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Quick Service Restaurants - US - August 2010

The U.S. economy has been in recession, taking a toll on the restaurant industry. However, Quick Service Restaurants (QSRs) have been putting up a good fight, winning over customers who are trading down from other segments and luring in cash strapped consumers with a wide range of value options. This report provides extensive details on how restaurants are proving successful and where there is still work to be done, including:

  • How the dollar/value menu has impacted customer spending
  • Where the competition is the greatest, both within the segment and from external forces
  • What draws customers to QSRs in general and how they choose specific restaurants
  • To what degree the “healthy” menu is impacting the industry and how best to address government mandates
  • The role social networking plays - and should play in the segment
  • Who the most earnest customers are and what it takes to keep them engaged

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Table of contents

  1. Scope and Themes

    • What you need to know
      • Definition
        • Data sources
          • Mintel Menu Insights
            • Consumer survey data
              • Advertising Creative
                • Abbreviations and terms
                  • Abbreviations
                    • Terms
                    • Executive Summary

                      • Restaurant sales a casualty of recession
                        • Healthy menu still lacking
                          • Retail convenience horns in on QSR
                            • Value menu reigns supreme
                              • Quick-service restaurant usage and usage frequency
                                • Consumer behavior within quick-service restaurants
                                  • Impact of the economy and the role of the dollar/value menu
                                    • Quick service comparisons to fast casual
                                    • Insights and Opportunities

                                      • Healthy kids’ meals are not optional
                                        • Health for all
                                          • Trans fats and high-fructose corn syrup have got to go
                                            • Setting the stage with a healthy breakfast
                                              • On the nutrition flip side…
                                                • The sustainability factor
                                                  • McDonald’s local and sustainable
                                                    • The undeniable social media
                                                      • Bring it local
                                                        • Social networking location tools
                                                          • Going mobile
                                                            • Food trucks are not just for independents
                                                              • Tapping into GPS
                                                              • Inspire Insights

                                                                  • Inspire Trend: Death of the Middle Ground
                                                                    • Barbell pricing, lifting a menu near you
                                                                      • Weighting the edges, Barbell menu strategies
                                                                        • Implications
                                                                        • Market Size and Forecast

                                                                          • Slow but growing sales
                                                                            • Figure 1: U.S. sales at quick-service restaurants, at current prices, 2005-15
                                                                            • Figure 2: U.S. sales at quick-service restaurants, at inflation-adjusted prices, 2005-15
                                                                        • Market Drivers

                                                                          • Key points
                                                                            • Restaurant sales a casualty of recession
                                                                              • Figure 3: Consumer Price Index for key consumer markets, June 2008-10
                                                                              • Figure 4: NRA Performance Indices, January 2009-June 2010
                                                                              • Figure 5: Adjusted foodservice and drinking place sales, January 2008-June 2010
                                                                            • Underemployment and unemployment impact spending
                                                                              • Figure 6: Unemployment and underemployment rates, January 2007-July 2010
                                                                            • Consumer confidence impacted by available disposable income
                                                                              • Figure 7: Real personal disposable income, January 2007-May 2010
                                                                              • Figure 8: Consumer sentiment index, by quarter, 2001-10
                                                                            • Consumers continue to seek out healthier choices on menus
                                                                              • Figure 9: Percentage of population who are overweight or obese—20-74s, 1988-2006
                                                                              • Figure 10: Would like to see more of at quick-service restaurants, May 2010
                                                                            • Government steps in with menu labeling requirements
                                                                            • Competitive Context

                                                                              • Key points
                                                                                • Retail convenience horns in on QSR cuisine
                                                                                  • Cannibalization or self-promotion?
                                                                                    • The competition cashes in on QSR success
                                                                                      • Upscale burgers
                                                                                      • Segment Performance: Hamburger

                                                                                        • Value menus and meals drive traffic
                                                                                          • Burgers for all size appetites and budgets
                                                                                            • Burgers get an upgrade
                                                                                              • The menu diversifies beyond the burger
                                                                                              • Segment Performance: Sandwich

                                                                                                • Adopting trends from other segments: Snacks, breakfast and value menu
                                                                                                  • Ahead of the health curve
                                                                                                  • Segment Performance: Chicken

                                                                                                    • The tortoise and the hare: Chick-fil-A and KFC
                                                                                                      • The other players: Popeyes and Church’s
                                                                                                      • Segment Performance: Mexican and Other

                                                                                                        • Seafood comes to the menu amid value promotions
                                                                                                          • New prototypes may point to future growth
                                                                                                          • Company Profiles

