Foodservice Lunch Trends in the U.S.

Chapter 1: Executive Summary

Scope and Methodology

Scope

Methodology

Macroeconomic Analysis

Fast Facts

Restaurant Usage & Outlook Tracker

Fast Facts

Share of Stomach: Lunch Sales Analysis

Fast Facts

Lunch Trends, Innovations & Strategies

Fast Facts

Lunch Restaurant Selection Analysis

Fast Facts

Lunch Menu Selection Analysis

Fast facts

Budgeters and Healthy Eaters: Usage, Attitudes and Behavior Drilldrown

Lunch on the Menu: Restaurant Brand Trendsetters

Chipotle Mexican Grill

Panera Bread

Freshii

Chapter 2: Macroeconomic Analysis

Restaurant sales rally fizzles; long slog ahead

Restaurant industry sales dip in June; future weakness likely

Spending upturn hinges on consumers with strong balance sheets

Upturn to benefit casual restaurants at expense of family and fast food/QSR players

Non-discretionary spending a recession rule

But affluent may help drive growth in discretionary spend

Packaged Facts’ Consumer Restaurant Tracker: Gloomy Near-Term Outlook

In-home breakfast and dinner trend remains significant

Bagging lunch takes a bite out of restaurant sales?

Graph 2-1: Consumer Restaurant Tracker: Current Behavior: A Top Line View

Looking ahead: Saving & grocery spending trumps limited service and full-service restaurant spend

Graph 2-2: Consumer Restaurant Tracker: Next 3 Months: A Top Line View

February to June food services & drinking places monthly sales sequentially improve

Full-service restaurants get needed shot in the arm; shift momentum away from grocery

Graph 2-3: Monthly Sales, 12-Month % Change, Grocery Stores & Food Services & Drinking Places, Full-Service Restaurants and Limited-Service Eating Places, 2009-2010

But month-to-month spending trends suggest restaurant and food retail pullback

Graph 2-4: Monthly Sales, Month-to-Month % Change, Grocery Stores & Food Services & Drinking Places, Full-Service Restaurants and Limited-Service Eating Places, 2009-2010

Restaurant Performance Index contracts for second straight month

Graph 2-5: Restaurant Performance Index, Monthly Metrics, 2006-2010

Macroeconomic factors shaping restaurant sales

Consumer confidence? No, not really

Present Situation Index decreases as perceptions of job prospects continue to darken

Expectations Index weighed down by dimmer outlook on job prospects

Unemploymentrate stagnates

Some perspective:

Graph 2-6: Unemployment Rate and Consumer Confidence: 2007-2010

By demographic, unemployment rates settle into troughs

Disparity in unemployment rates by education level

Young adults, minorities and men also find harder going

Graph 2-7: Unemployment Rate, Selected Demographics, 2007-2010

Graph 2-8: Unemployment Rate, by Race/Ethnicity, 2007-2010

How can increasing personal savings and reducing the debt burden be bad?

Households continue to repair their balance sheets

Graph 2-9: Consumer Debt Burden, 2000-2010

Graph 2-10: Savings Rate & Debt Service Ratio & Financial Obligations Ratio, 2007-2010

Unemployment and GPD forecast: expect recovery to take several years

Slow employment rebound to coincide with a slowrebound in consumer spending

Graph 2-11: Unemployment and GDP Forecast, 2010-12

Stock & housing declines deflate household wealth; rebound to record 2006 levels a long way off

Q1 2009 to Q1 2010 sees uptick in household wealth, but still $10 trillion off 2006 high

Graph 2-12: Household Net Worth, 2005-10

Case-Shiller and FOMC housing pessimism

Q2 2010 summary equities analysis

Graph 2-13: Wealth Effect: Wilshire 5000 and Case-Shiller Composite-20 Index: 2007-2010

Food at home maintains pricing edge

Graph 2-14: CPI: Food at Home vs. Food Away from Home, 2005-2010

Graph 2-15: CPI: Food at Home vs. Food Away from Home, 2005-2010

Food inflation forecast remains muted

CPI forecast for food at home and food away from home

Commodities pricing analysis

Intermediate foods and feeds index dips during Q1 2010

Prepared animal feed prices lead decline

Dairy product index falls after Q4 2009 hike

Finished consumer foods rise

Crude foodstuffs and feedstuffs rise tapers from Q4 2009 pop

Chapter 3: Restaurant Usage & Outlook Tracker

Note on reading charts

Packaged Facts’ Consumer Restaurant Tracker: at-home food spend trumps out-of-home spend

February 2010 trend continues in June 2010

Taking a bite from lunch

Graph 3-1: Consumer Restaurant Tracker: Current Behavior: A Top Line View

Looking ahead: Consumers more likely to save & spend on groceries than spend at restaurants

