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Presented by
Growing Your Business In A Challenging Environment
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This is the situation…
-0.4% +1.3%
Traffic Check Dollars
15 Billion JFM’17
$111 Billion JFM’17
+1.6%$7.52
Per Eater
Source: The NPD Group/CREST®
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Source: The NPD Group/CREST®
How you can grow revenue
Increase Reach Drive Purchase Frequency
Increase Checks
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To drive growth, operators must reverse the decline in purchase frequency
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1.Price really matters
2.Consumer resistance
3.How to increase restaurant visits
4.What you can do
Agenda
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Data sources
CREST®Checkout TrackingSM
Checkout PanelistsSurvey
Mobile app for consumers with iPhones and Androids
Users upload receipts for purchases made across all retail channels and categories
Transaction level detail captured provides a longitudinal view of consumers’ purchases behavior
50,000 active participants today, 13+~32,000 restaurant users submitting ~4.1MM receipts
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PRICE REALLY MATTERS
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The #1 driver of restaurant trafficShare of Traffic*
*Excludes Convenient Location – year ending Dec. 2016
Source: The NPD Group/CREST®
Good Price Treating Myself Food Variety/Quality
23% 13% 13%
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Food inflation – “story of the year”Eating at Home is Cheaper
-4%
-2%
0%
2%
4%
Q2'13 Q4'13 Q2'14 Q4'14 Q2'15 Q4'15 Q2'16 Q4'16
Graph shows quarterly inflation % change versus year ago
Source: Bureau of Labor Statistics
Away from Home
At Home
Qu
arte
rly
Infl
atio
n %
Ch
ange
Convenience vs. Cooking
10 10
Industry slowdown is everywhereTraffic % Change vs. YAGO
9% 10% 8%5%
1% 0% 0%
6% 4%
% Change vs. Year Ago
JFM'15 AMJ'15 JAS'15 OND'15 JFM'16 AMJ'16 JAS'16 OND'16 JFM'17
Full Service
QSR excluding Fast Casual
Fast Casual
( 75% )
( 6% )
-1%-2%-3%-4%-3%-2%-2%-2%-4%
0% 1% 1% 2% 1% 0%
-1%
0% 0%
( 19%)
Source: The NPD Group/CREST®
Retail – NC C-store +1
(Share of Traffic JFM'17)
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-10%
0%
10%
20%
30%
40%
50%
60%
70%
80%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
<$3 $3-$5 $5-$7 $7-$10+
YE Dec'15 % Traffic YE Dec'16 % Traffic YE Dec'16 Value
Eate
r C
hec
kD
istr
ibu
tio
n
Val
ue
Co
mp
osi
te S
core
Reality68% - $5-10+
Price satisfactionQSR Burger Lunch*
*Excludes Fast Casual Burger
Source: The NPD Group/CREST®
Sweet Spot
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$0.00
$1.00
$2.00
$3.00
$4.00
$5.00
$6.00
Los Angeles, CA Dallas/Ft. Worth, TX Atlanta, GA/AL/NC Chicago, IL/IN Orlando/Daytona New York/CT/PA Wash.D.C./MD/PA/VA/WV
Philadelphia,PA/DE/NJ
December '15 December '16
The proof is in the puddingChicken Sandwich – Average Selling Price
Source: The NPD Group/Checkout Tracking SM
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0%
20%
40%
60%
80%
0%
20%
40%
<$10 $10-$15 $15-$20 $20+
YE Dec'15 % Traffic YE Dec'16 % Traffic YE Dec'16 Value
Eate
r C
hec
k D
istr
ibu
tio
n
Val
ue
Co
mp
osi
te S
core
Price satisfactionCasual Dining Dinner
Source: The NPD Group/CREST®
Sweet Spot Reality
50% - $15-20+
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If restaurants are to succeed in this challenging marketplace, they must address their value proposition – it currently does not seem to resonate well with consumers.
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15 15
High profitability – high popularity Low profitability – high popularity High profitability – low popularity Low profitability – low popularity
Determine which foods drive your customers strongest value proposition
Evaluation of Menu PricingIs Warranted
Understand what parts of the menu require attention
Know the price ranges at which your customers are most satisfied
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Consumer Resistance
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“I watch how I spend my money on my purchases.”59%
“I think restaurant prices are too high.” 39%
Source: The NPD Group/Checkout TrackingSM Restaurant Re-contact Survey, September 2016
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Consumers manage restaurant spend
Trade Down Cutback On Visits
Order Fewer Items
Promotions
and Deals
19 19
Importance of buyer groups Understand how dependent the restaurant industry is on these buyer groups based on their frequency of visits.
Source: The NPD Group/Checkout TrackingSM Total Channel
SUPERLIGHT
LIGHT
MEDIUM
HEAVY
Less than once a week
Once a week
2 times a week
3+ times a week
October 2016
20 20
Who’s to blame for slow growth?
30% 28%
25% 25%
23% 26%
22% 21%
6 ME August'15 6 ME August '16
SUPERLIGHTLess than once a week
LIGHTOnce a week
MEDIUM2 times a week
HEAVY3+ times a week
% of Restaurant Buyers: Purchase Frequency Distribution ’15 vs ‘16
Source: The NPD Group/Checkout TrackingSM Restaurant Re-contact Survey, September 2016
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HOW TO INCREASE RESTAURANT VISITS
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“Give me a real deal”
They want to choose the deal 10%OFF
Source: The NPD Group/Checkout TrackingSM Restaurant Re-contact Survey, September 2016
All restaurant customers claimed they would visit restaurants more often if operators offered more price incentives.
This suggests that what is currently offered as a deal is not resonating with consumers.
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“Reward me for my visit”All groups are interested in rewards programs, they are most appealing to Heavy Buyer
NPD Checkout Tracking Survey – September 2016
Heavy Buyers
Medium Buyers
Light Buyers
52%
46%
46%
Source: The NPD Group/Checkout TrackingSM Restaurant Re-contact Survey, September 2016
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“Treat me well”
Based on satisfaction at lunch; Service also had highest correlation at dinner
Source: The NPD Group/The Changing Dynamic at Lunch report
Pleasant service
Responsive
Food quality
Pleasant service
Food quality
Taste and flavor
QSR FSR
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Source: The NPD Group/Custom Study
So what can you do?
Look at menu prices
Target heavy and light visitors
Remember: “Treat me well”
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Being served
Appeal to a specific craving
Someone else cooks
Don’t have to clean up after you eat
Eating out is a reward
Messaging To Get Them Out Of The House: Promote Restaurant Benefits More Clearly
Source: The NPD Group/Custom Study
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QUESTIONS?
27
28
Thank youThank you
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29
STUDY PARAMETERS
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About This Report
Source: The NPD Group/Checkout TrackingSM Total Channel
Checkout TrackingSM Total Channel
Receipt harvesting mobile app for consumers: iPhone and Android
All categories, transaction level, longitudinal
Crosses channels
Panelist demographics and cross-shopping activity
52,000 active participants today, 13+
Weighted and projected to the U.S. Census
Restaurant Re-Contact Survey to Checkout Tracking Panel
Other Information Sources: CREST® & BLS.gov
INFORMATION COLLECTED
A static sample was used, so the same buyer groups are analyzed across time periods.
Panelists were re-contacted in September 2016 and asked to answer eight questions regarding their state of mind on the economy and restaurant usage in the past 12 months, if they had any.
The data presented in this report is based on 12 month usage ending August 2016 unless otherwise noted.
Report based on responses from almost 9,100 restaurant users.