For most restaurant operators, making the best of a difficult economic climate requires an intelligent understanding of what consumers are thinking.
That may explain why the Lake Forest, Calif.-based quick-service chain Del Taco recently hired Tom Johnson as director of consumer insights. Johnson comes to Del Taco from Lieberman Research Worldwide, a custom research supplier, where he did a lot of work for both quick-service and full-service clients.
What does a consumer insights director do?
I’m in charge of helping collect feedback from customers and doing research. Internally, I consider myself the voice of the consumer. Part of my job is making sure the research is actionable and helping Del Taco reach its business goals.
What are some key issues on the minds of consumers these days?
There are a lot of things running through consumers’ minds, but at the top is the state of the economy.
Is it impacting their spending?
I can’t quantify what percent are being impacted by the economy. A large percentage of people still have jobs, yet they’re holding back on their purse strings, even though their position financially hasn’t really changed. Of course, there are tons of people who have lost their jobs or their homes, and those people certainly have to cut back. Others are guarding their wallets for fear of the future.
What are consumers thinking about pricing?
We’ve done a fair amount of research looking at how consumers think about price and value. It’s not all just about price. It’s really playing into what elements drive that price-value equation. We’ve gleaned some insights into what consumers take into consideration that has helped us make some decisions about which types of things we should be promoting.
Del Taco, for example, is promoting a new $3 meal deal, with three choices of meals with drinks included. A lot of competitors are talking about value and it’s driven by price point or quantity of food for the money. We knew there was going to be competitive pressure in January to come up with a strong value message, but we had to find ways to further differentiate our message. The $3 meal deal includes several concepts: a good price point, variety with three different meal options that gives consumers choices, and high-quality food with a beverage, compared to what others are offering.
So it’s not just about having low-price, fill-the-belly options?
Quality has to be at the core. A lot of operators might think to make this work financially for us on the back end, you have to offer a low-food-cost item. But that can erode your customer base. Consumers know when you lower the quality of a product. They may come in the door for a low-priced product, but they won’t come back.
Are consumers trading down?
Anybody in QSR who is keeping a pulse on consumers is seeing a trade-down effect, mostly from full service. We are seeing people trade in, but we are also still seeing people trade out, even at the QSR level. We have an opportunity now to get people in who aren’t as often in the QSR category. But that’s where the quality issue is key. They’re coming in for value, and what you want to do is prove your brand provides better value than what they had at a fast-causal or full-service restaurant. If you give them a ho-hum experience, they’ll go right back to full service when their money comes back. But if they come and are impressed with the food, they’ll stay.