Graph 3-2: Consumer Restaurant Tracker: Next 3 Months: A Top Line View

Planned spending on fast food appears grim

Graph 3-3: Consumer Restaurant Tracker: Future Behavior: Fast Food Restaurant Spending

Intended full-service spend lacks promise

Graph 3-4: Consumer Restaurant Tracker: Future Behavior: Full-Service Restaurant Spending

Intention to save money remains high

Graph 3-5: Consumer Restaurant Tracker: Future Behavior: Saving Money

Lunch restaurant goers intend to spend more at restaurants

Intended spend more likely among smoothie shop, fine dining and coffeehouse lunch goers

Graph 3-6: Consumer Restaurant Tracker: Future Behavior: Full-Service and Limited-Service Spending, Restaurant Lunch Users

Restaurant usage and usage frequency

Overview

February 2010 to June 2010 mean use comparison

Graph 3-7: Mean Restaurant Usage in Last Month, by Restaurant Type, 2010

Graph 3-8: Restaurant Usage in Last Month, by Restaurant Type, 2010

18-34s continue to drive guest counts

Graph 4-6: Mean Restaurant Usage in Last Month, by Restaurant Type, 2010, by Age

18-34s exhibit higher usage

Key smoothie shop and street stand users

Graph 3-10: Restaurant Usage in Last Month, by Restaurant Type, 2010, by Age

HH income: fast food enjoys egalitarian status

Graph 4-6: Mean Restaurant Usage in Last Month, by Restaurant Type, 2010,

by HH Income

Graph 3-12: Restaurant Usage in Last Month, by Restaurant Type, 2010, by HH Income

Employment status: having a job pays the bills but also fits restaurant lifestyle

Graph 3-13: Mean Restaurant Usage in Last Month, by Restaurant Type, 2010,

by Employment Status

Full-time workers and students also compare favorably regarding overall usage

Graph 3-14: Restaurant Usage in Last Month, by Restaurant Type, 2010, by Employment Status

Restaurant lunch use

Lunch day part accounts for about one-third of all usage

Graph 3-15: Day Part Usage on Last Visit, 2010

Fast food dominates lunch

Graph 3-16: Restaurant Usage in Last Month for Lunch, 2010

Gender: men + grab-and-go

Graph 3-17: Restaurant Usage in Last Month for Lunch, 2010, by Gender

Age: mobile lifestyles speak volumes

Graph 3-18: Restaurant Usage in Last Month for Lunch, 2010, by Age

HH income: it’s all about disposable income

Graph 3-19: Restaurant Usage in Last Month for Lunch, 2010, by HH Income

Employment status a driving factor

Students at the grocery store?

Graph 3-20: Restaurant Usage in Last Month for Lunch, 2010, by Employment Status

Appendix: Consumer Survey

Chapter 4: Share of Stomach: Lunch Sales Analysis

Market size and overview

Declining sales amidst a very touch climate

Near-term challenges

Lunch daypart sales peak in 2008, dip in 2009 and 2010

Graph 4-1: Lunch sales: limited-service and full-service restaurants, 2005-2011

Graph 4-1: Lunch sales: limited-service and full-service restaurants, % growth, 2005-2011

Terminology and sourcing note

Lunch comprises 12% of HH food spend

Graph 4-2: Food at Home versus Food Away from Home Daypart Spend

Fast food has 50% share of lunch daypart sales

Graph 4-3: Lunch Expenditures: Fast Food, Full-Service, Vending Machines & Cafeterias

Consumer food expenditure trends suggest migration to food at home spend

Table 4-1: Consumer Food Expenditures, 2005-08

Lunch share of restaurant spend consistent during 2005-08

Table 4-2: Meals Away From Home Expenditures, by Daypart, 2005-08

Lunch takes only a 1.2% bite out of pre-tax income

Table 4-3: Lunch Expenditures: Selected Metrics & Fast Food, Full-Service, Vending Machines Cafeteria Spend, 2005-08

Graph 4-4: Lunch Expenditures: Fast Food, Full-Service, Vending Machines & Cafeterias, 2005-08

Lunch expenditures highest in south

Northeast consumer units spend least on percentage basis

Table 4-4: Lunch Expenditures: Selected Metrics & Fast Food, Full-Service, Vending Machines and Cafeteria Spend, by Region

On a per dollar basis, youth drives lunch spend

56% of 65+ lunch dollars go to full-service establishments

Table 4-5: Lunch Expenditures: Selected Metrics & Fast Food, Full-Service, Vending Machines and Cafeteria Spend, by Age

Higher income = higher absolute lunch spend, but lower percentage of income

Table 4-6: Lunch Expenditures: Selected Metrics & Fast Food, Full-Service, Vending Machines and Cafeteria Spend, by Income

Lunch share of wallet highest among Hispanics

Table 4-7: Lunch Expenditures: Selected Metrics & Fast Food, Full-Service, Vending Machines and Cafeteria Spend, by Race/Ethnicity

Guest Traffic Analysis

Frequency counts: definition

1 in 20 McDonald’s monthly users goes 14 or more times per month!

