When it comes to value, traditionally, it was thought that the lower the price or the greater the discount, the better the perceived value to the customer. Owners and operators got into the mindset that price was, and in some cases, still is the only characteristic that drives customers. However, consumer demands have shifted considerably and so too has the definition of value. “Many people thought value meant lowest price or highest discount. But that’s an old way of thinking,” says Mark Mears, CMO of Noodles & Co.
A 2017 Technomic study found that price was no longer the most important component with consumers. Perceived value is more important than the product’s actual price. You only have to look at brands like Chipotle. Despite the relatively higher cost, it and many similar brands are popular among Millennials and even teenagers.
Rafi Mohammed, a pricing expert and author of the book The Art of Pricing, agrees that value is not merely a matter of being inexpensive. “I think that the word is misused, and when people talk about value, they think about it in terms of giving people the lowest price. From a consumer’s standpoint, it’s about an evaluation between what they get and what the price is.”
So, if price isn’t an overriding factor, what is?
Demand for high-quality food is at an all-time high. Consumer attitudes regarding the link between diet and health have shifted and as a result are more willing to pay higher prices to ensure that what goes into their bodies is nutritious. According to the National Restaurant Association’s 2015 Industry Forecast, 92% of customers cited quality of food as the most important consideration in selecting a limited-service establishment. Nine out of 10 operators also noted that guests paid more attention to food quality than they did two years before.
Today, health and wellness is now a top priority for consumers around the world, with 67% saying they actively seek products with healthful ingredients. Consumers are looking at the makeup of food and the quality of the ingredients more than ever before. Menus that list calories, offer items that are natural, organic, locally sourced and denotes items that are vegetarian or vegan, as well as those that include either all-natural or free-range proteins etc. resonate with consumers and create a higher willingness to pay.
Similarly, consumers are increasingly wanting, and value, the ability to be flexible with menu options. In other words, offering each of the components of a meal and letting the customer customize and build their order by choosing and deciding the right quantity of food for the occasion and therefore what they perceive as good value.
Speed and convenience matter as much as ever to American diners. They still want fast and value but increasingly they also care about where their food comes from, what they’re eating, and how it was made. And more importantly, they are willing to open their wallets and pay more for what they perceive to be easy, customized and healthier fare.