Trends & Insights

QSR Webcast: Written Responses

images_02 Recently the American Egg Board, in conjunction with QSR Magazine presented a webcast titled “Winning the Breakfast Daypart.” No daypart has grown faster than breakfast over the last 5 years, and no daypart has contributed more to the success many quick-service chains are having in a down economy.

This webinar focused on the phenomenal growth of the A.M. daypart, the prospects for future growth, and the strategies and innovative products chains have used to help them continue their dramatic success in the morning. The panelists included Stan Frankenthaler, Culinary Director of Dunkin' Donuts, Warren Solochek, VP Client Development, The NPD Group/CREST® and was moderated by Steve Solomon, National Accounts Director, American Egg Board.

Following you will find their comments. You can read what they had to say on the tab marked “Written Responses” or you can hear their responses by clicking on the Incredible! egg to the right of the statements below.

Although half of all foodservice breakfasts are eaten in the car or at work, the incidence of on-premise dining is on the rise.

Response: Warren Solochek of the NPD Group/CREST® reports – “We have seen that on-premise occasions for morning meal has actually increased over time. We suppose that sources from two different things. One is the fact that you have older consumers trading down from full service restaurants to quick service restaurants. They still enjoy a sit down occasion versus a drive-through or carryout. Secondly, we are seeing more fast casual outlets being built and offering morning meal. They tend to provide a different kind of environment to come in and sit down for a while versus carryout or just doing the drive through. The other big change that we have seen is when we ask people where they ate their take-out food; there has been a pretty sizable decline in the percent of people picking up something on the way to work. That is directly tied to the growing unemployment rate that we are seeing. If people are not working then they are not stopping off in between. That has been a really big change.”
Normally relegated to lunch and dinner, the practice of promoting QSR combo-meals is increasingly being seen during the morning daypart.

Response: Warren Solochek of the NPD Group/CREST® states – “One of the other things that happened in quick service, morning meal specifically, is that we are starting to see an increase in promotion supporting the morning meal occasion. We have broken it down into traditional quick service restaurants, that is what we call quick service excluding retail, and convenience stores. We have seen in the past year an increase in dealing for both of those different categories. I think that is important. Quick service has traditionally done a lot of promoting but it has not always been in the morning. I think we are seeing that operators are saying that we need to continue to drive traffic in the morning although it might be a smaller base of the population. We still need to get people to come and promotion is one way of doing it.”
C-stores are taking their cues from the success of QSR combo promotions, with the major difference being c-store combos are driven by the beverage purchase.

Response: Warren Solochek of the NPD Group/CREST® reports – “One of the things that convenience stores have done in the past year is to say, let's look at what traditional restaurants are doing and see if we can use the same kind of tactics to drive traffic to our outlet. I think the two differences in the restaurant categories are that for convenience stores, beverages are an important driver, and not necessarily just coffee. It could be all kinds of different beverages. It is much more of a beverage-driven occasion in a convenience store than it is at a quick serve restaurant.”
Focusing on innovation has helped QSRs weather the economic downtown better than other segments and it will also help maintain customer loyalty when the economy improves.

Response: Warren Solochek of the NPD Group/CREST® mentions – “Let me just add to that as I think that one of the great things that quick service restaurants have done in the past couple of years is really focus in on innovation. To Stan's point, I think that those that have been successful, have been those that have continued to innovate and provide offerings that might be closer to what you traditionally thought you could get in a full service restaurant. I think that is clearly one of the incentives to having people trade down from full service to quick service. Those offerings are getting closer. The more variety that is out there and available, certainly it is going to be more appealing to more people.

Where that nets me out is a dilemma I think that is really going to face the quick-service industry as a whole as we go forward which is, how can quick-service operators start to move away from all the promotion that is going on and still drive traffic. That brings me back to innovation, which I think is just so important because it helps make an operator unique. It helps make them different. It helps provide a little more variety for not only their customers, but for competitor's customers. I think in an environment like the one we are in today, if you stop innovating, once we finally come out of this economic downturn you are going to be way behind the eight-ball versus those operators that continue to innovate.”
Value is not just about price, but is a judgment about the entire experience – how satisfied was I with what my money just bought?

Response: Warren Solochek of the NPD Group/CREST® says – “… value also means value for the money which means I may spend a little bit more on a new and different product, but as long as I feel like the money I spent was worth it, it is an incentive for me to get that product again. I think what innovation does, or what variety does, as long as those newer products that are there are deemed to be worthwhile, I think it is absolutely a way to grow business. I also think that value, to go back to what Stan said, means consistency and knowing that you can go back to a chain, maybe not the same unit every time, and expect the same consistency and the same quality and the same heat and the same everything else, plays a lot into the value equation.”
News drives business – customers like to have new choices available to them even if they tend to buy the same thing everyday.

Response: Steve Solomon of American Egg Board asks – “Is there any thinking that with more options out there and more competition, we will all get better at meeting consumer needs and be able to attract even more people to the day part?”

Response: Stan Frankenthaler from Dunkin' Brands responds – “Oh absolutely. I think that competition is a great thing for growing your business. I think that it not only draws more attention and more customers to the day part, but really a good sense of healthy competition drives innovation, drives consistency, drives a high level of execution. It is all the things that customers want and when you can hit on those cylinders, then you really are working for your customer and you will increase that loyalty.
Beyond convenience, QSR breakfast offers an attractive dining experience that is difficult to replicate at home due to the work and the number of ingredients involved.

