Despite Economy, Premium Foods Can Fetch Top Dollar

CHICAGO—According to a new report from Technomic, “The Consumer Pricing Strategy Report,” despite the fact that consumers are spending less on dining out, many are willing to spend more on higher-quality items if they include premium ingredients. More than 6 out of 10 consumers (61%) would spend more for a higher-quality sandwich with premium meat; 41% with premium cheese; and 34% with premium bread.

Other findings include:

• Only 25% of consumers feel restaurants are increasing prices to make more money; three out of four (75%) attribute rising menu prices to increases in the cost of gasoline and ingredients.
• The majority (91%) of consumers cutting back on restaurant spending are dining out less frequently. One-third (32%) purchase less-expensive food when eating out, and one-fifth (19%) order smaller amounts and portions.
• Consumers are cutting back more at full-service than at limited-service restaurants; lower-income consumers are decreasing purchases at both types of venues.
• Over half (56%) of consumers prefer that restaurants increase prices slowly over time, rather than all at once, or by substantially increasing pricing on certain items.

“Consumers are spending less on dining out and feel they have to allocate restaurant spending more wisely,” says Darren Tristano, executive vice president, Technomic. “Restaurant operators must offer a strong value equation to compete successfully for those dollars. Knowing when, how and how much to raise prices requires research into consumer intentions and behaviors as well as a close examination of industry practices.”