The Definition of Value: It’s Complicated

In consumers’ transactions with restaurants, value is far more complex than a certain amount of money exchanged for a certain amount of food—and has become even more complicated over the past couple of years. Here, I’d like to share in general terms recent consumer findings that we’re presented this month at Technomic’s Consumer Insights Planning Program and Foodservice Planning Program meetings.

More than seven in 10 consumers say price is important when they’re choosing a restaurant—but other factors are more important. That’s true not only for special-occasion meals, but also for everyday occasions. And it’s true in every segment. The limited-service value equation is now balanced between price and quality, with consumers placing more importance on food quality and less on price and the restaurant experience than they did two years ago. In family dining, quality of ingredients has become the most important value element, and in casual dining, the price/quality balance has shifted significantly to the quality side.

Diners define quality based on both the experience and the food. They’re most likely to say they would pay more for a fun, exciting dining experience; also of high value to consumers is an environment that allows them to relax over a meal with the family. Around three-quarters of diners say they’d pay more for craveable fare. The same proportion would pay extra for “better for you” options. Almost half would pay more for fresh fare—with definitions of “fresh” ranging from “prepared that day” to “made from scratch” to “made to order.”

Customers are focused on getting their money’s worth, but they’re willing to pay more and hoping to dine out more frequently. Consumers’ price thresholds—what they see as a reasonable price for a meal—have increased across all segments and dayparts. Diners still seek deals, but they say the top reason they’re looking to save money in restaurants is to have enough left to buy more restaurant meals. Another indication that purse strings have loosened: A quarter of consumers (and almost half of Millennials) admit that in the past three months, they’ve spent more on restaurant meals than they intended to.

As I see it, the restaurant value equation is increasingly complex—balancing price, quality, food flavor and freshness plus experience factors. Consumers are willing to spend more on restaurant meals than they did a couple of years ago (and may even spend impulsively), but they want more value in exchange. Concepts with well-balanced value equations—those that outperform their competitive set on each metric that consumers value most—will be rewarded. For both operators and suppliers, success depends on meeting and exceeding consumer expectations of value for every type of dining occasion.

Note: This content originally appeared in the June 2013 issue of Technomic’s Foodservice Digest newsletter.

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Ron Paul

Ron Paul founded Technomic over 45 years ago. As President and CEO, he directs the firm and all its research and consulting engagements, covering almost every aspect of the foodservice business. Ron has written extensively about management and marketing topics, as well as a broad range of food and foodservice issues. He is a frequent industry speaker and is often quoted in trade, news and business media, including the New York Times, Wall Street Journal, USA Today, BusinessWeek, Newsweek, CNN-TV and CNBC-TV.

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  1. Value is definitely complex and highly subjective. One one end of the spectrum, we have over-sized portions of questionable quality. On the other we have fresh, healthy dishes made with locally harvested ingredients – but unfortunately offered at a premium price. The sweet spot has to be something in the middle. Fox Restaurant Concepts has a terrific small chain of restaurants called True Food Kitchen – healthy delicious meals, but offered at a higher price point. I believe what the market is missing (in Phoenix anyway) is fresh, locally harvested food offered on a limited menu at a fair price. Now that’s value!

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