Foodservice Brief — September 2015
The burger is an American classic, right up there with mom and apple pie. When it comes to their burgers, consumers place more value on the quality, freshness, and taste of a burger than its price or convenience/ease of purchase.
Restaurants focus on burgers because of their broad appeal. There is minimal risk, because burgers consistently rank among the top foods ordered at restaurants. Burgers accounted for 15 percent of all restaurant orders in the U.S. in the year ending July 2015, which equated to 8.9 billion burgers. The fact that not all burgers are created equal is an additional appeal for consumers and restaurants. Burgers come in a wide variety of tastes and sizes. What can be done with a burger seems to have no limit; burgers lend themselves to a great deal of innovation.
Which operators are addressing the growing demand in the marketplace?
The traditional fast food burger places are losing ground to more upscale burger choices. Servings at traditional burger places fell by 2 percent in the most recent year, which translated to a loss of 145 million burger servings. This category weakness resulted in burger servings as a whole being flat for the year ending July 2015. However, consumers have not given up on ordering burgers, they are just ordering them at different locations.
Compared to year-ago, burgers ordered at QSRs outside of the hamburger category and fast casual grew by 12 percent. On the full service side, orders increased by 6 percent at casual dining places, and even midscale restaurants were able to grow 2 percent in burger servings. Said another way, the sizeable decline at traditional QSR burger concepts was offset by the growth occurring at other concepts.
Hamburger/Cheeseburger Servings % by Segment
- % Change
Source: The NPD Group/CREST®, YE July 2015 vs. 2014
Fast casual and full service restaurants have been able to achieve these growth rates by positioning their burgers as fresh, made-to-order, higher-quality alternatives to traditional fast food burger concepts. Success with this positioning is seen in the CREST® customer satisfaction ratings when burgers are ordered. Across the board, fast casual and full service restaurants receive considerably higher ratings on quality, freshness, and taste and flavor of the burger than do traditional fast food hamburger places.
Customer Satisfaction — Hamburgers/Cheeseburgers
Source: The NPD Group/CREST® Customer Satisfaction, CREST®, YE July 2015
Success with the more upscale positioning is seen in consumers’ acceptance of higher meal costs, compared to costs at traditional quick service hamburger places. At the same time, the disparity in the price paid for a burger meal at a traditional fast food place and fast casual or full service outlet is narrowing. For example, the average price of a burger is $9.09 at casual dining, $7.24 at midscale, and $5.59 at fast casual, compared to $3.36 at a traditional QSR outlet. However, the gap closes when considering that fries typically come with a burger order at full service restaurants and need to be purchased separately at fast casual and quick service restaurants. The price of adding fries at a fast casual concept adds $2.88 to the check and an additional $1.72 at QSRs, based on our Checkout Tracking℠ data.
Average Price of Hamburger/Cheeseburger
Source: The NPD Group/Checkout Tracking℠, July 2015
What’s the big takeaway? Despite any health movements, Americans’ preference for burgers is not going away. Consumers are looking for different kinds of burgers that offer a variety of ingredients and flavors. And they’re willing to pay more for a burger that satisfies the need for greater variety and higher perceived quality and freshness.
To compete effectively, traditional fast food burger places must find ways to address discerning consumers’ needs. While burger innovation is warranted, the bigger challenge for the fast food burger leaders is to deliver a burger that is a quality product, tasty and flavorful, and as freshly prepared as possible. This mission is not only for those in the fast food burger arena. The challenge is how to make it fast, fresh, and tasteful when the business model is built around price, speed of service, and convenience.
While the gap is narrowing on price, QSR hamburger places remain the lower-cost providers. However, the burger still has to warrant the price being paid, regardless of how low that price may be. With the ever-increasing competition in the burger arena and consumers’ increased willingness to pay more for a burger that meets their expectations, traditional fast food burger leaders in particular must address – and exceed – consumers’ high expectations.To learn more about Checkout Tracking, please contact your NPD client service representative, call our restaurant analyst, Bonnie Riggs, at 847-692-1767, or email firstname.lastname@example.org.