In search of stand-out operators

Brands have become a central part of the eating out market. They are well known and well used by consumers, and are continually increasing their reach.

But in a flat market, with consumers at best reluctant, and at worst afraid, to splash their cash, it’s increasingly important for both established and emerging brands to build their reputation, their appeal and loyalty.

The issue for eating out operators and brand owners is increasingly about market share, not only defending it from the jealous grasp of the supermarkets, but also from the immediate competition – in all its diverse forms.

Typically, consumers have a broad range of brands they will use including fast food chains, coffee shops, pubs and casual dining concepts – all of which influence their experiences and expectations. That breadth also means that competition, both direct and indirect, comes from a wide field.

The Peach BrandTrack survey of 5,000 consumers completed its third round of research in April this year. It brings an up to date view on eating out behaviour and attitudes, with a specific focus on the standing and stature of the leading brands in the UK marketplace. The full research also includes detailed profiles of individual brands and their competitive sets.

Many key messages from our two surveys in 2010 remain true, not least the essential challenge to convert brand awareness to brand enthusiasm and advocacy.

[To see full set of tables, see right]

What’s the downturn done to eating out?
People are continuing to eat out-of-the home, with 92% of the public eating out at least once in the last six months – unchanged from this time last year.

Consumer confidence has been weak, and there is some evidence in our new data of the effects. The proportion of people eating out at least weekly has gone down slightly since October, from 44% to 41%, but there is no apparent reduction in the numbers of those who eat out several times a week at least, up slightly at 14%. They are disproportionately found in London, and among the AB social groups, where the squeeze on the consumer has been least evident.

In our last round of BrandTrack research, we observed an impact on weekly eating-out habits among younger consumers, the group most impacted by joblessness. That seems less marked, but this time round we are seeing a squeezing of the over 45s – with  a reduction in frequent dining out among this age group, who are most exposed to the effect of prolonged low interest rates on savings income. The most important group for the eating-out market remains 25-34 year-olds.
Frequency of going-out is much higher than average among the under 35s – the generations that have grown up with the eating out habit.

And then there’s London. Two thirds of people in London eat out weekly, compared to only 37% in the rest of the country. Look at daily eating out, and the difference is even more stark: it’s now done by 17% of our London sample, and only by 4% outside the M25. This is another symptom of our two-speed economy: with the disparity between London and the rest increasing over each of our three surveys.

There’s some evidence that people are a little less willing to go to a restaurant for a special occasion or celebration than in the past, but despite the consumer squeeze, there are still over three times as many people who say they would eat out on these occasions, compared to those who say they would entertain at home or visit friends.
Ultimately eating-out is still a huge market: with, if our calculations are right, well over 40 million adult weekly occasions to compete for.

Not only is the scale of the market impressive but from the perspective of branded operators, there’s a qualitative opportunity as well. We asked our sample of consumers how well they would rate the quality of restaurants in their local area – only 37% say the standard is very good or excellent, and outside London the figure drops to 35%. There’s massive scope to impress the consumer, and that’s where the issues of brand reputation, image and delivery come in.


Quality and value driving choice
When we ask consumers what is the most important factor when deciding where to eat, food quality comes out top – followed by choice of food and value.

But there are signs that service is becoming more important for some as a potentially important differentiator. In London, where the evolution and the density of the market is so much higher, and where it might be argued that good quality food is easier to find, more emphasis is placed on service than elsewhere in the country.

Price on its own is not as commonly mentioned as might be expected, although it is relatively more important for the younger market and among the C2 social grade – two groups that are known to have struggled more than many in the downturn.

However those are generic issues about dining out. We also ask consumers for the reasons they chose a particular brand, and here value comes close to food-related issues. Although, it’s worth noting the power of past personal experience in the decision process.

Value for money is an important consideration for users of all brands, but it is among pub brands where the issue is most strong, cited by over 75% of customers of five of the leading brands in the market – and Wetherspoons was not the highest in this list.

Vouchers and offers are less important in choice, although their significance is greatest among pizza brands - and the evidence suggests they have become more significant for their customers over the last six months rather than less.

If quality and value are so important, what other attributes lie behind these images? We ask consumers to attach certain adjectives, such as ‘exciting’, ‘fresh’, ‘passionate about quality’, ‘generous’ and even ‘down-market’, to individual brands.

There is a strong link, for example, between a perception of freshness and being passionate about quality. It’s a simple truth for our market and one which favours sandwich operators such as Pret and Subway and the open kitchens of Wagamama. It begs the question of whether developing an aura of freshness can boost a brand’s sense of quality with its customers.

Likewise, brands more associated with being downmarket have comparatively low ratings for being passionate about quality, and the converse is equally true. This is a challenge, particularly, for some pub brands.

Our other ‘simple truth’ is the evident linkage between a perception of ‘generosity’ and good value. Generosity is a strong card for the pub sector in general, compared to the casual dining brands, which tend to play better on freshness.

With pub groups, both branded and unbranded, generally trading better than their casual dining counterparts at the moment, it may well be down to their perceived advantage in delivering generosity and value, as well perhaps their flexibility in being able to trade day-parts better.

