While c-stores have been slowly muscling into QSR territory, there’s no question the industry is fighting back as if its life depends on it. That’s because it does.
Despite the long-term aspirations of convenience leaders, c-stores have foodservice; QSRs are foodservice. And the latter aren’t letting themselves be backed into a corner.
“What’s really keeping c-stores from stronger growth is the morning meal,” says Bonnie Riggs, restaurant industry analyst for The NPD Group. Morning-meal traffic increased 4% at QSRs last year, compared to a 1% decline for convenience retailers.
Riggs says that the top-performing categories in 2013 were gourmet coffee/ tea, fast casual and doughnut. Much of this growth was fueled by unit expansion, which has undoubtedly put breakfast-minded c-store operators much closer to the nearest Starbucks or Dunkin’ than they’d like to be.
Technomic senior director Donna Hood Crecca agrees with Riggs that breakfast has given QSRs a nice jolt. “There’s a lot of innovation and blocking and tackling as new folks like Taco Bell come in, both in terms of indulgent items and healthier items,” she says.
Breakfast competition from other QSRs is causing some well-publicized woes for McDonald’s, as well as those participating in Technomic’s Consumer Brand Metrics study.
“Whenever you’re the big guy, everyone takes shots at you,” Crecca says. “McDonald’s [has] high traffic, high sales, but it doesn’t score real high across a lot of attributes. There’s definitely room to improve.”
On the flavor front, Justin Massa, founder and CEO of Food Genius, is finding a growing incidence rate of spicy menu items—just like at c-stores. He has noticed chains taking a regular menu item and adding hot sauce to create a limited-time offer. “McChicken to [Hot ’n] Spicy McChicken is a great example,” as well as Subway’s Sriracha Steak Melt and Sriracha Chicken Melt, he says.
“The other thing that we saw—and we think this was more of an artifact of trying to add a better veneer to existing healthy options—was the number of salad dressings offered as options grow,” Massa says. “It wasn’t a growth in salads, but there was a greater array of salad dressings offered.”
QSRs are competing in anchor c-store categories such as coffee and doughnuts, but they’re also beginning to feel pressure from the grab-and-go aspect of c-stores—especially those with strong sandwich offerings such as Sheetz and Wawa. In reaction, says Rachel Tracy, managing director of Culinary Visions Panel, Chicago, they’re innovating upwards and putting pressure on higher-price-point restaurants.
“QSR has had to be the new fast casual,” she says, “where c-store is taking on the other option for QSRs.”
NEXT: Data! Traffic Report & Segment Leaders
Traffic Report: QSR
QSR segments experienced flat traffic last year, compared to 1% growth for c-stores, according to The NPD Group.
| Year ending | Traffic PCYA* |
| Dec. 2011 | 1% |
| Dec. 2012 | 1% |
| Dec. 2013 | 0% |
Source: The NPD Group/CREST
* Percent change from a year ago
QSR Business Expectations
The majority of QSR/fast-casual operators expect their business to improve somewhat in 2014. Comparatively, a greater percentage of c-store operators (23%) reported in the same study they expect their foodservice business to improve greatly this year.
Source: FARE 2014 State of Foodservice Study
QSR Day-Part Distribution 38+Year ending December 2013
The breakfast battles among QSR chains induced a 4% increase in traffic during the morning hours. Lunch still commands the largest share.
| Day-part | Share of traffic | PCYA* |
| Morning meal | 22% | 4% |
| Lunch | 36% | -1% |
| Supper | 29% | -1% |
| P.M. snack | 13% | 1% |
Source: The NPD Group/CREST
*Percent change from a year ago
The Restaurant Leaders
Like its C-Store Consumer Brand Metrics study, Technomic also conducts an ongoing brand performance study that includes the top 100 U.S. restaurant chains in terms of sales. An online questionnaire asks approximately 80,000 consumers about the importance of more than 60 attributes related to the restaurant experience. Scores represent the percentage of respondents who strongly agree with the statements on a scale of one to five. Below are the leaders in a few key segments. The No. 1 overall: Papa Murphy’s, followed by Chick-fil-A.
