Special Report: A New Snack Mix

Hectic schedules and on-the-go lifestyles make between-meal bites more routine for hungry, time-starved consumers.

By Derek Gale, Associate Editor -- Restaurants & Institutions, 3/1/2007

The idea of three square meals isn’t what it used to be, and for many consumers, regimented breakfast-lunch-and-dinner lifestyles no longer exist. Instead, meals are shoehorned in, sometimes taking the form of a snack rather than a full meal, opening up opportunities to eat, eat and eat again. For foodservice operators, this means changing menus, hours and offerings to better fit the snacking lifestyle.

From Starbucks beefing up morning food offerings to Einstein Bros. adding afternoon-snack offerings, menus are quickly responding. And picking up on a trend colleges began to see nearly a decade ago, quick-service operators are keeping doors open longer to lure after-dinner dollars.

Such strategies make sense. The National Restaurant Association forecasts that the snack and nonalcoholic beverage segments will be the fastest growing among eating places in 2007, with 8.8% growth projected.

Joe Pawlak, vice president at Chicago-based food research consultancy Technomic Inc., is bullish on the category, thanks to changing consumer behaviors. "We think snacking is a huge opportunity," he says. "Consumers aren’t eating three meals a day as they had in the past. We’re getting to a point where consumers are eating six to seven meals."

So far, those extra meals aren’t a revenue bonanza for restaurants. Nearly 85% of consumers surveyed in R&I’s New American Diner Study say they sneak a snack at least once a day, but nine of 10 say they rarely—if ever—visit a restaurant to do so. Such results show a clear opportunity to capitalize on consumers’ hunger at nonmeal times.

"By analyzing current offerings from a fresh perspective and offering new options that appeal to the snacking consumer, chains could make a measurable impact on same-store sales and add business during what frequently are off-peak hours," says Darren Tristano, executive vice president of Technomic’s Information Services division.

What Is a Snack?

Snacking is largely a hunger-driven impulse decision rather than a planned eating occasion, with nearly half of all consumers saying they snack because they want to eat but don’t have time for a full meal, according to Technomic’s 2007 Snacking Category Report.

Yet consumers consider just about all menu items as potential snack foods, including those that seem more like full-meal items (such as hamburgers, pizza and combo meals), as long as they carry a snack-size price. Technomic finds that 76% of consumers view the optimal snack price at below $3.

Operators tend to have more specific ideas about what items fit the snack category, but are happy to meet consumers’ snacking needs however they can. Prairie du Sac, Wis.-based Culver’s Frozen Custard and ButterBurgers units offer a SnackPak consisting of a ButterBurger, small fries and a small drink for $2.99.

The chain first looked at the bundled offering as a value alternative for customers looking to spend a little less money, but it "quickly turned into a perfect-size meal at a perfect price," says Director of Marketing Chris Contino. "The [SnackPak] name has a lot to do with how people consider it," he notes. "And because it is such a value price, guests think it may be less of a meal than a full Value Basket. This plays right into guests wanting to eat a little less food more often."

Increasingly, beverages also are considered snack options—especially smoothies and blended coffee drinks—although carbonated beverages such as energy drinks and soft drinks may serve as snack-satisfiers as well.

"One of the goals for our 2007 marketing plan is to promote and own the snack category," says Nicole Hutson, director of marketing for Atlanta-based Planet Smoothie. "We want to tell consumers that our products are sweet, healthy and energy-filled, and, depending on the size you get, they don’t fill you all the way up, but will carry you over throughout the day or to the next meal."

Falling between combo meals and beverages are more-traditional snack foods, from sides such as fries and onion rings to healthful fruits and veggies.

Know When to Hold ’em

Whether snacks are healthful or indulgent, one of their most important characteristics is convenience, especially in terms of portability. With consumers eating on the run and in cars, handheld items as well as those that fit in cup holders are essential.

That helps explain the rise of small-size chicken items such as McDonald’s Snack Wrap and the KFC Snacker, as well as Burger King’s Chicken Fries, served in a container designed to fit in car cup holders. Miami-based Burger King is testing other items that can be served in similar packaging, including handheld breakfast and lunch wraps called BK Hold ’Ems.

Meanwhile, Oak Brook, Ill.-based McDonald’s recently expanded the popular Snack Wrap line with ranch and honey-mustard flavors, and the tortilla-wrapped snacks now are available in grilled or crispy-chicken varieties.

Turning on Off Hours

Although snack time by definition can be any time, there are three primary snacking periods: morning hours, afternoons between lunch and dinner, and the after-dinner or late-night snack hours. Historically, operators have thought of them as off-hours, but with the right products and marketing, these dayparts can spring to life.

Afternoons are by far the busiest snacking time—or "shoulder period" as Kevin Armstrong. president and CEO of Deerfield, Ill.-based Cosi, calls it. R&I’s New American Diner Study finds that 73% of consumers who say they occasionally or frequently stop at a restaurant for a snack do so between lunch and dinner. Even higher percentages of frequent snackers ages 26 or younger (82.1%) and 61 or older (86.6%) choose afternoons for an extra bite to eat.

Golden, Colo.-based New World Restaurant Group, which operates Einstein Bros. Bagels and Noah’s Bagels, recognizes this potential and is working to develop more menu items around the afternoon snack time, perhaps even culminating in a 10- to 15-item menu specific to that daypart, says CEO Paul Murphy.

