have been going on for "some time."  He thinks current trends are merely indicative of "a re-definition" of the market. 

"Here's something I picked up," he offered." We haven't seen business lunches [at full-service restaurants] taking much of a hit, even though you'd think businesses would be pulling back. We've been watching this for about a year, and we're now noticing a shift to smaller parties. So a businessperson doesn't have to necessarily change price points but is able to moderate the overall cost of the meal. No one ever thinks of it that way."

Posted by David Farkas on March 12, 2008 | Comments (2)