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Hispanics and Fast Casual Dining - US - February 2016

Hispanics over index for use of all subcategories of fast casual restaurants which makes them an important segment that fast casual restaurants can’t ignore. However, in spite of this, Hispanics tend to have difficulties seeing a better value in fast casual restaurants when comparing these to other types of restaurants.

This report examines the following areas:

  • Hispanics over index for all fast casual dining subcategories
  • Most Hispanics don’t see a better value in fast casual restaurants compared to other types of restaurants
  • Not overcomplicating it – it’s all about the food

The food service market is becoming more complex with trends such as fast restaurants aiming to offer more healthful foods and Hispanic independent stores representing a convenient alternative that also offer good value for the money. For the long-term wellbeing of fast casual restaurants, it is important to clearly define – and communicate – their positioning based on the taste and quality of the food to avoid becoming lost between different types of restaurants.

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Table of contents

  1. Overview

    • What you need to know
      • Definition
      • Executive Summary

        • Hispanics’ expenditures on LSRs projected to reach $48.7 billion by 2019
          • Figure 1: Expenditures and fan chart forecast of Hispanic consumers on limited service restaurants, at current prices, 2010-20
        • The issues
          • Hispanics over index for all fast casual dining subcategories
            • Figure 2: Fast casual restaurant types Hispanics used in the past month, Hispanics vs all, October 2015
          • Most Hispanics don’t see a better value in fast casual restaurants compared to other types of restaurants
            • Figure 3: Hispanics’ perception of value – Fast casual restaurants vs other types of restaurants, October 2015
          • Not overcomplicating it – it’s all about the food
            • Figure 4: Hispanics’ reasons to visit fast casual restaurants, October 2015
          • The opportunities
            • Going beyond lunch and dinner
              • Figure 5: Hispanics’ visits to fast casual restaurants by type and meal of the day, Indexed to all*, October 2015
            • Children are the future
              • Speaking their language
                • Figure 6: How Hispanics learn about fast casual restaurants, October 2015
              • What it means
              • The Market – What You Need to Know

                • Hispanics’ expenditures on LSRs currently estimated at $38.1 billion
                  • Structural market factors may affect fast casual restaurants
                    • Other trends affecting the market
                    • Market Size and Forecast

                      • Hispanics’ expenditures at LSRs projected to almost double between 2010 and 2020
                        • Figure 7: Expenditures and fan chart forecast of Hispanic consumers on limited service restaurants, at current prices, 2010-20
                        • Figure 8: Expenditures by Hispanic households on limited service restaurants, at current prices, 2010-20
                    • Market Factors

                      • Improving labor market for Hispanics has a positive impact on their confidence
                        • Figure 9: Hispanic unemployment, January 2007-December 2015
                      • Hispanics live in larger households and are more likely to have children
                        • Figure 10: Average household size and average number of adults and children in households, by race and Hispanic origin, 2014
                        • Figure 11: Presence of children in household, by race and Hispanic origin, 2014
                      • The Hispanic population is young
                        • Figure 12: Population by Hispanic origin and generation share, 2015
                      • Bicultural Hispanics fueling growth of fast casual restaurants
                        • Figure 13: Hispanics’ change in behavior toward fast casual restaurants, by household income, October 2015
                    • Market Perspective

                      • Hispanics claim to be cooking more at home
                        • Figure 14: Hispanics’ change in behavior toward fast casual restaurants, by gender and age, October 2015
                      • New foods more appealing as Hispanics become more acculturated
                        • Figure 15: Attitudes about trying new foods, Hispanics by language spoken at home vs all, July 2014-September 2015
                      • Understanding how Hispanics define foreign foods
                        • Figure 16: Attitudes about eating foreign foods, Hispanics by language spoken at home vs all, July 2014-September 2015
                      • The trend toward more healthful foods gains relevance with higher incomes
                        • Figure 17: Hispanics’ attitudes about healthier fast food, by household income, July 2014-September 2015
                    • Key Players – What You Need to Know

                      • Fast casual restaurants that build strength around food may do well
                        • Differentiation from other restaurants is the biggest challenge
                          • More fragmentation is to be expected
                          • What’s Working?

                            • In a fragmented market, clearly defining strengths of the food
                              • Pollo Tropical
                                • Figure 18: Pollo Tropical® is Growing, January 2014
                              • El Pollo Loco
                                • Figure 19: About El Pollo Loco, July 2014
                              • Roti Mediterranean Grill
                                • Figure 20: The Roti Story, September 2012
                              • Costa Vida Fresh Mexican Grill
                                • Figure 21: What we’re made of – Hatch green chiles, Costa Vida Mexican Grill, October 2015
                            • What’s Challenging?

                              • Differentiation from fast food restaurants
                                • Figure 22: Average number of limited service restaurants Hispanics visit in a typical month, by age, July 2014-September 2015
                            • What’s Next?