Response: Warren Solochek of the NPD Group/CREST® replies – “So I think if you talk about it not so much in terms of price, but you can talk about it in terms of you can get things here that you just cannot make at home. Something that is different. Something that is hot, as opposed to eating ready to eat cereal or cold cereal. I think it does a lot to at least get people thinking about coming into quick-service restaurants and getting something that they cannot necessarily do at home.”

Response: Stan Frankenthaler from Dunkin' Brands states – “If the menu grows to offer the components of breakfast, and I can choose from them, I can combo them, I can put them together myself, that is an important way to build check average. Then again to look at this idea of building towards premium offerings with premium ingredients. So we have a great cherry wood smoked bacon. That creates great appeal with our customers.”
Technology will take an increasingly important role in the complexity, sophistication and type of menu items QSR operators will be able to offer in the future.

Response: Warren Solochek of the NPD Group/CREST® reports – “I think, honestly, a lot of it will have to do with technology and what kinds of technological innovations allow for faster preparation of perhaps more complex foods. We have seen the introduction of turbo ovens in a lot of different outlets, and that has enabled a lot of operators to make breakfast sandwiches or heat breakfast sandwiches, or do omelets, or do different kinds of sandwiches that they had not been able to do just a couple of years ago because there was no way to do that quick heating type of thing. I think as technology expands and gets better, it is going to provide a lot more opportunity to provide something a little bit more complex than today.”
The breakfast sandwich is still the number one breakfast item and continues to grow year after year.

Response: Stan Frankenthaler from Dunkin' Brands states – “Again, that idea of graying of the lines between the categories, it is of great value to be able to have an omelets in the check average of a QSR or a Dunkin Donuts, than having that omelets at a sit-down restaurant. We never used to get that before. That is a great example of innovation leading to that opportunity, and around value perceptions. So we did our waffle breakfast sandwich. That was a plated meal in the past. I had to sit down for that. Now I can have that portable. We did something similar with French toast.”
Convenience is a major driver of the growth of QSR breakfast, which in turn, is one reason for the continued increase in egg servings even in the face of the economic downturn.

Response: Stan Frankenthaler from Dunkin' Brands reports – “I believe that we are going to continue to see a lot of growth in the QSR category across the board in breakfast. I think we touched on ideas like convenience. We all know that a lot of folks skip breakfast and, as Warren just commented on, it is often time driven. We more often skip breakfast because we say that we do not have time than a lot of other reasons. QSR growth is certainly going to continue. I think that we saw, in some of Warren's data that he discussed earlier in the webinar, that the combo meal is growing and it is easy to understand why. That is the complete meal. The combo represents my complete meal and that means a lot to me. So, speed, convenience, the opportunity to get a complete meal, as Warren demonstrated to us, it is a significant savings as you trade between the categories.”

Response: Warren Solochek of the NPD Group/CREST® responds – “I do think there is the opportunity to kind of go down both of those paths, convenience and comfort. So clearly I think convenience is driven by the fact that a stop in the morning, at least during the week, tends to be on my way to someplace else and I do not have a lot of time to linger, which is where I think quick-service restaurants truly have an advantage relative to their full-service competitors. But I also think that if there is an opportunity to provide what I will call more comfort type food, I think people are looking for that and if I can still get it in a relatively quick way, I still will purchase it.”
There were 121 million more servings of egg-related products at QSR morning meal in 2009 than during 2008.

Response: Warren Solochek of the NPD Group/CREST® reports – “…the number one food sold is a breakfast sandwich. That could be a breakfast sandwich that is sold on a bagel, croissant, biscuit, or other type of carrier. You can see that there are a number of other products on there, including eggs. There are a lot of different carriers here that use eggs in some way, shape, or form.”
As the ethic makeup of the American public continues to evolve, so do QSR breakfast menu items and the flavors being used in them.

Response: Stan Frankenthaler from Dunkin' Brands states – “I do think that we are going to see more exploration at QSR from a flavor perspective. We are certainly seeing more and more diversity in our communities, more and more diverse flavors coming to the dinner table at home, coming in those other day parts from all categories of restaurants Certainly the Latin flavor profile, Southwest, Tex-Mex, we are going to be seeing a lot more of that happening. We are going to be seeing some of the Asian flavors and Asian profiles, and especially as that might hit up against some perceived healthier choices, cleaner flavors.”

Response: Warren Solochek of the NPD Group/CREST® reports – “…there is a much more sophisticated restaurant goer today than there has been in the past. I will compare simplistically me and my kids to my parents. My kids have what I will call a more sophisticated palate. They are used to eating more ethnic foods and not being scared away from different kinds of sauces or different kinds of preps, whereas my parents would not have prepared or purchased those kinds of food. I think the fact that you have a generation out there now where restaurant eating is as common place as eating at home, it provides all sorts of opportunities to bring those kinds of preparations into restaurants because you know the demand for them will be there, whereas that may not have been the case five or ten years ago.”

To read an executive summary, click on “Winning the Breakfast Daypart.”

To view the entire webcast, click here.