Why brand competition is hotting up
29 December, 2010
by David Martin
London is almost another country: one in seven Londoners say they eat out every (or almost every) day – up from one in nine in April
The British public is continuing to eat-out and brands are becoming a more important part of that experience – leading to even greater competition among leading chains for both custom and loyalty. David Martin reports on the key trends from the latest Peach BrandTrack research
Branded chains are cementing their place in the affections of the public. People are continuing to go out to eat and are now choosing from a wider range of branded options than ever before. But that popularity is not necessarily being converted into customer loyalty.
That’s the story from the latest Peach BrandTrack survey of 5,000 consumers taken in October, leading to the conclusion that although brands are doing well, competition among individual concepts for business is hotting up.
In all, 91% of the adult population had eaten out at least once in the last six months, much the same as in April – which given the apparent fragility of consumer confidence is good news. More than 40% were eating out at least week – a figure rising to over 50% in London.
But, there is evidence to reinforce the view from the late night operators that the under 25 market is weakening – the proportion of that age group eating out weekly has reduced from 58% to 52% in the last six months. Notably, the proportion of 18 to 24s eating out at least three times a week is down from 22% to 14%. In all other age bands the proportion eating out at least weekly has increased compared.
London is almost another country. A key differentiator in this market is the significance of the very high frequency customer in the capital: one in seven of our London sample now says they eat out every (or almost every) day – up from one in nine in April. In all the other regions the equivalent figure is typically 3-4%.
A full set of accompanying tables can be found to download right, under Related Media
Who’s the most well-known and have we seen any changes?
Quick-serve brands still dominate the list of the most spontaneously recalled eating out brands, although Wetherspoons’ awareness has risen in the last six months to move ahead of Pizza Hut:
However, brand awareness is generally a slow-burn and long term building process. We see only marginal changes in levels of brand awareness since our April research, although most leading brands are ahead by 1 or 2 percentage points; only two brands have shown 5 percentage-point advances in prompted awareness, Sizzling Pubs (where a TV ad campaign has recently broken), and Chef & Brewer (where a ramped-up investment programme is under way).
The branded world is very crowded, with a very long tail. We again picked up around 200 brands with some spontaneous awareness, but only 12 brands were recalledby at least 10% of the sample. Women, people in social group AB, and the under 2’s tend to spontaneously recall more brands than the average (of 5.6, unchanged from April). When prompted, the average number of names recalled is 24.8, up from 24.3 in April. Dining brands are gradually registering more with the consumer.
But building awareness is only the first step to getting a brand seriously considered by consumers. From those 24.8 brands recalled with prompting, on average our sample of consumers would seriously consider nine brands from which to pick their average of roughly five they will visit during a month. However, this ‘consideration set’ has gone up from just under 8 in April, and indicates that the fight for customers is getting tougher. This trend is across the board and applies to all age bands, regions and social grades. Once again it is the younger diners and the more upscale social groups who have wider brand ‘literacy’ expressed by consideration as well as usage.
The relationship (or conversion) between brand awareness and consideration is significantly different across the spectrum of brands we research, reflecting varying levels of brand appeal. Considering all brands where our sample of users is at least 100, this conversion factor is highest for Jamie’s Italian (at 62%, 8 percentage points higher than the next brand), and lowest for Wimpy (at 17%).
Most used brands – the leaders and the movers
There are no great surprises in the “most used” list of brands. McDonald’s is still comfortably ahead of any other brand in terms of its user base. However, the two leading coffee chains, Starbucks and Costa, appear to have made advances in eating-out usage, and in terms of the proportion of their customers who eat there at least monthly.
Among the other leading brands, Harvester, which has returned to TV advertising, has registered growth in usage. Wetherspoons has also overtaken Pizza Hut in terms of usage.
The number of brands people use, in other words their “brand repertoires” are higher for the under 35s, among social groups AB and C1, and, unsurprisingly, in London.
So, brands are making progress in increasing their penetration of the market. But if overall visit frequency in the market is static, it means simply that more brands are competing for the same people’s time.
Building frequency of use by is core customers is probably important for any brand. QSR and coffee chains have the most regular customers, and among the leading pub and restaurant players Wetherspoons and Harvester are performing best.
Brand repertoires – the big brands are universal
Target market customers can often be relatively tightly defined by their owners, leading to the potential assumption that a brand has a discrete audience, not necessarily exposed to the ‘mass market’ operators. Not so. Our research shows that the big brands are the ‘big brands’ for everyone.
Among AB social groups, for example, the most used brands are pretty much the same as for the whole market. Better-off people still eat fast food, and practically all brands have Wetherspoons and McDonald’s as significant competitors. Of course, this is not the same as looking at the brands most dependent on AB customers
BrandTrack produces detailed customer repertoires for all the brands in the survey and these are available separately for BrandTrack subscribers.
This time we also asked why diners that have heard of a brand wouldn’t consider using them. The good news is that the principle reasons given were lack of availability (in other words no sites nearby) and lack of knowledge (they don’t know enough about a particular brand), rather than any intrinsic dislike of a brand. Better marketing and more sites, might be the simple answer to getting more people to trial.
