Lunch prices among U.S. casual dining restaurants fell 94 cents in 2011 compared with 2010 despite several establishments considering price increases, survey finds; kids meal prices at US$4.69, down 2 cents from 2010

Nevin Barich

BOSTON , January 31, 2012 (press release) – Cost-conscious consumers can still dine out without making bigger dents in their entertainment budgets, according to the 2011 Casual Dining Study recently published by Intellaprice, a Boston-based restaurant pricing consultancy. Especially if dining excursions consist of lunch with the kids and a beverage from the bar, the survey found.

Lunch down almost a buck

Restaurant operators knew early in 2011 that they’d have to grapple with rising costs for chicken, beef, cheese, and other commodities. But in a year that started with chains considering menu price increases, the casual dining segment saw lunch prices decrease by $.94. According to Intellaprice President, Leslie Kerr, this reverses the 2010 trend in which lunch prices were up $.93.

So how can operators stomach lunch prices that harken back to 2009 levels, and what does it mean for restaurants and their guests? According to Kerr, the changes combine price adjustments with updates to menu items, and if done properly, this benefits customers as well as chains.

Hamburger, yes. Filet Mignon, not so much

“It’s good news for guests, but perhaps not for the reason they might think,” Kerr explained. “They can still order the $7 lunch combos and pairings they have grown to love – and these haven’t gone down in price. But $20 New York Sirloins are no longer offered, and there are more combos, sliders and sandwiches at $7 and $8. Restaurants are providing more options at these prices because guests want them, and if these yield better margins for operators, everybody wins.”

Fear of the $9 Lunch

Price changes vary by menu category, and dinner entrées were up $.41, or 3%, vs. 2010 levels, Intellaprice found. “Operators adjusted menus to maintain lunch traffic, fearing that at $9 and $10, customers wouldn’t visit as often. For dinner items, there wasn’t as much caution, though the increase was conservative compared to the $.72 we saw in 2010,” Kerr explained.

Tips for the cost-conscious

Wallet-watchers should avoid extras with their meals based on Intellaprice’s data. In 2011, add-ons, side dishes and desserts saw the most noticeable increases, up 5%, 12%, and 7.5%, respectively. “It’s a balancing act to identify areas where price increases are acceptable,” Kerr says. And there are additional menu items, some at the bargain end of the spectrum, and others at the indulgent end. “Mini desserts have been well-received at around $2, and now menus include six for $12.00. A portion of tables will bite, so why not put them on the menu?”

The cheap stuff gets cheaper

A welcome finding for some: bar beverages are only up $.03 on average over 2010. Beer and cocktails Intellaprice studied averaged $5.98 in 2010 and $6.01 in 2011. A top-shelf margarita set diners back only $.07 more in 2011, at $8.86, and a domestic draft beer was up just a dime, to $3.64. Those looking to save on bar beverages should stick with house vodka, which was down $.09 to $5.00 a glass.

Other findings from Intellaprice’s study:

* High-ticket lunches in 2010 ranged from $10.00 to $27.99, whereas in 2011 items in this group capped out at $14.90
* Prices for items in all categories were up by 1.2% vs. 2010
* Kids meal prices were $4.69 in 2011, down $.02 vs. 2010, when they were up $.30 from 2009
* Among dinner entrées, the most commonly used price point shifted from $8.99 in 2010 to $9.99 in 2011

Intellaprice’s findings suggest that operators are sensitive to guest perceptions as well as their own margins. “They are treating consumers’ lack of confidence with different responses,” Kerr explained. “For items that remained on menus from 2010 to 2011, over half of the prices remained flat, 40% went up, and 7% went down. Operators seek to cover cost increases with the combination of adjustments.”

Intellaprice’s casual dining study, in its fifth year, tracks prices of all menu items. The 2011 study, conducted in August and September, includes prices for over 32,000 food and beverage items from casual dining brands nationwide.

About Intellaprice®

Intellaprice is a full-service pricing intelligence firm serving the restaurant and beverage industries. Intellaprice publishes the Intellaprice Report, which is syndicated pricing intelligence on quick service and casual dining segments. Intellaprice specializes in pricing, profitability, and marketing analysis to help organizations increase sales, grow profit, and reduce competitive intelligence costs. Intellaprice was founded by restaurant industry veteran Leslie Kerr and is based in Boston. For more information visit www.intellaprice.com.

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