Quick-service restaurants still have a hammerlock on off-peak business, winning snackers and late-night diners with the potent combo of attractive prices and convenience. But full-service places are nibbling into QSRs’ dominance, aided in part by the greater ease delivery offers over drive-thrus.
Among the factors for the 6.9% jump in the same-store sales of BJ’s Restaurant & Brewhouse during the third quarter were “good numbers coming out of the midafternoon [and] the late-night dinner” dayparts, CFO and President Greg Levin told investors. “People are working [later], or maybe they're celebrating, coming a little bit more in the midafternoon and late night, and we put initiatives around that,” including new discounts on BJ’s happy hour menu.
Those off-peak dayparts have been firming up even as lunch business remains soft, according to Levin. Indeed, he added, off-peak transactions now account for 25% of total unit sales.
Similar accounts came from a number of the publicly owned full-service chains that recently reported their Q3 financial results. Late-night business has always been a big part of IHOP’s mix, but it has picked up lately, albeit moderately, President Darren Rebelez tells Restaurant Business. “What we have seen is interest in delivery in that overnight shift,” he says. And with the 1,640-unit chain still rolling out that service through a deal with DoorDash, the prospects look good for continued growth, he adds.
Archrival Denny’s has also felt that uplift from off-premise business. “The rise of digital ordering and delivery has definitely opened up more opportunities for late-night, offering us an easier way to connect with guests looking to satisfy late-night cravings outside of the limited options they may have at home,” says CMO John Dillon. Late-night takeout orders have risen for the same reason, he tells RB.
Efforts to land more post-dinner business have moved the needle on casual dining’s share of late-night traffic, according to Transaction Insights data from Technomic. The full-service places raised their share of all late-night transactions to 14.7% in August, up from the 14% clocked in the same month of 2017.
The gains came at the expense of quick-service and midscale (or family-dining) restaurants, whose market shares slipped August to August by 0.6% and 0.3%, respectively. Fast-casual restaurants increased their portion of the pie to 6.4%, a slight uptick for the rapidly expanding sector.
But casual dining still has lightyears to go before it can even spy the quick-service sector in the distance. QSRs and fast casuals together captured 77.5% of late-night visits, or more than three of every four orders placed.
Nevertheless, 22% of consumers say they’d like to find more snack options available from full-service restaurants.
What drives off-peak
Consumer research from Technomic shows why grab-and-go places have been dominant. More than a fourth of snacks and off-peak meals are eaten in a car, and about one of every five was ordered at a drive-thru. Delivery orders may be on the rise, but they still account for only 1.5% of off-peak transactions. Carryout orders add another 3.4% to the mix. Only 23% of the purchases in total are consumed in a home.
Not surprisingly, portability is a key consideration for snackers. Nearly half of consumers (48%) said they’re prompted to have a between-meal or late-night bite because they can grab the food and eat on the run.
The desire plays into the underlying factor of convenience. Speed of preparation, for instance, is why half of snack fans opt for something to hold them over, instead of waiting for a full meal. Technomic contends that snacking is on the rise in part because consumers don’t have time to consume a full sit-down meal, a dynamic evident in particular among younger customers. Indeed, in instances where consumers buy a snack from a restaurant to eat later, half of those purchases are made while eating a regular meal in the place, eliminating the need for a time-eating second visit.
Still, spontaneity is a far bigger driver of snacking or late-night dining. In more than two-thirds (68.4%) of the instances where a consumer popped into a restaurant for a bite, the visit wasn’t planned.
Prospects for the future
“Snacking is an engrained behavior for nearly all consumers, and that is not likely to change anytime soon,” Technomic concluded in a recent report on snacking.
It noted that consumers are increasingly replacing one meal a day with snacks, boosting the average number of between-meal or post-dinner noshes to just under three per day (2.8). Conversely, the number of people who now eat a traditional three meals a day, with nothing in between, dropped this year to just 4%.
Nearly one out of 10 consumers (9%) said they intend to increase their snacking. The percentage is double (18%) for snackers ages 18 to 34.
With the increased opportunity has come a rise in the number of players looking to exploit it. “Like just about every aspect of the restaurant industry, we’ve seen increased competition in the marketplace when it comes to late-night options,” says Dillon of Denny’s. “More and more restaurants—and even some c-stores—are pushing late-night menus, but we are confident in our ability to serve as a truly unique late-night dining option.”