Brand enthusiasm – the holy grail
Having broken through into diners’ awareness, then into their consideration set, then onto their comparatively narrow repertoire, the last hurdle is to impress the guest, in order to secure their next visit.
The problem is that across the leading 40 industry brands surveyed, on average only 53% of their users say they are very, or extremely, likely to revisit and only 30% give a ‘top-box’ recommendation rating – in other words, those that would be deemed brand advocates or enthusiasts. This represents a huge risk of competitive intrusion, and customer churn, and is worrying given the long road from the creation of brand awareness to the conversion into usage. Loyalty is still hard to secure
So, which brands have the most enthusiasts? On the basis of the recommendation question, the top 10 features five pub dining brands, notably two carvery brands, Crown and Toby, placed second and third, behind Loch Fyne. Putting together an aggregate of satisfaction, revisit and recommendation scores, Toby Carvery comes out on top – hence the fact that it won The Peach 2020 Hero award for Consumer Choice this year. It’s the brand that delivers most for its customer group.
Quick-serve brands and coffee chains are absent from this top10. This touches on a wider point that the biggest brands, measured by awareness, tend (on average) to get lower experience and recommendation ratings. The challenge of scale may be? Simplistically, the brands that break through 60% in prompted awareness are typically those associated with higher levels of consideration and usage, which may of course be principally number and spread of sites. However, smaller brands tend to get higher recommendation ratings – although there are exceptions.
Driving eating-out choice – and the links to quality and value
We ask the public to rate factors most influential in determining their choice of restaurant or eating-out establishment - and here the value of positive experiences becomes clear. Across the leading brands, food quality comes out top, ahead of food choice, and value for money. ‘My previous experience’ was also cited by over 60% of diners, over three times as many who mentioned a recommendation from someone they knew.
If food quality is the dominant driver of choice, which brands are rated the most highly by their users? The top-rated brands for food quality are primarily casual dining operators – only two pub formats feature in the top 10 and no quick serve brands.
Interestingly, the research showed a strong correlation between perceptions of “freshness” and being “passionate” about quality, exemplified by the likes of Pret a Manger. The conclusion is that building a perception of freshness is highly likely to benefit your perception of quality.
The research showed a similarly strong link between “value” and a sense of “generosity” in a brand The appeal of pub carveries is an obvious example, rating high for value and for being generous. In fact, the 10 brands most highly associated with generosity are all pub dining formats, and two of the leading three are carvery operations.
Meanwhile, the lower reaches of this league table of generosity is where we find the coffee chains, and the major quick-serve brands.
However, there is no easy correlation between the brands where vouchers and offers are deemed important to consumers and a sense of value for money. Offers and vouchers may get people through the door, but they don’t by themselves instil a sense of value for customers.
Not surprisingly perhaps, pizza brands dominate the list of chains where vouchers and deals are most important to customers, cited by at least one in three users. La Tasca and Slug & Lettuce are others that make the list.
It’s getting better
Lastly, one of our attitudinal questions is to ask diners how they rate the quality of the restaurants in their local town or city. In our April research the proportion who said ‘very good’ or ‘excellent’ was 40%, and while this has moved ahead only marginally in this latest edition to 41%, it is significant that the increase is primarily coming from the demographic groups that are the most brand-literate and brand-familiar: women, ABC1s, those in London and the younger age bands. Brands are getting better, and the customer seems to be recognising it. But there is plenty of scope to expand the network, even at a time of stalled market demand growth. There is still all to play for.
FOOTNOTE 1: Jamie’s hits town
Jamie Oliver can, it seems, do little wrong. One of the most striking features of this round of research is the data emerging for Jamie’s Italian, although sample sizes are relatively small, we cannot ignore some of the results. Jamie’s UK casual dining chain is showing results that if sustained over bigger samples, as it grows, would in many cases be industry-leading. Jamie’s Italian has the highest conversion from prompted awareness to consideration of all the brands we measured. It also shows Jamie’s with the best satisfaction rating we’ve measured, the best service rating, the best food quality rating and the highest net promoter score. The industry waits.
FOOTNOTE 2: Breakfast news
Much has been written about the emergence of the out-of-home breakfast market, and in particular the efforts made by McDonald’s and Wetherspoon to attack this opportunity. But how big is the British audience for breakfast away from the home? According to our survey, 19% of adults have eaten breakfast at a brand in the last six months. This equates to a market of around 7.5million adults. McDonald’s and Wetherspoons are selling breakfast to about one in six of their brand users.
What is Peach BrandTrack?
Peach BrandTrack is a major piece of consumer research examining eating out behaviour, and the comparative standing of the leading brands in the market - through awareness, usage, and recommendation – from a sample of 5,000 adults, surveyed online by Harris Interactive. The first survey was conducted in April 2010. This second round of this research, carried out in October 2010, looks for changes in behaviour and in brands’ status. Research partners also receive detailed profiles of 50 plus individual brands, including customers’ brand repertoires. For more information or to gbecome a partner contact Peter Martin on 01704 550383 or via firstname.lastname@example.org