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As Inflation Continues to Outpace Wage Growth, Restaurant Marketing Must Offer Diners Greater Value

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Restaurant Marketing: As inflation continues to outpace growth in wages, consumers are looking to do more with less. When it comes to dining out, they are choosing a restaurant that they perceive offers them the best value for their money. Learn how to target these consumers to increase market share in our blog post.

As inflation continues to outpace growth in wages, consumers are looking to do more with less. When it comes to dining out, they are choosing a restaurant that they perceive offers them the best value for their money.

Consumers who say they have no brand preference rank second in the Quick Service Restaurant (QSR) category. This segment represents a $40 billion opportunity for quick service restaurant marketing efforts across the US.

  • 24% of QSR/Fast Casual consumers prefer McDonald’s, the largest brand preference within the category.
  • Consumers reporting they have no preference or loyalty to a brand is second with 21%.

What does this mean for your quick service restaurant? Based on the average check of $12.60 for the no QSR brand preference customer, increasing your traffic just 3% would generate $34,000 annually.

Each No Preference consumer is spending $365 annually on QSR/Fast Casual purchases, based on current trends. To achieve a 3% lift in traffic, you would only have to convert approximately 225 customers per month, or 56 per week.  Greater increases grow your ROI at an even higher rate.

Slow Churn and Drive New Customer Growth

Understanding this invisible “competitor” presents a tremendous opportunity to slow churn and drive new, loyal customer growth.

What is important to the No Preference consumer and what composes the right elements of value which will gain their attention?

Your strategy to reach this segment is to motivate them with compelling offers to generate trial, and then win them over with your exceptional service and great tasting food.

Even though inflation declined in August to 8.3% overall, it continues to outpace the 6.1% increase in wages. Discretionary spending is down as prices for household necessities such as gasoline, utilities, and groceries continue to climb. Restaurants continue to maintain a 5.5 point gap in inflation over groceries.

As we enter fall, home heating oil, natural gas, and electricity continue to increase.  Perhaps the greatest impact is felt by the Rural Consumer who has seen their Discretionary Income decline by 49.1% from June 2020 to June 2022, compared to 14.5% for Urban Consumers.

As prices increase, customers are trading brand preference and loyalty for the greatest perceived value. Brands that understand the new consumer value equation can create preference and steal share.

Source: Bureau of Labor Statistics, August 2022 CPI Report; Iowa State analysis, July 2022 (CPI, June 2020-June 2022)

Coordinated Exposure Amplifies Your Message

  • 31% of QSR/Fast Casual Consumers are influenced by print media, making direct mail a critical lever in your media mix.
  • 62% of QSR/Fast Casual Consumers are influenced by Print and Digital Channels, 4 points higher than Restaurants overall.
  • 43% of Consumers are likely to make a purchase after receiving both print and digital advertising from a brand.

A healthy media mix is built on coordinated direct mail and digital display to increase reach and response. Gain more restaurant industry insights, including our new Restaurant Marketing eBook, on our resources page. Reach out today to plan your strategy!

Sources: Prosper Insights & Analytics February 2022; SG360 The Future of Direct Mail, 2021; Prosper Insights – MBI Survey, January 2022; Bureau of Labor Statistics; USPS Mail Moments Survey, Spring 2021; Iowa State analysis, July 2022 (CPI, June 2020-June 2022)