Skip to footer

McDonald's customers lured away by the smaller guys

McDonald’s Corp. CEO Don Thompson acknowledged recently that some higher-income customers are leaving fast food chains for fast-casual alternatives.

|
Gene J. Puskar/AP/File
The McDonald's Golden Arches logo on a window at a McDonald's restaurant in Robinson Township, Pa. McDonald's execs worry they may have overcomplicated the fast food chain's menu.

Full-year data from The NPD Group survey reveal that customer traffic at fast-casual restaurants increased 8% in 2013 (12 months ending November). Meanwhile, the total restaurant industry and the quick-service (QSR) sector were both shut out with 0% gains. QSRs had been up 1% through September but had a bad Q4 as McDonald’s and others have reported. Full-service, casual dining and midscale/family restaurants haven’t experienced positive growth in customer traffic for several years.

Rubbing it in, fast-casual restaurants saw a 10% increase in customer spending while the restaurant industry overall could muster just a 2% gain. Fast-casual checks averaged $7.30 in 2013 while spending at QSRs averaged $5.30, according to NPD’s CREST research. NPD tells BurgerBusiness.com that the average QSR burger check was $5.06 in 2013 (up from $4.95 a year earlier). Those compare with an average check at full-service restaurants of $13.66, why helps explain why many full-service concepts are struggling or reducing prices.

“Overall, restaurant customers are trading down, foregoing some of their visits to full service places while increasing the number of visits made to fast casual restaurants,” says NPD restaurant analyst Bonnie Riggs. “Fast-casual concepts are capturing market traffic share by meeting consumers’ expectations, while midscale and casual dining places continue to lose share.

The number of fast-casual chain units increased 6% in 2013 to 16,215, NPD reports.

The burger category continues to see a shift of customer traffic away from quick-service to fast-casual burger bars and chains such as Smashburger, Elevation Burger, BurgerFi, Burger 21 and many others. Last month, McDonald’s Corp. CEO Don Thompson acknowledged that some higher-income customers are leaving QSRs for fast-casual alternatives. “If we look in the U.S. particularly, one of the things that we see today is a bit of a bifurcation on a consumer base,” Thompson said in a conference call with analysts. “So some of the fast casuals are performing a bit better and customers are skewing that way a little bit more as a result of a bit more discretionary income and that economic class of individuals.”

In 2013, Technomic reported that more than half of consumers (51%) said they consume a burger from a fast-casual restaurant once a month or more. That was up from 43% in 2011.

NPD previously forecast brighter results for the industry this year, predicting a 1% rise in visits and spending gain of 3% by the end of next year. The QSR categories of gourmet coffee and doughnut, as well as the fast-casual category are forecast to do best this year.

You've read  of  free articles. Subscribe to continue.
Real news can be honest, hopeful, credible, constructive.
What is the Monitor difference? Tackling the tough headlines – with humanity. Listening to sources – with respect. Seeing the story that others are missing by reporting what so often gets overlooked: the values that connect us. That’s Monitor reporting – news that changes how you see the world.
editor@csmonitor.com
Subscribe
Mark Sappenfield
Editor

Dear Reader,

About a year ago, I happened upon this statement about the Monitor in the Harvard Business Review – under the charming heading of “do things that don’t interest you”:

“Many things that end up” being meaningful, writes social scientist Joseph Grenny, “have come from conference workshops, articles, or online videos that began as a chore and ended with an insight. My work in Kenya, for example, was heavily influenced by a Christian Science Monitor article I had forced myself to read 10 years earlier. Sometimes, we call things ‘boring’ simply because they lie outside the box we are currently in.”

If you were to come up with a punchline to a joke about the Monitor, that would probably be it. We’re seen as being global, fair, insightful, and perhaps a bit too earnest. We’re the bran muffin of journalism.

But you know what? We change lives. And I’m going to argue that we change lives precisely because we force open that too-small box that most human beings think they live in.

The Monitor is a peculiar little publication that’s hard for the world to figure out. We’re run by a church, but we’re not only for church members and we’re not about converting people. We’re known as being fair even as the world becomes as polarized as at any time since the newspaper’s founding in 1908.

We have a mission beyond circulation, we want to bridge divides. We’re about kicking down the door of thought everywhere and saying, “You are bigger and more capable than you realize. And we can prove it.”

If you’re looking for bran muffin journalism, you can subscribe to the Monitor for $15. You’ll get the Monitor Weekly magazine, the Monitor Daily email, and unlimited access to CSMonitor.com.

Subscribe to insightful journalism

QR Code to McDonald's customers lured away by the smaller guys
Read this article in
https://www.csmonitor.com/Business/The-Bite/2014/0214/McDonald-s-customers-lured-away-by-the-smaller-guys
QR Code to Subscription page
Start your subscription today
https://www.csmonitor.com/subscribe