                              • More fragmentation coming to a market near you
                              • The Consumer – What You Need to Know

                                • Hispanics more likely to visit fast casual restaurants than all US consumers
                                  • Hispanics’ visits to fast casual restaurants are limited mainly to lunch and dinner
                                    • Fast casual restaurants not a better value for most Hispanics
                                      • Meeting expectations lead to repeat visits
                                        • The price/quality relationship needs to communicate value
                                          • The power of recommendations
                                          • Hispanics and Fast Casual Dining

                                              • Hispanics over index for all fast casual dining subcategories
                                                • Figure 23: Fast casual restaurant types Hispanics used in the past month, Hispanics vs all, October 2015
                                              • Younger Hispanic men drive visits
                                                • Figure 24: Fast casual restaurant types Hispanics used in the past month, by gender and age, October 2015
                                              • More affluent Hispanics eating more at fast casual restaurants
                                                • Figure 25: Hispanics’ change in behavior toward fast casual restaurants, by household income, October 2015
                                            • Meals Hispanics Eat at Fast Casual Restaurants

                                                • Hispanics over index for lunch and dinner at fast casual restaurants
                                                  • Figure 26: Hispanics’ use of fast casual restaurants by type and meal of the day, indexed to all, October 2015
                                                • The competition for Hispanic customers is more evident during lunch
                                                  • Figure 27: Correspondence analysis – Types of restaurants and types of meals, October 2015
                                                  • Figure 28: Types of restaurants, October 2015
                                              • Fast Casual Restaurants versus Fast Food Restaurants

                                                  • Few Hispanics consider fast casual restaurants offer a better value than fast food restaurants do
                                                    • Figure 29: Hispanics’ perception of value – Fast casual restaurants vs fast food restaurants, October 2015
                                                  • More affluent Hispanics more likely to see value in fast casual restaurants
                                                    • Figure 30: Hispanics’ perception of value – Fast casual restaurants vs fast food restaurants, by household income, October 2015
                                                  • Hispanics not replacing casual dining restaurants with fast food restaurants
                                                    • Figure 31: Hispanics’ change in behavior toward fast casual restaurants, by household income, October 2015
                                                • Fast Casual Restaurants versus Casual Dining Restaurants

                                                    • Hispanics see equal value in fast casual restaurants and in casual dining restaurants
                                                      • Figure 32: Perception of value among Hispanics – Fast casual restaurants vs casual dining restaurants, October 2015
                                                    • Less-affluent Hispanics gravitating toward fast casual restaurants instead of casual dining restaurants
                                                      • Figure 33: Hispanics’ change in behavior toward fast casual restaurants, by household income, October 2015
                                                  • Fast Casual Restaurants versus Hispanic Independent Restaurants

                                                      • Hispanics have a slight inclination to see better value in Hispanic independent restaurants
                                                        • Figure 34: Perception of value among Hispanics – Fast casual restaurants vs Hispanic independent restaurants, October 2015
                                                      • Less-acculturated Hispanics see better value in Hispanic independent restaurants
                                                        • Figure 35: Hispanics’ perception of value – Fast casual restaurants vs Hispanic independent restaurants, by level of acculturation, October 2015
                                                      • Bicultural Hispanics eating more at Hispanic independent restaurants
                                                        • Figure 36: Hispanics’ change in behavior toward fast casual restaurants, by level of acculturation, October 2015
                                                    • Hispanics’ Reasons to Visit Fast Casual Restaurants

                                                        • It’s all about the food
                                                          • Freshness can be a differentiating factor
                                                            • Value doesn’t necessarily mean promotions
                                                              • What about children?
                                                                • Figure 37: Hispanics’ reasons to visit fast casual restaurants, October 2015
                                                              • Less-acculturated Hispanics give more relative weight to a kid-friendly atmosphere
                                                                • Figure 38: Hispanics’ reasons to visit fast casual restaurants, October 2015
                                                            • Hispanics’ Opinions About Fast Casual Restaurants

                                                                • Satisfaction leads to repeat visits, but opportunities for stronger engagement exist
                                                                  • Establishing clear expectations and delivering upon them is key to developing a clientele
                                                                    • Price/quality balance needs to be carefully evaluated in a competitive environment
                                                                      • Restaurants’ values and ethics may be important, but mostly unknown
                                                                        • Figure 39: Hispanics’ opinions about fast casual restaurants, October 2015
                                                                        • Figure 40: Hispanics’ opinions about fast casual restaurants, by level of acculturation, October 2015
                                                                      • Hispanics more willing to pay more at fast casual restaurants (if quality deserves it)
                                                                        • Figure 41: Hispanics’ opinions about fast casual restaurants, Hispanics vs all, October 2015
                                                                    • How Hispanics Learn About Fast Casual Restaurants

                                                                        • Recommendations are key to making fast casual restaurants known
                                                                          • Figure 42: How Hispanics learn about fast casual restaurants, October 2015
                                                                        • Bicultural Hispanics more open to learn through multiple sources
                                                                          • Don’t underestimate the power of Spanish-language TV
                                                                            • Figure 43: How Hispanics learn about fast casual restaurants, October 2015
                                                                        • Change in Use of Coupons, Loyalty Programs, Other Deals at Fast Casual Restaurants

                                                                            • Use of coupons, loyalty programs, other deals shows limited change
                                                                              • Figure 44: Hispanics’ change in behavior at fast casual restaurants – Use of client engaging tactics, by level of acculturation, October 2015
                                                                          • Appendix – Data Sources and Abbreviations

                                                                            • Data sources
                                                                              • Sales data
                                                                                • Fan chart forecast
                                                                                  • Consumer survey data
                                                                                    • Correspondence analysis methodology
                                                                                      • Abbreviations and terms
                                                                                        • Abbreviations
                                                                                          • Terms
                                                                                            • A note on acculturation
                                                                                            • Appendix – The Market

                                                                                                • Figure 45: Expenditures by Hispanic households on dining out, at current prices, 2010-20
                                                                                                • Figure 46: Expenditures by Hispanic households on dining out, at inflation-adjusted prices, 2010-20
                                                                                                • Figure 47: Expenditures by Hispanic households on dining out, by segment, at current prices, 2010-20
                                                                                                • Figure 48: Expenditures by Hispanic households on dining out, by segment, at current prices, 2013 and 2015
                                                                                                • Figure 49: Expenditures by Hispanic households on limited service restaurants, at current prices, 2010-20

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                                                                                            Hispanics and Fast Casual Dining - US - February 2016

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