| Chain | Service and hospitality | Food and beverage | Value | Overall** |
| Beverage/snack chains | ||||
| Krispy Kreme | 71% | 55% | 49% | 58% |
| Caribou Coffee | 71% | 48% | 47% | 56% |
| Pinkberry | 66% | 53% | 45% | 55% |
| Bakery café/sandwich chains | ||||
| Firehouse Subs | 77% | 60% | 53% | 64% |
| McAlister’s Deli | 72% | 59% | 50% | 60% |
| Jason’s Deli | 71% | 59% | 49% | 59% |
| Burger chains | ||||
| In-N-Out Burger | 77% | 52% | 57% | 61% |
| Culver’s | 74% | 56% | 46% | 58% |
| Fuddruckers | 71% | 57% | 48% | 57% |
| Chicken chains | ||||
| Chick-fil-A | 78% | 61% | 55% | 65% |
| Zaxby’s | 68% | 54% | 45% | 57% |
| Boston Market | 61% | 47% | 42% | 50% |
| Pizza/Italian chains | ||||
| Papa Murphy’s | 81% | 59% | 66% | 67% |
| Maggiano’s Little Italy | 69% | 57% | 50% | 58% |
| Carrabba’s Italian Grill | 68% | 58% | 51% | 58% |
Source: Technomic Inc. 2013 Consumer Brand Metrics
** Includes attributes not listed
NEXT: Eating Occasions & Growth Expectations
Cross-Channel Eating Occasions
Occasions shed light on why consumers make certain choices and offer insight on how best to target those motivations. A “1” ranking indicates the strongest occasion for that channel (the occasion for which it captures its highest relative share).
| Occasion | Frequency | Average spend | Rank: LSR* | Rank: FSR** | Rank: Retail | Rank: On-site |
| Casual lunch | 14% | $9.58 | 7 | 12 | 23 | 24 |
| Family meal | 14% | $10.70 | 17 | 7 | 22 | 23 |
| Quick bite | 13% | $6.41 | 2 | 24 | 9 | 15 |
| Casual dinner | 12% | $12.20 | 23 | 3 | 24 | 25 |
| Running errands | 12% | $6.77 | 8 | 19 | 4 | 26 |
| Cheap bite | 12% | $6.13 | 1 | 25 | 8 | 16 |
| Hold over | 9% | $6.36 | 10 | 26 | 1 | 14 |
| Dinner on way home | 8% | $10.16 | 5 | 16 | 19 | 18 |
| Hanging w/ friends | 8% | $10.95 | 19 | 9 | 12 | 21 |
| Food as fuel | 8% | $7.75 | 9 | 21 | 5 | 10 |
| Last-minute dinner | 7% | $10.09 | 4 | 17 | 21 | 19 |
| Relaxing at home | 7% | $9.27 | 6 | 22 | 3 | 22 |
| Morning commute | 5% | $7.14 | 3 | 23 | 2 | 20 |
| Social gathering | 5% | $13.01 | 24 | 4 | 13 | 8 |
| Work break | 5% | $9.29 | 13 | 20 | 7 | 2 |
| Weekend breakfast | 4% | $10.76 | 16 | 8 | 15 | 13 |
| Work lunch | 3% | $13.62 | 15 | 15 | 11 | 1 |
| Romantic meal | 3% | $17.54 | 25 | 2 | 26 | 17 |
| Brunch | 3% | $13.23 | 11 | 13 | 16 | 11 |
| Special occasion | 3% | $16.50 | 26 | 1 | 25 | 7 |
| Before event | 3% | $14.38 | 18 | 11 | 14 | 3 |
| Road trip | 3% | $9.62 | 14 | 18 | 6 | 9 |
| Festive | 2% | $14.82 | 21 | 10 | 17 | 6 |
| Formal dinner | 2% | $21.56 | 20 | 5 | 20 | 4 |
| Guy’s night out | 2% | $17.18 | 12 | 14 | 10 | 5 |
| Girl’s night out | 2% | $14.04 | 22 | 6 | 18 | 12 |
Source: Datassential, International Foodservice Manufacturers Association (IFMA)
*Limited-service restaurants **Full-service restaurants
Day-Part Growth Expectations
QSR/fast-casual operators have about the same growth expectations for lunch as c-store foodservice operators. They differ at breakfast, where c-store operators expect a far greater growth (34% vs. 17%).
Source: FARE 2014 State of Foodservice Study
*** Numbers do not equal zero due to rounding
NEXT: Consumer Eater Types
Consumer Eater Types
According to annual consumer research conducted by Datassential and the International Foodservice Manufacturers Association (IFMA), consumers generally belong to one of four distinct eater segments, each defined by a set of shared attitudes and behavior with regard to away-from-home (AFH) food spend.
Basic Eaters: 21% of population, 9% of AFH spend. With a no-frills mentality, these consumers “eat to live” rather than “live to eat.” Affordability and speed are key motivators.
Quality Essentialists: 22% of population, 18% of AFH spend. Quality matters, but only to a certain point. It has to be good but need not be spectacular. Consistency is key.
Progressives: 28% of population, 31% of AFH spend. Progressives are often foodies with a greater appetite for experimentation; many also favor health-conscious dining.
Experientialists: 28% of population, 41% of AFH spend. For experientialists, it’s not just about the food, but rather the entire experience, from ambiance and service to kid-friendly options.
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