Article
Why consumers spending more on business meals won't help fast casuals
Limited-service restaurants wanting to target business-meal customers must present similarly to higher-end concepts.
November 25, 2013 by Cherryh Cansler — Editor, FastCasual.com
A recent survey by Consumer Edge Insight shows a large increase in spending on business-related meals. That should be good news for restaurants overall, but the rest of the findings isn't really good news for limited-service concepts. When eating on the company's dime, more consumers traded up in October to fine-dining and casual-dining, leaving fast casuals behind, according to Restaurant DemandTracker, a recent survey of restaurant customers in the United States. It found that the number of business-related meals is up from last year and that average spending on those meals is also up substantially.
This trend favors fine-dining restaurants, which are more likely to be visited for business meals, but also casual-dining restaurants that are appropriate for those occasions, said David Decker, president of Consumer Edge Insight.
"A higher-spending business meal customer is a very welcome development for the high-end but also the middle tier of the restaurant industry," he said. "For fine-dining restaurants, one of their core customer segments is starting to visit restaurants more often and is more likely to be trading up to fine-dining than a year ago. While this is a smaller customer segment for most casual-dining restaurants in terms of traffic, the higher average spending among this group makes them an important segment to understand and target as much as possible given your brand."
The research backs up Decker's claim; The average total spending on business meals was $55 per week in October 2013, vs. only $45 in October 2012. This translates to an average check per business meal of about $18.50 in October 2013 vs. $13.50 last year.
That means that a substantial portion of this improvement in check size was driven by a higher degree of trade-up to fine-dining among business-meal-customers. In October 2013, 42 percent of business-meal-customers visited a fine-dining restaurant once a week or more (for any type of meal) vs. just 34 percent in October 2012. Over the same time, the number of business-meal customers who visited casual-dining restaurants once a week or more (for any reason) also increased, rising from 48 percent last year to 53 percent this year.
What the research means for limited-service concepts
Over the same time period, Decker said he saw only a 2 percent increase in fast casual visitation among business-meal customers. In October 2013, 59 percent of business-meal customers visited fast casual restaurants (for any reason) once a week or more, compared to 57 percent in October 2012.
There was an even smaller increase when it came to quick-service restaurants. In October 2013, 67 percent of business-meal customers visited quick-service restaurants (for any reason) once a week or more, compared to 66 percent the previous October.
"So, the increase we're seeing in the frequency of business meals and average spending per meal is really occurring among table-service restaurants only," Decker said. "This makes sense as business travelers would be more likely to choose table-service meals when traveling for work, in order to take advantage of whatever their company's expense policy permits them to spend on each meal."
Limited-service restaurants wanting to target this audience should look for ways to overcome barriers to being considered less desireable for business-meal occasions, Decker said. Another option is to promote catering.
"For instance, they might want to promote delivery services in locations with a high degree of business meal activity," he said.
Read more about trends.
Cover photo: ThomasWanhoff
About Cherryh Cansler
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