Looks like QSR consumers are experiencing a super-sized hangover in the post-Double Down era, as their demands have shifted 180 degrees.
Diners now want smaller portions at smaller prices. Reduced portion size has been listed as a top trend by the National Restaurant Association and market research firms The NPD Group, Mintel and Technomic.
NPD Group's recently released study, "Healthy Eating by Generation," finds that nearly 60 percent of adult consumers are craving smaller portions, and they're looking for these options at QSRs.
"Based on the interest, portion control is an area of opportunity for food manufacturers," said Dori Hickey, director, product management at NPD and author of the report. Hickey added that the demand is particularly strong among younger age groups, making portion control a long-term opportunity for the industry.
Portion control and snack daypart are equals
Smaller menu items are certainly not new to the QSR space; the trend has been evolving since 2006, when McDonald's introduced its first snack wraps.
The difference now is that a snack daypart is actually defined – the time between lunch and dinner – and the incremental sales opportunities are greater than ever.
"In the past five years, all of the growth in the restaurant industry has come from either breakfast (60 percent) or snacking, at 40 percent," said Bonnie Riggs, restaurant industry analyst at NPD Group. "Snacking is a huge growth area and restaurants should capitalize on it."
In doing so, she added, it's important for chains know exactly what consumers want for their "in-between" meals and to introduce new items accordingly. That can be tricky, however, as the traditional definition of "snack" doesn't apply anymore.
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"What consumers are telling us now is that they want a burger or a chicken sandwich as a snack. It's not necessarily a full meal, but it's not what you historically think of in terms of a small treat," Riggs said.
Mintel's recent research showed that younger generations are more likely to consider any type of food a snack – from appetizers and sides to coffee and donuts – so the trend appears to be here to stay.
"Consumers want more choices than ever and they want healthier choices. But they don't want to give up their indulgences entirely, so finding items that appeal to their needs is hard," Riggs said.
Blurring the daypart lines
These demands are born from a confluence of factors emerging within the past few years. Simply put, we're busier, more health conscious and more frugal.
"We're behaving differently and behaving differently means eating differently. The dynamics of why we're snacking today were not in place six or so years ago," Riggs said. "That's why this is such a big growth area and also why it's here to stay. We want to save time, we want to save money, and we want to satisfy an immediate craving."
Also, we want healthier choices which, for many, means smaller and therefore lower calorie. To complement this trend, there have been a number of studies touting the benefits of eating five to six smaller meals throughout the day, as opposed to three big meals.
Denny Lynch, senior vice president of communications at Wendy's, adds that because more people are working from home or working on the go, traditional meal times have changed.
"Lunch really isn't from 11:30 to 1 p.m. anymore. People are eating their lunch at 3 p.m. now. That's why beverages and smaller portions are attractive for (Wendy's customers) during that time," he said.
Chains exploring new territory
Although Lynch said Wendy's currently has a strong focus on core items such as burgers, CEO Roland Smith said in an earnings call earlier this month that the company also intends on expanding its snack offerings to focus on new items that can generate both incremental transactions and higher margins. An example of this expansion, he said, is the new Caramel Apple Frosty Parfait.
Wendy's former sister company Arby's is also leveraging the trend. In a recent interview with Restaurant Finance Monitor, Hala Moddelmog, Arby's brand president, said: "We're going to emphasize the snack daypart. We have incredible snacks and sides that are like hors d'oevures ... There's a lot of equity in our shakes."
Burger King just rolled out a mini sandwich line that President Steve Wilborg called the "perfect snacking option."
And Dairy Queen even altered its 25-year-old signature item last year by rolling out the Mini Blizzard at about half the size of a small 12 oz. Blizzard. Chief Brand Officer Michael Keller said the new offering has been a huge success, not only meeting small portion demands but also price point demands.
"The mini size had been a big hit with customers," he said. "The size and price really appeal to many consumers and create a very strong perceived value."
By offering smaller portions, restaurants will benefit from more than simply meeting a demand. As calorie count requirements make their way onto menu boards within the next year, they'll also garner favorable perceptions if they have some alternatives to big calorie signatures.
"Opportunities and bright spots right now are few and far between and restaurants should really capitalize on the snacking growth. Some operators may see a challenge adding to their menus, but it's actually an added benefit," Riggs said. "Restaurants are open for lunch and dinner anyway; they should tap into the potential of that timeframe between them."
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