Stealing the lunch money

Some dining chains in the United States don’t even open at lunchtimes. But in the UK, lunch is an important slice of any food operator’s traffic.

However, it is increasingly dominated by sandwich, coffee and fast food brands, where speed and convenience are king. That is the challenge for pub and restaurant chains, with high street pub brands already identifying the likes of Greggs and Pret a Manger as their biggest mid-day competitors.

While two thirds of the eating-out population will have lunched out at least once in the past six months, barely more than a quarter—28%—will have been to a restaurant and fewer than a third—31%—will have had a pub lunch. In contrast, four out of ten—41%—will have bought lunch from a sandwich or coffee chain and almost as many—38%—will have used a fast food brand. Time may
not be on the side of the sit-down operators.

Lunch is now a volatile battleground, and the new round of Peach BrandTrack research, conducted in October among over 5,000 out-of- home diners, reveals the brands in the market where lunch is most significant and sheds more light on the nature of the lunch customer.

The brands
Lunch is the one session that is critical for all types of foodservice operator, from coffee and sandwich shops to full-service brands.

But the patterns we see at brand level are a function of how much time consumers have to spend, where they are during the day, and what eating-out choices are accessible to them at the right time.

Although lunchtime usage is highest among the users of coffee and sandwich chains and quick service brands (with the exception of KFC) at around 40 to 50%, there are a handful of casual dining brands with a similarly high lunch bias: YO! Sushi, Carluccio’s and Cafe Rouge. While YO! offers the help-yourself convenience of the conveyor belt, the other two both emphasise their all-day trading and flexibility.

Those three, along with Crown Carvery, each have close to 40% of their users visiting at lunchtime. At the other extreme, Miller & Carter, Garfunkels, Chiquitos, and TGI Friday's each have fewer than one in five customers who are lunch diners.

Immediately the influence of location is evident, as is the influence of cuisine, in particular the enduring appeal of the Sunday roast. Along with Crown, Toby Carvery is among the three top pub dining brands in terms of the proportion of diners who visit at lunchtime. The third is Wetherspoons, which again exemplifies the significance of location, and also speed, with its 10-minute food turnaround.

Focusing on the brands with the strongest orientation to lunch usage (Greggs, Eat, Pret, McDonalds and Subway), and comparing their BrandTrack data with all brands, again time and place stand out as influential. Neither factor is intuitively surprising, but the implications of both are significant.

Time to eat?
The most lunch-focused brands over-index greatly on the proportions of users who say their visit occasions were a quick bite to eat, or that they had no time to cook.

There is no shortage of evidence to suggest that consumers are giving less and less time up for their working lunch. If we are in any doubt, we should look to France, where the once sacrosanct extended lunch is rapidly becoming a thing of history. Research conducted for the Malakoff Médéric social protection group in 2011, reported in the Daily Telegraph, suggested the average lunch break in France could now be as short as 22 minutes, down from 1 hour 38 minutes just 20 years ago. Move over “La pause déjeuner”—bring on “grab and go”.

This need for speed helps to govern the potential lunch options for consumers, and plays into the hands of non-traditional foodservice providers, not least the fast-growing network of in-town food retail convenience stores. J Sainsbury alone is aiming to open 75 small stores a year (many, perhaps ironically, in former pubs), and Morrisons has just signalled its intention to join the convenience market, with 70 openings planned in the next two years, all firmly targeting the time-poor town centre consumer.

In the same way that some early-generation A-road eateries are now sped past by fast-rushing traffic, many restaurant options at lunchtime are effectively being sped past in the consumers’ mind.

This time-poverty also piggy-backs the tendency for lone dining on a wider underlying trend in society. Only recently the Hartman Group
has revealed that almost half of all adult eating occasions in the United States (including snacking) are now solitary, and while this is not out-of-home specific, the figure has grown in recent years. Hartman says that eating alone in the workplace has “become so pervasive that many of us don’t realise we’re doing it anymore.”

The working lunch is becoming swift and single. The implications for foodservice design, in all senses, are all too clear.

Shopping and dining
There is no need to add to the sum of words written about the current state of Britain’s high streets, but it is worth noting that according to latest research, there has been a 3% drop nationally in footfall in 2012, up to late October. Steady growth for online retailing, in a muted consumer economy, suggest a lean time for “physical shopping”, especially away from the major retail malls, which we discuss elsewhere in this edition of Peach Report.

Our BrandTrack research indicates the dining brands with the most exposure to the shopping customer. The three leading coffee shop brands are the brands with the highest proportion of users visiting while shopping (around 40% in each case), but among the pub brands, the town- centre estates of Yates’s, O’Neill’s, and Wetherspoons have the strongest link to the shopping occasion. In the restaurant segment, YO! Sushi, Wagamama and Cafe Rouge have the most exposure.

The luncher
Across the pub and restaurant brands we measure, just over one in four users, on average, are lunchtime visitors, and perhaps surprisingly, this differs little between the two sectors. But they are different kinds of diners.