Guest traffic rises most at Panera Bread and Chipotle Mexican Grill

Table 4-8: Guest Traffic: Limited-Service Restaurants, Selected Lunch Players, 2008-10

Daypart meal spend analysis

Breakfast meal spend approaches that for lunch at fast food and family restaurants

Graph 4-5: Consumer Restaurant Meal Spend, by Daypart and Restaurant Type, 2010

Lunch meal spend by restaurant type reveals significant differences

Graph 4-6: Lunch Meal Spend, Fast Food Versus Family Restaurants, Selected Demographics

Fast food daypart spending reveals differences among married and older users

Table 4-9: Meal Spend by Daypart, Fast Food Restaurants, Selected Demographics

Chapter 5: Lunch Trends, Innovations & Strategies

Discounting and bundling

Extreme affordability weighs down fast food/QSR

Everyday value strategies add wrinkle to family dining segment

Full-service value menus

Lunchtime LTO meal bundling trends

Fast food/QSR

Fast casual

Family & casual dining restaurants

Health on menu

Choosing more healthful options away from home on the rise

What does “healthy” mean to consumers?

Table 5-1: Restaurant Health Attitudes, 2010

Table 5-2: Consumers’ Associations with “Healthy,” 2010

Challenging perceptions that healthy food is more expensive

Chapter 6: Lunch Restaurant Selection Analysis

Note on reading charts

Lunch restaurant selection influencers

Overview

Graph 6-1: Lunch Restaurant Selection Influencers, 2010

Lunch restaurant selection: convenience influencers

Gender shapes routine

Graph 6-2: Restaurant Selection: Lunch Convenience Influencers, by Gender, 2010

Age-driven lifestyle needs influence lunch restaurant selection

Graph 6-3: Restaurant Selection: Lunch Convenience Influencers, by Age, 2010

HH income shapes importance of work proximity

Graph 6-4: Restaurant Selection: Lunch Convenience Influencers, by HH Income, 2010

Employment status: work implies less mobility, more routine

Graph 6-5: Restaurant Selection: Lunch Convenience Influencers, by Employment Status, 2010

Urban, suburban, or rural location affect proximity and routine

Graph 6-6: Restaurant Selection: Lunch Convenience Influencers, Urban, Suburban, Rural, 2010

Restaurant selection: lunch menu item influencers

Portion control for cost and for calories entices women

Graph 6-7: Restaurant Selection: Lunch Menu Influencers, by Gender, 2010

Portion control for cost savings a cue for 18-24s

Graph 6-8: Restaurant Selection: Lunch Menu Influencers, by Age, 2010

Healthy menu items an egalitarian influence

Graph 6-9: Restaurant Selection: Lunch Menu Influencers, by HH Income, 2010

Students swayed by a plethora of menu items; retires another matter

Graph 6-10: Restaurant Selection: Lunch Menu Influencers, by Employment Status, 2010

Restaurant selection: lunch cost threshold influencers

Meal deal? At lower price points, women lunch goers just a tad more interested

Graph 6-11: Restaurant Selection: Lunch Cost Threshold Influencers, by Gender, 2010

Younger people: meal deal, please!

Graph 6-12: Restaurant Selection: Lunch Cost Threshold Influencers, by Age, 2010

HH income: don’t underestimate interest in meal deals across the board

Graph 6-13: Restaurant Selection: Lunch Cost Threshold Influencers, by HH Income, 2010

Employment status: students seeking deals

Graph 6-14: Restaurant Selection: Lunch Cost Threshold Influencers, by Employment Status, 2010

Restaurant selection: lunch dine-in partner influencers

Age: friends, family, or alone?

Graph 6-15: Restaurant Selection: Lunch Dine-in Partner Influencers, by Age, 2010

Restaurant selection: lunch takeout partner influencers

Save me some money on tip and drinks?