                                                                                                            • McDonald’s
                                                                                                              • Figure 11: McDonald’s systemwide revenue and net income, Q2 2009 and Q2 2010
                                                                                                            • Burger King
                                                                                                              • Figure 12: Burger King systemwide revenue and net income, Q4 2009 and Q4 2010
                                                                                                            • Wendy’s/Arby’s Group
                                                                                                              • Wendy’s
                                                                                                                • Figure 13: Wendy’s systemwide revenue and operating profit, Q2 2009 and Q2 2010
                                                                                                              • Arby’s
                                                                                                                • Figure 14: Arby’s systemwide revenue and operating profit, Q2 2009 and Q2 2010
                                                                                                              • Taco Bell
                                                                                                                • Figure 15: Yum! Brands U.S. division revenue and operating profit, Q2 2009 and Q2 2010*
                                                                                                              • KFC
                                                                                                              • Marketing Strategies

                                                                                                                • Getting the Message Out
                                                                                                                  • Figure 16: Product category domestic ad spending, 2008 and 2009
                                                                                                                • Social networking
                                                                                                                  • Burger King
                                                                                                                    • Figure 17: Bk.com monthly visits, July 2009-June 2010
                                                                                                                    • Figure 18: Burger King television ad, 2010
                                                                                                                  • Wendy’s
                                                                                                                    • Figure 19: Wendys.com monthly visits, January 2010-June 2010
                                                                                                                    • Figure 20: Wendy's Real Value Menu television ad, 2010
                                                                                                                  • Subway
                                                                                                                    • Figure 21: Subway.com monthly visits, January 2010-June 2010
                                                                                                                    • Figure 22: Subway $2.50 Breakfast Combo television ad, 2010
                                                                                                                  • McDonald’s
                                                                                                                    • Figure 23: Mcdonalds.com monthly visits, January 2010-June 2010
                                                                                                                    • Figure 24: McDonald's McCafé Frappé television ad, 2010
                                                                                                                  • Taco Bell
                                                                                                                    • Figure 25: Tacobell.com monthly visits, January 2010-June 2010
                                                                                                                    • Figure 26: Taco Bell NBA $5 Box television ad, 2010
                                                                                                                • Menu Insights Analysis: The QSR Menu

                                                                                                                      • Figure 27: Top 10 QSR menu item sections, by incidence, Q2 2008-Q2 2010
                                                                                                                      • Figure 28: Top 10 QSR menu item sections, by incidence and price, Q2 2008-Q2 2010
                                                                                                                      • Figure 29: Top 10 QSR menu items, by incidence, Q2 2008-Q2 2010
                                                                                                                      • Figure 30: Top 10 QSR menu items, by incidence and price, Q2 2008-Q2 2010
                                                                                                                  • Menu Insights Analysis: Marketing the QSR Menu

                                                                                                                        • Figure 31: Top 10 marketing claims on QSR menus, by incidence, Q2 2008-Q2 2010
                                                                                                                        • Figure 32: Top 10 marketing claims on QSR menus, by price, Q2 2008-Q2 2010
                                                                                                                        • Figure 33: Top 10 nutritional claims on menus, by incidence, Q2 2008-Q2 2010
                                                                                                                    • Menu Insights Analysis: The Beverage Menu

                                                                                                                          • Figure 34: Top 10 beverages on QSR menus, by incidence, Q2 2008-Q2 2010
                                                                                                                          • Figure 35: Top 10 beverages on QSR menus, by incidence and price, Q2 2008-Q2 2010
                                                                                                                      • Menu Insights Analysis: The Kids’ Menu

                                                                                                                            • Figure 36: Top 10 kids’ menu items at QSRs, by incidence, Q2 2008-Q2 2010
                                                                                                                            • Figure 37: Top 10 kids’ menu items at QSRs, by incidence and price, Q2 2008-Q2 2010
                                                                                                                            • Figure 38: Top 10 kids’ menu preparation methods at QSRs, by incidence, Q2 2008-Q2 2010
                                                                                                                        • Quick-Service Restaurant Usage and Usage Frequency

                                                                                                                          • Key points
                                                                                                                            • Lunchtime the “most important meal of the day”
                                                                                                                                • Figure 39: Quick service daypart usage, by gender, May 2010
                                                                                                                                • Figure 40: Quick service daypart usage, by age, May 2010
                                                                                                                                • Figure 41: Quick service daypart usage, by race/Hispanic origin, May 2010
                                                                                                                              • McDonald’s has by far the greatest popularity
                                                                                                                                • Figure 42: Quick-service brand usage, May 2010
                                                                                                                                • Figure 43: Quick-service brand usage, by gender, May 2010
                                                                                                                                • Figure 44: Quick-service brand usage, by age, May 2010
                                                                                                                                • Figure 45: Quick-service brand usage, by household income, May 2010
                                                                                                                                • Figure 46: Quick-service brand usage, by race/Hispanic origin, May 2010
                                                                                                                                • Figure 47: Quick-service brand usage and frequency, May 2010
                                                                                                                                • Figure 48: Quick-service brand frequency usage, by age, May 2010
                                                                                                                                • Figure 49: Quick-service brand frequency usage, by household income, May 2010
                                                                                                                                • Figure 50: Quick-service brand frequency usage, by race/Hispanic origin, May 2010
                                                                                                                            • Consumer Behavior within Quick-Service Restaurants