Carvery brands are particularly strong on generosity. Eight out of the 10 best rated brands for value for money are pub/bar brands, with the two leading carvery brands, Toby and Crown, close to the top of that value league. It’s probably therefore no coincidence that those two brands are both among the four most recommended brands in our survey this time too.

While pubs might want to improve their image when it comes to quality, passion and excitement, casual dining perhaps need to look at value and generosity? Providing offers and vouchers is not enough as our calculations show little link between those and a perception of value. Offers get people through the door; they don’t say much about the experience. That still needs to be delivered.

What stops people using brands?
This time, we asked why people wouldn’t consider using certain brands. These could be negative impressions, its food or its customer profile. However, the main reasons for not considering going to a brand are either there aren’t any branches locally or a simple lack of knowledge about the brand. In other words, brand owners probably need to open more sites and up their marketing!

There are slight differences between pub and the casual brands, with the latter a little more likely to be thought to be expensive, but this is a secondary issue.

Leading operators, like M&B, have long made the case that their individual market share is comparatively modest, and that there is considerable scope to grow. This evidence would tend to back that up. In the shorter term, continued marketing investment should help to raise consumer understanding of the brands, and bring them onto the radar, and investment in retail standards and the customer experience would help reduce the small but not insignificant proportion of people who rule out brands on the basis of a disappointing previous visit.


Eating habits – it all depends on the time of day and time of week
Time of day and time of week makes a big difference on where people choose to eat – with Sunday still the day to go to the pub for lunch.
Coffee shop use tends to dominate the beginning of the week. Fast food comes to the fore on Fridays and Saturdays, with casual dining use also peaking on a Saturday. Friday is the top day for pub going, but pubs still dominate eating-out occasions on a Sunday, which is otherwise the quietest day for going out.

When it comes to day-parts, breakfast is still an under-developed period, dominated by coffee shops and fast food brands. Fast food and then pubs are the most widely used at lunch-time, with coffee shops coming into their own in the afternoon.

Early evening trade is generally given over equally to casual dining chains and pub restaurants. Later evening business is more the preserve of casual dining brands. But on our evidence, eating out after 8pm is actually an under-developed opportunity.

That may seem strange to anyone working in London or any other big city, but typically people aren’t going out after 8pm for a meal. It may be an age or family thing, but even if we remove coffee and QSR brands from the equation, an average of only 15% of pub and casual dining brand users say they have eaten there after 8pm, and the figure across the leading pub brands we measure is little over 10%. Only TGI Fridays has more than 30% of its customer-base eating after 8pm, with only Zizzi, Loch Fyne, Jamie’s Italian and PizzaExpress having at least a quarter of their consumers turning up after 8pm.

Forget breakfast, is late evening the real under utilised day-part?


Top brand rankings
[For full set of ranking tables see right]

Brands are fully established in the consumer consciousness. In our two earlier rounds of research we picked up over 200 brands with some level of spontaneous recall. That long tail has now got longer: this time we picked up over 250, although only 13 brands are mentioned spontaneously by at least 10% of diners, with McDonalds still head and shoulders above the rest.

When prompted by showing people a list, the average number of brand names recognised is again over 24, and one third of our sample can recognise a minimum of 30 brands from the list presented.  We introduced some more brands into our list in the latest research, including Greggs – which is now 10th most recognised brand on a prompted basis.

Because levels of brand familiarity are higher among younger and better-off diners, there are some brands whose users are particularly brand-aware – customers of Jamie’s Italian, Eat and Giraffe for example can name the most brands.

Awareness and recognition is of course just the start of the journey to brand enthusiasm and recommendation. But consumers appear to be warming to brands. From the 24 brands recognised, consumers will now consider an average of almost 10 brands when considering where to eat out, and this number is rising over time, from under eight in April last year.

In a flat market, that only has one consequence – greater competition to secure a share of the (roughly) five eating visits per month that the average UK consumer makes.

McDonald’s remains Britain’s most visited brand. Although we picked up slightly fewer claimed users in this round of research, those that are visiting the brand appear to be doing so more often. Around 5% of the population claims to use McDonalds at least weekly.

Greggs moves onto our leader board as the fourth most used brand (on a six-month basis); indeed six of the ten brands with the largest user base are in the on-the-go market. Costa has again made advances, as its UK network grows quickly, and like the other coffee retailers, it tends to enjoy comparatively frequent usage compared to pubs and casual dining.

The average number of brands used by the public is now 5.5. That’s the second cycle of BrandTrack research in succession that this number has increased – it was less than four a year ago. There is an underlying growth in consumers’ brand ‘roster.’

There’s also a growing minority of consumers with wide brand repertoires - 13% now claim to use at least 10 brands, compared to 8% in October, and this trait is most marked among the under 35s and in London.

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, the second in October 2010. This third round of research, carried out in April 2011, looks for changes in behaviour and in brands’ status. Research partners also receive detailed profiles of 60 leading individual brands, including customers’ brand repertoires. For more information or to get involved contact Peter Martin on 01704 550383 or via peter@peach-report.com