Graph 6-16: Restaurant Selection: Lunch Takeout Partner Influencers, by Income, 2010

Chapter 7: Lunch Menu Selection Analysis

Note on reading charts

Lunch menu selection influencers

Overview

Graph 7-1: Menu Selection Influencers, Lunch Daypart, 2010

Health and bundles skew the age spectrum

Graph 7-2: Lunch Menu Selection Influencers, by Age, 2010

HH income: seasonal and healthful items versus bundled items

Graph 7-3: Lunch Menu Selection Influencers, by HH Income, 2010

Employment status: students love a good bundle

Graph 7-4: Lunch Menu Selection Influencers, by Employment Status, 2010

Urban, suburban, or rural location: here’s to urban health

Graph 7-5: Lunch Menu Selection Influencers, by Rural/Urban/Suburban, 2010

Chapter 8: Budgeters and Healthy Eaters: Usage, Attitudes and Behavior Drilldrown

Meet the Psychographic Groups

Some men really do like to eat healthy: how can operators connect with them?

Budgeters drawn by cost, naturally, but by other factors, too

Portion size provides double-sided menu connection with male Healthy Eaters

Meal pricing thresholds provide opportunity to connect with male Healthy Eaters

Table 8-1: Selected Lunch Restaurant Selection Factors, Psychographic Groups, by Gender

Income splits reveal some lunch surprises

Difference and customization more of a factor among <$50K Healthy Eaters

Promotions and bundles incent wider swath of lower-HH income Budgeters

Table 8-2: Selected Lunch Restaurant Selection Factors, Budgeters & Healthy Eaters, by HH Income

Youth drives interest among both Budgeters and Healthy Eaters

Table 8-3: Selected Lunch Restaurant Selection Factors, Budgeters & Healthy Eaters, by Age

Chapter 9: Restaurant Lunch Dining Partner Analysis

Fast food lunch usage leads all dayparts

Table 9-1: Fast Food Usage, by Daypart, Selected Demographics, 2010

Family restaurant & steakhouse lunch usage lags dinner daypart

Table 9-2: Family Restaurant & Steakhouse Usage, by Daypart, Selected Demographics, 2010

Fast food lunch dining partners differ according to demographic

Table 9-3: Lunch Fast Food Usage, by Dining Partner, Selected Demographics, 2010

Family restaurant & steakhouse lunch: more of an adult thing

Table 9-4: Lunch Family Restaurant & Steakhouse Usage, by Dining Partner, Selected Demographics, 2010

Chapter 10: Lunch on the Menu: Restaurant Brand Analysis

Note on food lifestyle segmentation charts and demographics

Chipotle Mexican Grill, Inc.

Competitive positioning: Customization; Food with Integrity

Marketing that backs Food with Integrity

2010 strategy

On the menu

Restaurant expansion plans: digging deeper where presence is already established

Loyalty program to target “evangelical, super-passionate regular customers”

Chipotle Mexican Grill: selected demographics

A 10 million-strong consumer universe

Strong income and gender skew

Table 10-1: Chipotle Mexican Grill Users: Selected Demographics

Food Lifestyle Segmentation: Variety on a Budget& True Foodies

Graph 10-1: Chipotle Usage Frequency Analysis, Food Lifestyle Segmentation

Chipotle Mexican Grill users: gourmets, meet practicality

Table 10-2: Chipotle Mexican Grill Users: Food, Health and Diet Attitudes

Chipotle by the numbers

Table 10-3: Chipotle Mexican Grill, Selected Metrics, 2007-09

Q2 2010 sales driven by increased visits

Outlook

Table 10-4: Chipotle Mexican Grill, Quarterly Sales Metrics, 2009-10

Panera Bread

2009-2010 lunch strategy has positive momentum

Trading up

“You Pick”!

Owning the menu category

Next up: Paninis

Catering: going after the big fish

Loyalty programcoming to a Panera near you

A toe in the licensing water

Panera Bread: selected demographics

A 16.4 million universe

Strong income and gender skew

Table 10-5: Panera Bread Users: Selected Demographics

Panera Bread Food Lifestyle Segmentation

Variety on a Budgetand True Foodies turn the doors with greatest frequency

Graph 10-2: Panera Bread Usage Frequency Analysis, Food Lifestyle Segmentation

Panera Bread users: food, health and diet attitudes

A more health-conscious bunch with a touch of food guilt

Table 10-6: Panera Bread Users: Food, Health and Diet Attitudes

Sales trending upward

Table 10-7: Panera Bread, Selected Metrics, 2007-09

Q2 2010 same-store sales jump almost 10%

Shift in menu mix suggests movement toward higher-priced items

Table 10-8: Panera Bread, Quarterly Sales Metrics, Q2 2009 & Q2 2010

Freshii—the new name in healthful fare

The Freshii store and menu

Fast and convenient

Health placed front and center

Calories and other health information updated in real time

A Freshii view of customization

Technology savvy

Green initiatives

Appendix on food lifestyle segmentation charts

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