divergent trading

Restaurant Trend: Divergent Trading

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There’s been a lot of conjecture that guests are “trading down” when it comes to eating out. That they are monitoring their wallets more and more, choosing to save money over enjoying the experience of a nice meal in a full service restaurant. But that’s not the full picture. What we’re seeing is not trading down. It’s divergent trading.

What is Divergent Trading?

Guests aren’t choosing to eat exclusively at quick serve establishments. They are budgeting their money so that they can have a quick bite one day and a better meal the next. Say you have $20 for lunch. Where do you go? Well, today you’ll go to Five Guys or Chipotle and spend nine bucks on lunch. It’s speedy, it’s convenient, it costs less.

And there. There’s where restaurant marketers go wrong.

They say, “Aha! It costs less. So you’re trading down, aren’t you? Because you used to go to TGI Friday’s and Chili’s for lunch.” But, the fact is, tomorrow maybe you’ll spend $22 at PF Chang’s.

It’s not that guests are trading down. Guests are looking more for value than low price: and the ones who lose are the casual dining restaurants with check averages of less than $20. What’s five extra bucks when your choice is the state-of-the-art 1989 cheeseburger from Bennigan’s or a trip to Five Guys where you’ll spend $8.50? It’s a lot quicker, no tips, and no tchotchkes.

What This Restaurant Trend Means for Restaurateurs

The grim reality of this restaurant trend will be faced by full service restaurant chains with check averages below $20 that try to compete with fast casual chains. Fast casual, by design, will be more convenient and cost less than full service. Don’t try to compete with them head on. Offer what they can’t – full service.

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