                                                                                                                              • Key points
                                                                                                                                • Customers less adventuresome and go for value
                                                                                                                                    • Figure 51: Consumer behaviors within quick-service restaurant, by gender, May 2010
                                                                                                                                    • Figure 52: Consumer behaviors within quick-service restaurant, by age, May 2010
                                                                                                                                • Quick Service Selection Factors

                                                                                                                                  • Key points
                                                                                                                                    • Wide range of factors determine selection
                                                                                                                                      • Figure 53: Reasons for selecting a quick-service restaurant, by age, May 2010
                                                                                                                                      • Figure 54: Would like to see more of at quick-service restaurants, by gender, May 2010
                                                                                                                                      • Figure 55: Would like to see more of at quick-service restaurants, by age, May 2010
                                                                                                                                      • Figure 56: Attitudes towards healthy dining at QSRs, by gender, May 2010
                                                                                                                                      • Figure 57: Attitudes towards healthy dining at QSRs, by household income, May 2010
                                                                                                                                  • Impact of the Economy and the Role of the Dollar/Value Menu

                                                                                                                                    • Key points
                                                                                                                                      • A slim majority report no change in spending
                                                                                                                                        • Figure 58: Impact of the economy on quick-service restaurant usage, by gender, May 2010
                                                                                                                                        • Figure 59: Impact of the economy on quick-service restaurant usage, by household income, May 2010
                                                                                                                                        • Figure 60: Dollar/value menu usage, by age, May 2010
                                                                                                                                        • Figure 61: Dollar/value menu ordering behavior, by gender, May 2010
                                                                                                                                        • Figure 62: Dollar/value menu ordering behavior, by age, May 2010
                                                                                                                                    • Quick Service Comparisons to Fast Casual

                                                                                                                                      • Key points
                                                                                                                                        • Dollar/value menu the strongest competitive tool
                                                                                                                                          • Figure 63: Quick service compared to fast casual, by household income, May 2010
                                                                                                                                          • Figure 64: Quick service compared to fast casual, by household income, May 2010
                                                                                                                                      • Cluster Analysis

                                                                                                                                          • Economizing enthusiasts
                                                                                                                                            • Characteristics
                                                                                                                                              • Opportunity
                                                                                                                                                • Convenient Health Seekers
                                                                                                                                                  • Characteristics
                                                                                                                                                    • Opportunity
                                                                                                                                                      • Infrequent, Unmotivated, and Uninterested
                                                                                                                                                        • Characteristics
                                                                                                                                                          • Opportunity
                                                                                                                                                            • Characteristic tables
                                                                                                                                                              • Figure 65: QSR clusters, May 2010
                                                                                                                                                              • Figure 66: Quick service daypart usage, by QSR clusters, May 2010
                                                                                                                                                              • Figure 67: Reasons for selecting a quick-service restaurant, by QSR clusters, May 2010
                                                                                                                                                              • Figure 68: Would like to see more of at quick-service restaurants, by QSR clusters, May 2010
                                                                                                                                                              • Figure 69: Impact of the economy on quick-service restaurant usage, by QSR clusters, May 2010
                                                                                                                                                              • Figure 70: Dollar/value menu usage, by QSR clusters, May 2010
                                                                                                                                                              • Figure 71: Attitudes towards and behaviors at QSRs, by QSR clusters, May 2010
                                                                                                                                                            • Demographic tables
                                                                                                                                                              • Figure 72: QSR clusters, by gender, May 2010
                                                                                                                                                              • Figure 73: QSR clusters, by age, May 2010
                                                                                                                                                              • Figure 74: QSR clusters, by household income, May 2010
                                                                                                                                                              • Figure 75: QSR clusters, by race, May 2010
                                                                                                                                                              • Figure 76: QSR clusters, by Hispanic origin, May 2010
                                                                                                                                                            • Cluster methodology
                                                                                                                                                            • Custom Groups: Light, Medium and Heavy Users

                                                                                                                                                                • Figure 77: Would like to see more of at quick-service restaurants, by usage, May 2010
                                                                                                                                                                • Figure 78: Dollar/value menu usage, by usage, May 2010
                                                                                                                                                                • Figure 79: Dollar/value menu ordering behavior, by usage, May 2010
                                                                                                                                                                • Figure 80: Quick service compared to fast casual, by usage, May 2010
                                                                                                                                                                • Figure 81: Quick service compared to fast casual, by usage, May 2010
                                                                                                                                                            • Appendix: Trade Associations

