NPD: Savvy kids seek more than just fries, pizza at QSRs

Move over, Happy Meal. While kids’ love for burgers and fries remains true, a growing number of young tykes are ordering chicken sandwiches, Mexican fare and seafood when they dine out.

According to new data from The NPD Group, today’s kids have more sophisticated palates than previous generations, making them open to a wider variety of menu offerings when they dine out and presenting savvy operators with a potentially lucrative opportunity.

In the year ended in July, kids under the age of 13 accounted for nearly 8 billion restaurant visits and nearly $40 billion in sales, according to NPD, a Port Washington, N.Y.-based market research firm. Nearly 80 percent of those visits were made to quick-service restaurants, where 64 percent of those dollars were spent.

“When you look at the size of the opportunity…it’s huge,” said NPD analyst Bonnie Riggs.

While quick-service restaurants capture the majority of restaurant visits from parties with kids and have been able to maintain share, mid-scale restaurants have lost share to casual-dining operations. During the last six years the quick-service segment has maintained its share of traffic from parties with kids and increased visits by 5 percent, according to NPD. During the same period, casual dining has increased its share from 9 percent to 11 percent and grown visits by double digits. Meanwhile, midscale restaurants have lost both share and visits.

While quick-service restaurants continue to draw children, some categories are more magnetic than others, according to NPD. Among the most popular quick-service categories are hamburger and pizza places. In the year ended in July, these categories accounted for more than 40 percent of traffic from all parties with kids under the age of 13. Even so, while hamburger traffic was up 12 percent from 2001, pizza traffic was down 5 percent over the same period.

“A lot [of the loss of visits to pizza] has to do with the price of a pizza from a restaurant, versus what you can get from a c-store or frozen,” Riggs said.

Over the past year, the hamburger, gourmet coffee/tea and doughnut categories have had the largest increase in visits from parties with kids under the age of 13. According to the data, there were 55 million more visits to hamburger restaurants in the year ended in July, a 5-percent increase over the previous year. During the same period, parties with kids under the age of 13 made 41 million more visits to gourmet coffee/tea outlets and 34 million more visits to doughnut shops, a gain of more than 25 percent for each category.

Where parties with kids order and eat their meals has changed dramatically over the last six years. So-called “dashboard dining” posted the strongest growth among parties with kids under the age of 13, according to NPD. Twenty-four percent of parties with kids ordered their meals at drive-thrus in 2007, an increase of 18 percent over 2001. Fourteen percent of meals were eaten in the car in 2007, up 17 percent from 2001. In the year ended in July, 60 percent of parties with kids ate their meals off-premise. Of that group, 40 percent ate them at home.

Although they visit quick-service restaurants most during the supper daypart, today’s on-the-go kids are increasingly eating out for a morning meal and for lunch. Over the past six years morning meal and lunch have seen the strongest growth, NPD found. Morning meal accounted for 13 percent of traffic from parties with kids under the age of 13 in 2007, up 23 percent from 2001. Lunch accounted for 29 percent, up 12 percent from 2001. During the same period, supper, which accounted for nearly half of quick-service traffic from parties with kids, showed no growth. Evening snack growth declined 5 percent.

“The big thing here is that supper accounts for 45 percent of visits, and it’s not growing,” Riggs said. She added that the shift away from pizza likely has contributed to the lack of growth at the supper meal occasion.

Like those kids who came before them, today’s youths favor burgers, chicken nuggets, fries and pizza when they eat out, but they also will order more grownup fare.

French fries, pizza, burgers and nuggets/strips are among the top foods eaten by kids under 13, according to NPD. Other foods gaining in popularity include breakfast sandwiches and chicken sandwiches, Mexican fare, and seafood.

Top foods chosen by kids under 13

In the year ended in July, 22 percent of all visits from kids under 13 included French fries as part of the order. During the same period, 17 percent included pizza and 17 percent included nuggets/strips, while 13 percent included burgers. As of July, servings of breakfast sandwiches were up 13 percent and servings of chicken sandwiches were up 8 percent over the previous year. Mexican and seafood servings increased 5 percent and 3 percent, respectively.

With an increasing array of choices, kids under the age of 13 are consuming less soda and more of just about every other beverage. In the year ended in July, top beverages included carbonated soft drinks, milk and juice.

While servings of milk were up 2 percent and servings of juice were up 1 percent over the previous year, regular carbonated soft drinks were down 5 percent. The beverage that grew the most in 2007 was iced tea, with servings up 13 percent over the previous year.

While kids’ meals once may have been a must-have, over the past six years they have taken a backseat to value menus and combo meals. In the year ended in July, value menus accounted for 6 percent of QSR traffic from parties with kids under the age of 13, an increase of more than 25 percent since 2001. During the same period, combo meals accounted for 14 percent of traffic, an increase of 11 percent. Kids’ menus accounted for 5 percent of traffic, an increase of 3 percent. Kids meals with a toy accounted for 9 percent of traffic, an increase of 5 percent from 2001. However, the growth rate of kids’ meals with toys has just kept pace with overall traffic.

“These kids are so savvy,” Riggs said. “I’m not sure [kids’ meals] are compelling enough or large enough to fit their appetites.”

To capture these small consumers, operators have to step up their offerings, Riggs said.

Oakbrook, Ill.-based McDonald’s Corp., which first introduced the Happy Meal in 1979, is doing just that and using the power of choice to attract young children. Several years ago, the burger giant added more options to its classic kids’ meal, which traditionally included a choice of burger, cheeseburger or 4-piece chicken McNuggets, a small soft drink and a small order of French fries. Kids can now choose milk instead of a soft drink and “apple dippers,” sliced apples with caramel dipping sauce, instead of French fries.

In addition, slightly older children have been able to opt for the Mighty Kids Meal, a larger portioned version of the Happy Meal, since 2001.

“We’ve seen overall share with kids and kids’ meals continue to grow by providing menu choices,” said Kathy Pyle, senior director of family marketing for McDonald’s USA. “It’s all about menu choices and variety.”

Similarly, Milford, Conn.-based Subway, which specializes in build-your-own sandwiches, also is appealing to kids with more choices.

In March, the 28,198-unit chain introduced Fresh Fit For Kids, a build-your-own meal menu that lets kids choose from eight different miniature subs boasting fewer than 6 grams of fat, three different sides and a handful of beverages.

“If you’re a kid, there are not many places where you can get listened to and give direction,” says Tony Pace, chief marketing officer for the Subway Franchisee Advertising Fund Trust. “[At Subway], they’re completely in charge.”

Other quick-service chains banking on giving kids more control include Dublin, Ohio-based Wendy’s, which expanded its kids’ meal choices in 2006.Wendy’s littlest customers can now choose from among five kid-sized entrées, three sides and a variety of beverages to create a Kids’ Meal combo.