NPD: Burgers are king of the QSR hill in beef-focused Dallas
The Dallas market is crowded with all manner of ethnic and eclectic quick-service restaurants, but it’s the familiar hamburger chains that are the big winners with the area’s consumers, according to new data from The NPD Group.
A recent survey of the top 35 quick-service chains in the Dallas market revealed that hamburger purveyors had by far the largest share of traffic–and it was still growing. In the year ended June 2007, hamburger chains won nearly 60 percent of all visits to quick-service chains in the Dallas market, a share increase of nearly 1.5 percent over the previous year.
During the same period, quick-service pizza and sandwich operators held steady, with just 12 percent of visits each. Chicken and Mexican chains, which accounted for 11 percent and 8 percent of visits, respectively, actually lost share. NPD’s survey included major quick-service hamburger, pizza, sandwich, chicken and Mexican chains. The burger category comprised McDonald’s, Burger King, Wendy’s, Jack in the Box, Sonic and Whataburger.
“There’s a lot of competition in this market, so [for hamburger chains] to perform this well is pretty amazing,” said Bonnie Riggs, an analyst with NPD, a Port Washington, N.Y.-based global market research firm.
The strong traffic growth of burger chains is coming from all meal occasions, with supper posting the largest gains. The category’s performance in Dallas differs from the averaged results of the top 39 markets, which show burger chain traffic growing most at the morning meal and evening snack occasions, NPD found.
“In this market, hamburger is up at all dayparts,” Riggs said. “But [it’s] very strong at supper, which is contrary to what we’re seeing nationally. Supper has been down nationally, but doing well in this market.”
The data also revealed that traffic at Dallas burger chains is up for on-premise dining, carryout and drive-thru. By contrast, NPD found that burger chains in the top 39 markets are not growing on-premise traffic, although traffic is up for both carryout and drive-thru occasions.
“They’re hitting on all cylinders in this market, and it’s got to be hurting the competition,” Riggs said.
Although hamburger chains have added stores in the Dallas market, unit expansion is not what’s driving the category’s growth, according to NPD. Instead, key drivers of that growth are personal loyalty and specific menu choices, NPD found.
While Dallas-area consumers said that convenient locations were the primary reason they visited major quick-service hamburger chains, personal loyalty came in second, NPD found. The desire for specific menu items also lured patrons. The data also revealed that personal loyalty is a stronger driver of restaurant visits to hamburger chains in Dallas than it is in other major markets.
High brand awareness also plays a role in driving traffic to Dallas burger places. In a survey conducted over the summer, NPD asked 400 Dallas consumers to name the first fastfood restaurants they could think of. According to the data, 64 percent of consumers expressed an awareness of hamburger chains. Sandwich chains game in second, with 14 percent of respondents expressing awareness of them.
In the same survey, NPD asked consumers to name the first fastfood restaurant advertisements they could recall seeing or hearing in the previous month. Again, hamburger chains registered the highest awareness, with 60 percent. Sandwich and Mexican ads came in next, at 16 percent and 14 percent, respectively.
“That’s a big driver,” Riggs said. “The hamburger category’s unaided ad/brand awareness is just amazing in this market.”
Frequent visits also are driving growth in the hamburger category. During the summer of 2007, 34 percent of consumers said they had visited one of the major hamburger chains in the past four weeks. During the same period, 26 percent of consumers said they had visited one of the Mexican chains in the past four weeks, and 20 percent said they had visited one of the sandwich chains. Meanwhile, just 11 percent said they had visited chicken chains and 10 percent said they had visited pizza chains.
“There’s a lot more opportunity to visit hamburger restaurants,” Riggs said. “Consumers can go for breakfast, lunch, dinner and snack.”
Riggs added that the breakfast market is a big part of why the hamburger category recorded a higher number of visits. Fast-food competitors in other categories tend not to be in the breakfast game yet, she said.
Consumers in the Dallas market not only visit burger chains often, they say they plan to continue doing so. In the summer of 2007, 52 percent of consumers said they intended to visit one of the major burger chains in the next four weeks. Only sandwich chains registered a higher intent to visit, with 57 percent.
Some industry experts believe that the hamburger category’s success in the competitive Dallas market is largely due to a home turf advantage.
“You can push all the chicken you want…. The heritage of Texas is beef,” said Craig Weichman, a former restaurant analyst.
What is likely to help burger chains continue to thrive in Dallas is offering and marketing new or existing products that target the specific needs of consumers, Riggs said.
For Oak Brook, Ill.-based McDonald’s, which has a strong foothold in the Dallas/Ft. Worth area with 300 units, a top priority is focusing on existing units and finding ways to satisfy local tastes.
“Over the past several years in the Dallas/Ft. Worth area, we have focused our efforts around building our business by making our existing restaurants better and therefore growing our business from our existing locations, rather than growing through building new restaurants,” said Jerome Elenez, marketing director for McDonald’s Greater Southwest Region.
No matter the region, officials at the No. 1 burger chain say McDonald’s works closely with its owner/operators and suppliers in an effort to provide customers with the menu choices and variety they crave. Dallas customers enjoy “bolder, richer, spicier flavors,” Elenez said. To meet that need, the burger chain is selling within that region products such as the Salsa Roja Snack Wrap, a grilled-chicken wrap with spicy salsa, shredded cheese and lettuce; and the Southwest Salad, a mix of cilantro-glazed chicken, poblano peppers, roasted tomatoes, black beans, fire-roasted corn, Cheddar cheese and chile-lime tortilla strips.
Although hamburgers are big business in Dallas, quick-service operators need not start flipping burgers to succeed there. Whether serving chicken, pizza, sandwiches or Mexican, operators need to think local, Riggs said. She suggested that they consider adding menu items tailored to regional tastes, developing localized marketing and advertising plans, expanding business hours or services, adding loyalty programs, and providing franchisees with insight into their specific areas.
“Consumer behavior and preferences differ from market to market,” Riggs said. “[Operators] are challenged to address consumer needs on a local level.”
Hamburger chains dominate Dallas’ quick-service market
Percentage of QSR 06-07 Traffic share
traffic, 2007 point change
HAMBURGER 57.7% 1.4%
PIZZA 11.9% -0.1%
SANDWICH 11.8% 0.4%
CHICKEN 10.8% -0.6%
MEXICAN 7.9% -1.1%
SOURCE: THE NPD GROUP/NPD FOODWORLD/NPD CREST
Note: Table made from bar graph.
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