"The breakfast daypart is very much a routine," Murphy says. "The way a lot of people use the midafternoon daypart is the same thing: People only [patronize] two or three places, whether near their office or when they are coming from high school or whatever. So we’re going to attack it from that angle."

In the 3rd quarter of 2006, Einstein Bros. introduced bagel pretzels and frozen-coffee and fruit drinks; more items are in the works for the first quarter of 2007. "We are in the process of initiating tests of more products relevant to the afternoon daypart," Murphy says. On the list is a pizza bagel, because it is "quick, snacky, has a good price point and fills people up."

Expanding out from its heavy emphasis on the doughnuts, bagels and muffins of morning, Canton, Mass.-based Dunkin’ Donuts’ new prototype stores offer an "Anytime Snacks" menu, featuring $2.99 handheld flatbread sandwiches and grab-and-go pizzas. Minneapolis-based Caribou Coffee’s ’Bou Gourmet line of bagels and other baked goods is intended to "give people a reason to visit more often" throughout the day, says Chairman Michael Coles.

Some snack items show equal worth during evening as well as afternoon. Ed Gleich, senior vice president of concept development for Atlanta-based Arby’s, says its signature Jamocha shake—as well as vanilla, chocolate and strawberry flavors—sells well as a post-dinner item.

Adds Culver’s Contino: "We see the snack occasion growing for custard. In the late afternoon and late evening, people are considering us more and more for a snack at that occasion."

After-Dark Activities

College students are notorious for loosely defining meal periods. While they may opt for snacks at any time, they are especially active late at night.

At Haverford College in Haverford, Pa., Cash Operations Manager Corey Wilkinson says 9 p.m. to 11:30 p.m. is the busiest time of day at the Coop/Skeeter’s, a popular campus eatery that stays open until midnight during the week and to 1 a.m. on weekends.

"Our big snack food at night is breadsticks," he says. "These outsell pizza 10 to 1. They’re the biggest hit on campus."

The breadsticks, not available during the day, are about 9 inches long and filled with "anything you can think of," Wilkinson says. Varieties include chicken cheesesteak, cheese and pepperoni, chocolate and banana, s’mores and apple-cinnamon. Pricing is consistent with other snack-category options, with a chocolate breadstick going for $2.50.

Wilkinson has cast his attention to students who stay cloistered in their dorms, even though they may be hungry. In January, he began testing nighttime delivery. Using golf carts, his staff delivers to any dormitory on campus five nights a week for cash payment.

"Everyone in the business looks at reasons not to do things," he says. "We were told to figure out how we can do these things [to better serve students]. Our college is pushing us not to say no, but to make it work."

College students aren’t the only ones grabbing late-night snacks. Restaurants open late now accommodate a diverse demographic, according to a study by Spartanburg, S.C.-based Denny’s. Nearly half of the respondents to the chain’s Late Night Dining Survey were age 50 or older, and only 30% were grabbing a bite after a night on the town. "Eating after 10 p.m. has become more commonplace as America becomes a 24-hour society," says Peter Gibbons, vice president of product development.

Irvine, Calif.-based Taco Bell recognizes this phenomenon with its "fourthmeal" program, a menu-marketing effort promoting late-night meals.

Know Your Competition

Outlets other than restaurants have had a running start on the snack business. Supermarkets, convenience stores and vending machines offer a variety of the most typical snack foods. As interest grows, restaurants are in the position of playing catch-up while the competition is lengthening the lead, building on their already well-developed snack-foods lines.

7-Eleven, for example, is expanding its selection of "better-for-you" foods at its 7,100 stores to include more fruits and vegetables, sugar-free Slurpees and 100-calorie packages of chips. Meanwhile, gasoline retailer BP is advertising and promoting its Wild Bean Cafe convenience-store concept with a focus on food-and-beverage options, offering baked goods, made-to-order and packaged sandwiches, salads, wraps and self-service soups.

"We spend an extensive amount of time marketing foodservice," says Tom Terlecky, food offer development manager for Warrenville, Ill.-based BP. In addition to television and radio ads, point-of-sale gas-pump materials always support foodservice, he says, typically with half of the promotional materials dedicated to food.

And while Terlecky admits consumers may be skeptical about foodservice operations within convenience stores and gas stations, "I believe we are changing that perception with our newly constructed or renovated sites," he says. "They are bright, roomy, convenient and open. We even changed how our interiors are laid out to create more of the restaurant look and feel. We are well on the way to consumers accepting that foodservice in a convenience store can be good."

Keep Innovating

Part of the reason consumers have not often purchased snacks from restaurants in years past may also have been that frequent snackers were not impressed with restaurants’ snack offerings. Technomic found last year that only one of 10 consumers rated the taste of snacks at foodservice venues as "excellent," and fewer than one in 10 rated the selection or cost as "excellent."

And yet consumers do look to foodservice operations to provide snacks, as evidenced by growing sales during snack dayparts. This is spurring snack-focused R&D activities.

"I will continue to develop snacky, appetizer-type items," says Ryan Joy, director of research and development for Tampa, Florida-based Checkers Drive-In Restaurants Inc. Joy notes that such items give the brand a way to get people into stores between lunch and dinner, when they are out and about in their cars.

Perhaps New World CEO Paul Murphy sums it up best: "I think [snacking] is huge," he says. "I’m pretty passionate and excited about it. There’s so much room there. I don’t want to say it’s been neglected, but a lot of times it’s been an afterthought." Einstein Bros. will "really do its homework to know who we’re speaking to, and listen to find out their likes and dislikes around that timeframe."