Industry News | June 20, 2008

Study Says Fast Food Remains Popular

Chicago-based Research International USA released its first fast-food industry report. The self-funded study, "Fast Food Nation 2008: A Consumer Perspective on the Fast Food Industry." Based on the results, eating fast food remains popular and the industry as a whole has a positive outlook, particularly in recessionary times.

"With the average American spending $500 a year on fast food," says Alexander Kleijngeld, Research International, vice president-client services, "the industry clearly plays a major part in the country's economy and we felt that our clients would benefit from gaining an in-depth understanding of this segment which is a large part of consumers' lives."

Some of the major findings from the study include:

-- More than half of the population eats fast food once a week with 20 percent eating fast food at least every other day.

-- Fourteen percent of the population accounts for almost half of all fast food sales. These high-frequency users tend to be male, below middle-age, and employed with high incomes.

-- High frequency users have an average income of $67,575 which is 15 percent higher than the sample group's average household income of $58,875.

-- Despite their above-average incomes, high frequency users are more likely to increase fast food consumption because of economic pressure and are attracted to "value" dining options.

-- Subway earned the highest Brand Energy score which measures how strong a brand is the minds of consumers. This score is a composite of four dimensions: Status and Momentum: strong brands not only perform well today (Status) but are also seen as continuously evolving and improving/innovating (Momentum); Affinity and Performance: strong brands not only offer a great experience functionally (Performance) but consumers also have an emotional bond with them (Affinity).

-- Frequent users are attracted to restaurants that have new menu options or promotions and react positively to healthy food choices that are in tune with a restaurant's efforts to improve the healthiness of their menu.

-- More than half the country (57 percent) has been to McDonald's in the past month followed by Subway (37 percent), Burger King (36 percent), Taco Bell (33 percent), Wendy's (32 percent), and KFC (27 percent).

-- Convenience is the main reason consumers choose a fast food dining option.

"Convenience was cited as the main reason consumers choose a fast food dining option which was further supported by the fact that less than one-third of patrons 'dine-in' when eating fast food. This underscores the importance of restaurants assuring the drive-through experience is positive for consumers in order to assure repeat business and gain brand loyalty," Kleijngeld says.

"Despite the heavy investment in the breakfast segment, four out of five fast-food visits are for lunch or dinner."

More than half of fast food visits are with family members (52 percent); 29 percent of these visits with a spouse/partner; and 23 percent are with children under the age of 18 which points to the potential influence that children can have on deciding where to eat.

Fast-casual restaurants (i.e., Chipotle, Panera Bread) have the highest sales per occasion while Dunkin' Donuts and McDonald's are among the restaurants with the lowest average spend per visit.

"Our research found that not only did Chipotle and Panera Bread have the highest spend per occasion but their customer tended to dine in compared to getting carry-out. While their meals tend to cost more, having a 'captive' audience may be creating additional sales opportunities for these chains," Kleijngeld explains.

While the average spend per occasion was $10.16, there was a fairly broad distribution on spending overall, indicating there are a wide variety of price points among fast-food brands. Sixteen percent spend less than $5; 25 percent spend $5-$7; 20 percent spend $7-$10; 21 percent spend $10-$15; and 18 percent spend more than $15.

"While the stereotype of a typical fast-food customer may be that of a couch potato, our research found the opposite to be true as high frequency fast food users are more involved and more active than the average consumer," Kleijngeld says.

High-frequency users tend to be more price sensitive when it comes to the food they choose and visit fast food restaurants because they perceive it to be cheaper than eating at home. While this group also eats fast food due to economic pressure, overall consumers below middle-age are more likely to turn to fast food during recessionary times.

As consumers are trying to be more health conscious, it becomes essential that fast-food operators provide new options and foods that are healthier to continually engage the frequent user base. In addition to the frequent users, women, as well as consumers with high incomes, are more likely than others to buy fast food with nutritional claims.

These findings are based on a panel of 1,000 respondents, ages 16-65, who participated in an online survey which was conducted from March 13 through March 18, 2008. Respondents were recruited from Lightspeed Research's Consumer Panel, a sister company of Research International and executed by Kantar Operations, the research operating division of Kantar Group.