                                                                                                                                                              Companies Covered

                                                                                                                                                              • ABC, Inc.
                                                                                                                                                              • ABP Corporation
                                                                                                                                                              • AFC Enterprises Inc.
                                                                                                                                                              • Anheuser-Busch Companies Inc
                                                                                                                                                              • Applebee's International Inc.
                                                                                                                                                              • Arby's Restaurant Group
                                                                                                                                                              • Blimpie International Inc.
                                                                                                                                                              • Bob Evans Farms Inc.
                                                                                                                                                              • Bojangles Restaurants, Inc.
                                                                                                                                                              • Borders Group
                                                                                                                                                              • Brinker International Inc.
                                                                                                                                                              • Bureau of Economic Analysis
                                                                                                                                                              • Burger King Corporation
                                                                                                                                                              • Captain D's Inc.
                                                                                                                                                              • Caribou Coffee Company Inc.
                                                                                                                                                              • Centers for Disease Control and Prevention
                                                                                                                                                              • Checkers Drive-In Restaurants Inc.
                                                                                                                                                              • Chipotle Mexican Grill Inc.
                                                                                                                                                              • Church's Chicken
                                                                                                                                                              • CKE Restaurants Inc.
                                                                                                                                                              • Coca-Cola Company (The) (USA)
                                                                                                                                                              • ConAgra Foods, Inc
                                                                                                                                                              • Darden Restaurants Inc.
                                                                                                                                                              • Del Taco, Inc.
                                                                                                                                                              • Denny's Corporation
                                                                                                                                                              • Dunkin' Brands
                                                                                                                                                              • El Pollo Loco Holdings, Inc.
                                                                                                                                                              • Facebook, Inc.
                                                                                                                                                              • Federal Trade Commission
                                                                                                                                                              • Fédération Internationale de Football Association
                                                                                                                                                              • Food and Drug Administration
                                                                                                                                                              • Food Distributors International
                                                                                                                                                              • Food Marketing Institute
                                                                                                                                                              • Fuddruckers, Inc.
                                                                                                                                                              • Fuze Beverage LLC
                                                                                                                                                              • Hershey Company, The
                                                                                                                                                              • Hot Topic, Inc
                                                                                                                                                              • Institute of Medicine
                                                                                                                                                              • International Food Information Council Foundation (IFIC)
                                                                                                                                                              • International Food Service Executives Association (IFSEA)
                                                                                                                                                              • International Foodservice Distributors Association (IFDA)
                                                                                                                                                              • International Foodservice Manufacturers Association (IFMA)
                                                                                                                                                              • International Franchise Association (IFA)
                                                                                                                                                              • International Fresh-Cut Produce Association (IFPA)
                                                                                                                                                              • Jamba Juice Company
                                                                                                                                                              • KFC Corporation
                                                                                                                                                              • Kraft Foods Inc. (U.S.A.)
                                                                                                                                                              • Long John Silver's Inc.
                                                                                                                                                              • Los Angeles Times
                                                                                                                                                              • Marine Stewardship Council
                                                                                                                                                              • MasterCard Incorporated
                                                                                                                                                              • McDonald's U.S.A.
                                                                                                                                                              • Monterey Gourmet Foods Inc.
                                                                                                                                                              • MySpace.com
                                                                                                                                                              • National Council of Chain Restaurants (NCCR)
                                                                                                                                                              • National Restaurant Association (NRA)
                                                                                                                                                              • National Retail Federation (NRF)
                                                                                                                                                              • Organic Trade Association
                                                                                                                                                              • Panda Restaurant Group Inc.
                                                                                                                                                              • Pizza Hut Inc
                                                                                                                                                              • Produce Marketing Association
                                                                                                                                                              • Sara Lee Bakery Group
                                                                                                                                                              • Seattle Coffee Company
                                                                                                                                                              • Sonic Corp.
                                                                                                                                                              • Starbucks Corporation
                                                                                                                                                              • Subway
                                                                                                                                                              • T. Marzetti Company
                                                                                                                                                              • Taco Bell Corp.
                                                                                                                                                              • Target Corporation
                                                                                                                                                              • The New York Times Company
                                                                                                                                                              • The Quiznos Master LLC
                                                                                                                                                              • The Vegetarian Resource Group
                                                                                                                                                              • Twitter, Inc.
                                                                                                                                                              • Tyson Foods Inc.
                                                                                                                                                              • U.S. Bureau of Labor Statistics
                                                                                                                                                              • U.S. Bureau of the Census
                                                                                                                                                              • U.S. Department of Agriculture
                                                                                                                                                              • University of Michigan, The
                                                                                                                                                              • Weight Watchers International Inc.
                                                                                                                                                              • White Castle System, Inc.
                                                                                                                                                              • YouTube, Inc.
                                                                                                                                                              • Yum! Brands Inc.

                                                                                                                                                              Quick Service Restaurants - US - August 2010

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