Highest spend increases with customers trying something new, but targeting get-togethers makes more business sense, according to MCA’s director of insight Steve Gotham

One of the eternal challenges for any analyst is telling the client something new.

So let’s start with something old and

then scratch below the surface and see if there is scope for operators to start looking at how they could increase theirconsumers’ average spend in new ways.

The recommendation here is to focus more closely on the various eating-out missions customers are on and to find ways to better optimise this mix in favour of higher spend and higher growth potential: core reasons to visit.

With a certain amount of inflation-busting price rises coming through on menus and also, with some buoyancy in the consumer economy over the past six months, it is no great surprise that average transactions have been rising.

At the dinner day part, and across pub, chain and independent restaurants, MCA’s customer tracking research highlights how, during Q2 2016, average spend rose to reach £19.10, up by 4.7% from the previous year. It will also fail to set any pulses racing by adding that spends are lowest on average in pub restaurants and highest in

independent restaurants, and probably also, that spend increases were most subdued within the more competitive chain restaurant segment.

But are restaurant brands missing a revenue trick or two here?

Drilling more deeply into MCA’s Eating Out Panel, data begins to open up several fertile lines of enquiry – not least regarding how spend varies with the mission customers are on. Unsurprisingly, the highest average dinner spends are associated with customers on a special occasion or celebration (see Table 1). Average spend here amounted to £23.53, some 23% higher than the overall average.

However, looked at year-on-year, special occasion spending was ahead by little more than the overall average increase, at 5.4%.

The stand-out mission here was trying something new or different, ahead by a meaty 30.3%. This sounds all very well, but this newness-inspired mission only accounted for 2% of total missions in the pub and restaurant sector. Targeting having a treat (13%) and special occasions (9%) appear more attractive, but the bulk of the market volume is generated by customers looking to have a get together, either with friends or family (24%) or by adults wanting to spend time with their partner (12%). So, if this social-mission space is the core battleground of the market, who is winning here?

Mission Spend RankCustomer MissionAverage Dinner SpendQ2 2016Average Spend Annual IncreaseMission Share of Total Visits

1

Special occasion or celebration

£23.53

5.4%

9%

2

To try something new or different

£22.58

30.3%

2%

3

To spend time with my partner

£21.51

-0.1%

12%

4

Get together with friends or family

£19.79

5.2%

24%

5

Having a treat

£18.34

4.2%

13%

6

To wind down or relax

£18.19

-4.8%

6%

7

Wanted to eat a specific cuisine/type of food

£17.88

5.3%

4%

8

During a leisure-based journey (e.g. off on holiday, travelling to an event, etc.)

£17.70

-1.2%

4%

9

Part of my regular routine

£16.62

-7.8%

3%

10

While out at another leisure activity (e.g. cinema, sports event, etc.)

£16.58

4.8%

4%

Overall Average

 

£19.10

4.7%

 

Table 2 shows the share of the leading customer missions split across the three main segments within the pub and restaurant market. Given the much higher number of pubs than restaurants, the highest number and share of missions are naturally accounted for by pubs. But when we look at segment shares of specific missions relative to their overall averages, we can start to see which areas over and under-index and the results get more insightful.

Mission Spend RankMission Share of Total VisitsCustomer MissionPubs – Segment share of MissionChain Restaurants – Segment share of MissionIndependent Restaurants – Segment share of Mission

1

9%

Special occasion or celebration

42%

20%

38%

2

2%

To try something new or different

35%

15%

50%

3

12%

To spend time with my partner

49%

18%

33%

4

24%

Get together with friends or family

48%

17%

35%

5

13%

Having a treat

40%

18%

42%

Overall Average

   

45%

19%

36%

 

Focusing on the higher-volume missions, pubs underperform in terms of special occasions and for having a treat, but are highly regarded in terms of places to spend time with a partner and for get-togethers with friends and families. So for pubs to find ways to better premiumise dining experiences and menu offerings, and adding greater larger-party appeal, may well prove worthwhile when executed well.

By contrast, chain restaurants have a modest advantage as a place for a special occasion, but do not share the same conviviality as pubs and underperform in terms of social appeal.

Given the amount of mission volume that is driven here with get-togethers of families, friends and partners, finding ways to offer stronger perceptions of enhanced informality, more relaxed interiors and homely impressions, should all be given greater consideration.

Independent restaurants are certainly recognised by consumers as the best places to try something new or different, but they also do well for having a treat and, to a lesser extent, as venues for special occasions and celebrations.

This combination of treats and special occasions only reinforces the need for a quality obsession and a strong service-led approach. As food fashions come and go, relying on something new and different is certainly going to be a much riskier business strategy.

Further customer behaviour analysis will be available within MCA’s latest Restaurant market report, due for publication by the end of this month. For more information contact sophie.barber@mca-insight.com 

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