Given the prevailing weak outlook for consumer confidence, it seems inevitable that more risk averse and belt-tightening behaviours will come to the fore. These can clearly take many forms, including going out less, focusing more on weekend activity, switching to more foodservice delivery, being more promotional-driven, trading down, buying fewer courses and favouring operators with core low price strengths. This article is focussed on the latter aspect, and looks to highlight those operators, across a range of channels, that stand out on the basic source of competitive advantage/differentiation that is low price.

Pubs do well but Lidl leads at Lunchtime

MCA’s Eating Out Panel tracking provides key insights into consumers’ ratings of their eating out experiences on a range of perspectives. The recognition of low price is one of these. Given how the highest frequencies of eating out are at lunchtime and that it has the widest set of competitors, it makes sense to start with this congested day-part. Here, and using data for the year ending Q3 2019, the highest rating (8.9 out of 10) goes to the food-to-go range of Lidl, which narrowly pips its German hard discounter rival, Aldi. Given the significant expansion plans of both retailers, this is more than a tad disconcerting for several foodservice specialists, particularly if a stronger High Street presence is secured.

Certainly, many pub chains are highly regarded on price, claiming seven of the Top 10 highest ratings. These are, perhaps unsurprisingly, led by Wetherspoon, but Farmhouse Inns, Sizzling Pubs and Toby Carvery also score strongly.

Elsewhere, Greggs takes the honours in the bakery & sandwich bar channel, AMT Coffee is highest ranked among cafés & coffee shops, while McDonald’s leads among traditional fast food operators.

In terms of those operators most recognised for improving their perceived low prices (based on largest year on year rises), the biggest movers are German Doner Kebab, Stonehouse Pizza & Kitchen and John Lewis restaurant/café. However, some of the praise needs to be tempered by the fact that only in the case of Stonehouse does the improvement result in an above average rating.

Pubs well placed on price at dinner too

A similar set of results are evident at dinner, with pub chains again rating strongly and Wetherspoons (with 8.6) claiming top ranking. AMT Coffee, Greggs and McDonald’s are also rated highest within their respective channels. One channel where low price appears a relative weakness is casual restaurants. The highest rated brand is Nando’s, with its score of 7.7 only in line with the average across the total survey sample.

Clearly, there is lots more to value for money than low prices, but should consumers become more price sensitive, then this is an area of vulnerability for some brands. A few, potentially exposed operators that are rated relatively poorly on low prices, include Five Guys, Department of Coffee and Social Affairs and German Doner Kebab. Moreover, none of these brands have recorded year on year rating rises at dinner. By contrast, consumers have detected pricing improvements at Chicken Cottage, ASK Italian and M&S café.

Price-led shortcomings, but …

For sure, it is misleading to focus exclusively on low prices. It is right to point out that quality is remembered long after the price is forgotten. But, and it is right there is a note of caution, that should trading conditions deteriorate, more operators might need to reflect on how if they are not talking about price in some form, they risk being perceived as becoming relatively more expensive.