Restaurants beefing up offerings despite rising protein costs
Oct. 30, 2014 | by Alicia Kelso
With meat prices at an all time high -- 13 percent higher year over year, with a 17.8 percent spike in beef prices, according to the Bureau of Labor Statistics -- you'd think that menus would be moving away from protein.
Not so.
Schlotzsky's just rolled out a whole new limited time offer based on beef. It's Hand-Carved Ribeye Steak offer, which will run Nov. 3 - Dec. 28, includes five sandwiches, salads, flatbreads and wraps.
It's the same across the restaurant industry, with Arby’s, for example, crafting its entire new messaging platform around "We have the meats," which debuted in July. The initial TV campaign spotlighted the Mega Meat Stacks, three offerings that the company called "the meatiest LTO in its history."
At the time of the launch, Jason Rollins, manager of public engagement, said the brand is focusing on proteins because it’s Arby’s unique differentiator. But other brands have gravitated toward the center-plate staple in recent months as well. For starters, Wendy’s launched a new BBQ pork line to close out summer, Tim Hortons made permanent its steak and cheese Panini and added a new grilled steak and egg breakfast sandwich, Dunkin’ Donuts also added a steak platform, Cousins Subs launched a Wisconsin steak and brat sub and, earlier this month, Papa John’s unveiled its Ultimate Meats pizza.
Operators are so undeterred by rising protein costs that steak sandwiches are actually the fastest-growing category in QSR, according to the NPD Group, and menu mentions of protein across the board have risen 67 percent in the last five years.
So the questions remain, why and how are operators navigating historically high protein prices? Because it’s what consumers want. How they’re doing it varies from pricing to promotion.
Protein highs
With consumers in the driver’s seat, they’re demanding protein loud and clear. According to Nancy Kruse, a menu analyst and president of The Kruse Company, consumers believe protein is beneficial to their health, as it helps build muscle, provide energy and make them feel fuller longer.
"Consumers want to know 'what does this food do for me,' and protein is a great example of what they’re looking for in terms of functionality," she said.
Protein enrichment is becoming so ingrained into restaurant marketing repertoire that even big name players are jumping on board, such as Taco Bell’s Cantina Power Menu and Cheerios Protein.
The popularity extends beyond just marketing. Ed Zimmerman, founder of The Food Connector, said recently-presented IRI data shows that protein is the fourth highest macrotrend in the food industry, behind convenience, health and nutrition.
"Brands that are focusing on proteins have figured out that that’s what their specific customers want. Many consumers still avoid carbs and more are doing a gluten-free diet, too, which helps the trend. Protein also provides sustenance, which fits in with the snacking trend. There are a lot of things working in favor of proteins," he said.
He expects the focus to continue as meat prices are anticipated to show some relief in the next few months behind a "huge" corn crop this year.
"I believe we’ve hit a peak and future prices will come down and, at the same time, consumer demand will remain high," Zimmerman said.
Navigating high costs
In the meantime, it’s hard to be patient with high food costs, but most brands have taken some pricing, while others have shifted their marketing or menu mix.
Quiznos, for example, recently launched a new line of Ciabatta Toasties, available in honey Dijon ham, pesto turkey and veggie caprese. CMO Susan Lintonsmith said the company chose to focus on non-beef/pork proteins.
"I’ve seen pricing to offset the cost of beef across the industry and we’re no exception. But we also focused on products that utilized other proteins besides beef and pork and, because of that, we were able to feature those items at a value price point since those proteins haven’t been hit as hard," she said. The Toasties have exceeded expectations, she said.
Cousins and Wendy’s both went big on pork LTOs. Wendy’s released its BBQ lineup in late September, with hickory-smoked pulled pork. Cousins Subs also introduced a pulled pork (and slaw) sub this year, as well as a Cubano, with pulled pork, salami, ham and more.
Kruse said showcasing protein through barbecue interpretations is "especially smart" given the high cost of protein.
"It allows patrons to indulge in a favorite food, while the operator can control the portion added to the dish," she said.
Cousins also offers a steak line prepped on a grill and has added 50 percent more steak on the products in the past couple of years, according to Justin McCoy, VP of Marketing. He said the products have been "a tremendous" hit, have generated "extremely positive feedback and have mixed extremely well."
McCoy said the company is frequently in communication with its vendors to lock in the best pricing in order to keep up with demand.
"It is important to be priced appropriately and in line with your category," he said.
Millennial-driven
And even if high protein costs necessitate higher pricing across the industry, McCoy said consumers are more willing to pay for these offerings now than in recent years.
"Consumer behavioral data and particularly millennial consumer data indicate that guests are looking at value differently. Value no longer is just about price point. The quality of your product, where it is sourced and the amount of product on a particular recipe are extremely important today. Guests are willing to pay a premium for quality and are seeking it out," McCoy said.
Lintonsmith agreed much of this trend is driven by millennials.
"Consumer confidence is up from two or three years ago and, they’re willing to pay a little more to get a little more," Lintonsmith added. "Millennials look at price value differently. They want it to be worth what they pay and they’re not willing to compromise on taste."
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