Branded pub lunch users, compared to restaurant lunch diners, are:
* more likely to be over 55
* likely to eat out a little less often
* much more likely to visit on a Sunday (not necessarily at lunchtime)
* slightly less likely to have children in the household
* are less likely to be found in the prosperous South East and London
* are less likely to be in the more prosperous Acorn groups and occupation classifications
* are a little less happy with their current financial position.

Comparing branded pub diners who visit at lunchtime, to the overall branded pub user base, the lunch profile is skewed even more to older customers, to retired diners in particular, and towards women, as well as people without children.

Pubs: the Sunday best
The restaurant brands’ lunch diner profile is also skewed towards females, but with not the same strength of skew towards older guests.
While we cannot isolate lunch visiting by day of week in our research, we can see the brands with the highest incidence of Sunday usage, when lunch will be the dominant session. It is crystal clear just how strong the pub brands in general are on Sundays. Not only that, but despite all the changes in consumer behaviour, the iconic role of the Sunday roast is also clear: the brand with the highest incidence of Sunday usage among its customer base is, by some distance, Toby Carvery.

Coffee shops—in name only?
Our focus here is principally on the pub and restaurant brands, but it is worth looking at coffee brands’ presence in the lunch market. In our latest research, all three major coffee brands have almost as many customers claiming to visit at lunchtime as in the core morning segment, evidence of their focus on developing “food capture” in recent years. As the coffee format evolves, we should expect this gap to narrow even further.

The future
What of the future, and the challenges for brands and operators, particularly in the casual dining and pub-restaurant segments? We clearly have to draw a clear divide between the suburban diner’s typically more leisurely mode of usage and that of the urban workforce, who feel they have less and less time for lunch, are increasingly likely to be multi-tasking while lunching, and eating at less traditional and predictable times.

It is partly a function of the changing world of employment: the proportion of those employed who work part-time has grown from 29% in 2001 to over 32% in Q2 2012, whilst at the same time the proportion that is self-employed has grown from 13.6% to almost 17%. It is no wonder that the workplace catering sector is facing challenges. In the words of the Trajectory Partnership, “set mealtimes are increasingly a thing of the past.”

Simply discounting the lunch session is unlikely to be a sophisticated enough reaction to these societal changes. Unconventional consumer behaviour requires unconventional brand responses. Everyone, perhaps most notably the food retailers, wants a piece of the lunch spend, especially if the optimists are right about market growth in what seems likely to be a prolonged period of suppressed consumer spending.

We have seen that when you move away from the iconic Sunday pub lunch, consumers’ lunching behaviour is becoming increasingly more diverse and less “structured”. It is a complex challenge for leading foodservice brands, not least because of the increasing diversity of the competitive set. Everyone, including the grocers, wants that lunch money.

Most/least lunchtime-biased brands: pubs and restaurants
Restaurant brands with the highest (and lowest) % of guests who visit at lunchtime
YO! Sushi 39%
Carluccio's 39%
Cafe Rouge 39%

Garfunkels 20%
Chiquitos 17%
TGI Friday's 16%

Pub dining brands with the highest (and lowest) % of guests who visit at lunchtime
Crown Carvery 38%
Wetherspoons 36%
Toby 33%

All Bar One 22%
Beefeater 22%
Miller & Carter 15%

Most lunchtime-biased brands: all channels
The 10 brands with the highest % of guests who visit at lunchtime
Subway 57%
Greggs 55%
Pret a Manger 51%
Eat 43%
McDonald’s 42%
Burger King 42%
YO! Sushi 39%
Carluccio's 39%
Cafe Rouge 39%
Wimpy 38%

Least lunchtime-biased brands: all channels
The 10 brands with the lowest % of guests who visit at lunchtime
La Tasca 22%
Strada 22%
All Bar One 22%
Beefeater 22%
Frankie & Benny's 22%
Zizzi 21%
Garfunkels 20%
Chiquitos 17%
TGI Friday's 16%
Miller & Carter 15%

Shopping-linked visiting by segment
Average proportion of brand users who visit while shopping
Coffee / sandwiches 32%
QSR 24%
Restaurants 9%
Pubs / bars 7%

Branded coffee shop—usage by daypart
Average proportion of brand users who visit in each daypart
Breakfast 9%
Mid-morning 33%
Lunch 30%
Mid-afternoon 28%
Early evening (5 to 8pm) 8%
Late evening (after 8pm) 2%

Sunday dining: the pub's domain
The 10 brands with the highest % of guests who visit on Sundays
Toby 25%
Fayre & Square 18%
Crown Carvery 18%
Harvester 16%
Brewer's Fayre 16%
Chef & Brewer 15%
Hungry Horse 15%
Vintage Inns 14%
Flaming Grill 14%
Sizzling Pubs 13%

Source: Peach Brand Track October 2012, Sample c4,900 out of home diners