Home News Channel Blurring: Challenging Quick Service Restaurants

Channel Blurring: Challenging Quick Service Restaurants

Foodservice Brief

New competition — not just another “fast food” option

As traditional convenience store (c-store) products slip in demand, c-store operators must place a stronger emphasis on prepared foods to improve profits. A growing number of c-store chains are providing high quality, quick food, supported by appealing, food-forward marketing. For QSRs this means many c-stores are now direct competitors

Grocery stores are also focusing on prepared foods, aiming to take visits from QSRs. Grocery retailers were once very different from restaurants, serving customers' need for in-home meal preparation. But today, prepared, ready-to-eat meals and snacks are readily available. Grocery stores’ prepared meals offer quality and are growing in variety. These historically different concepts now compete in the same space for the same customer and the same occasion.



How QSR customers use QSRs, c-stores, and grocery for their fast food needs

Most customers are using multiple channels to purchase food for immediate consumption. Fewer than one in four U.S. consumers are exclusive QSR users for these meal occasions. Those who are exclusive QSR customers are just as likely to dine in or take away as other QSR users. Off-premise visits made by exclusive QSR buyers are likely to be vulnerable to shifts to other channels. The extent of the customer sharing demonstrates the pervasive competitive threat that alternative channels present.



% QSR Customers Visiting

Source: The NPD Group/QSR Plus Retail Market Monitor, March Through June 2015, Past Four-Week Recall

QSR operators need to broaden their perspective of their competition. Not only must they monitor and win against direct fast food competitors for visits, they also must be aware of efforts being made by retailers and, especially, food-forward c-stores.



Grow share in an expanding marketplace

Quick and convenient food from c-stores and grocery incrementally adds customers to the fast food/foodservice market. Further, the number of fast food purchases made by customers using these outlets is over six visits higher in an average four-week period. How might QSRs gain share from this larger pie?



% Penetration* and Purchase Frequency

*% penetration = % of the population purchasing at least once in the past four weeks
Source: The NPD Group/QSR Plus Retail Market Monitor, March Through June 2015, Past Four-Week Recall



The c-store and grocery threat varies by daypart

QSRs offering morning meals are the most likely to feel the impact of c-stores on their customer base. Between-meal purchases/snacks are another vulnerable time of day. C-stores hold their highest shares of these product categories: coffee, snacks, breakfast foods, and soft drinks. Product offerings vary, with some c-store chains emphasizing prepared foods more than others. Clearly, for QSRs the morning daypart is the most vulnerable. These occasions are likely in-and-out, grab-and-go visits where convenience and fast service trump chain preference.

Grocery stores hold a high share of purchases of chicken, side dishes, and salads. They are providing a ready-to-consume meal for the family – easy, convenient, and an opportunity to meet the needs of multiple family members.



Food Category Purchase by Channel

Source: The NPD Group/QSR Plus Retail Market Monitor, March Through June 2015, Reported For Last Visit

WaWa takes share from top QSR chains


The competitive strength that can be achieved by food-forward c-stores was obvious when we used our QSR Plus Retail Market Monitor data to evaluate the Philadelphia market. The distribution of visits in that DMA showed the most popular place to purchase food/beverages market is WaWa. This c-store is a clear favorite among consumers. WaWa’s share is nearly twice that of Dunkin’ Donuts and McDonald’s. Taco Bell and Subway are not in the top 10.

Top Chains in Philadelphia — Share of Visits

Source: The NPD Group/QSR Plus Retail Market Monitor, March Through June 2015, Past Four-Week Recall

When all the meals consumers buy on-the-go are included, a very different ranking of chain importance emerges. The competition is very different by market. This example shows the extensive influence of multi-channel purchasing. Consumers use QSRs, c-stores, and grocery interchangeably for fast food, particularly when they find the same quality and a lot of variety.

WaWa leads in the morning with coffee and breakfast sandwiches


WaWa accounts for nearly twice as many coffee purchases as Dunkin’ Donuts in Philadelphia. WaWa is also a significant competitor in breakfast foods. Although the chain is well known for its sandwiches, WaWa is overshadowed on the sandwich/burger/wrap front by McDonald’s in this market. WaWa may not be a destination for lunch, but this could change.

Types of Foods Purchased in Philly


Source: The NPD Group/QSR Plus Retail Market Monitor, March Through June 2015, Reported For Last Visit


Including retail in the QSR arena delivers new and very different insights about the structure of a market from a consumer perspective. Life is more complicated for QSR operators because of channel blurring. We expect growth of alternatives to QSRs will continue. The challenge for QSRs is to find the best way to stand out among a diverse set of competitors in order to grow market share.

To obtain additional information on QSR Plus Retail Market Monitor, please contact your client service representative, call Bonnie Riggs at 847-692-1847, or email bonnie.riggs@npd.com.

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