Shop Talk
Retailers, consumers and prices
Diners say Olive Garden, Papa John’s are tops
Papa John’s and Olive Garden got top marks in their respective restaurant categories in the University of Michigan’s 2010 American Customer Satisfaction Index, while McDonald’s and Chili’s Grill & Bar were laggards.
Papa John’s took the lead in the limited-service category from Domino’s Pizza. Notably, this year’s win for Papa John’s came as Domino’s was getting a sales bump from its reformulated pizza recipe and crowing about how its new pies were beating rivals in taste tests.
Papa John’s earned an ACSI score of 80 (out of 100), up from 75 last year. Little Caesar, Pizza Hut and Starbucks each made gains versus 2009 and were close behind with scores of 78. Domino’s score of 77 was flat from a year ago.
McDonald’s, which has outperformed most other quick-service restaurants, was the only major fast-food company to post a decline. Its score fell to 67 from 70 last year.
“Price was behind much of the improvement, but new products also contributed,” said Claes Fornell, a professor at the University of Michigan’s Stephen M. Ross School of Business.
Pizza Hut offered any pizza for $10, while Papa John’s combined similar pricing promotions with what customers perceive as high quality products.
“As increasingly frugal consumers have made price more salient, McDonald’s has acquired more customers. These newcomers seem less satisfied, and were it not for the economy some of them would rather eat somewhere else,” Fornell said.
Check Out Line: Tasty outlook from Brinker
Check out the tasty outlook coming from restaurant chain Brinker.
The parent of Chili’s Grill & Bar, On the Border and Maggiano’s Little Italy restaurants raised its full-year earnings outlook while also boosting its quarterly dividend payout by 27 percent.
Brinker now expects a 2010 profit of $1.40 to $1.44 a share excluding one-time items. It had previously forecast a range of $1.15 to $1.30. Analysts were expecting $1.39, according to Thomson Reuters I/B/E/S.
The news continued a nice run for Brinker, which in January posted a better-than-expected quarterly profit. On Thursday, the company said it would sell its On the Border Mexican Grill & Cantina business to an affiliate of Golden Gate Capital for undisclosed terms.
Analysts expect sales trends to continue to improve for U.S. restaurants from last year’s dismal levels, but gains will be tough to come by as spending levels on meals away from home are expected to remain constrained.
Also in the basket:
Best deals for restaurant meals
When it comes to getting the most bang for a buck at sit-down restaurants, Olive Garden, Cracker Barrel, Golden Corral, Applebee’s and Chili’s get top marks, according to 5,000 diners recently polled online by BrandIndex.
Brands with the worst perceived value were Ground Round, Benihana, Bahama Breeze, Landry’s Seafood House and Hooter’s.
Sit-down restaurants have been discounting heavily as consumers cook more meals at home and “trade down” to lower-priced fast-food chains to save money amid a long recession that has sent U.S. unemployment to a 26-year high.
BrandIndex is owned by market research company YouGov.
Here is the full list of results:
(A score can range from 100 to -100 and is compiled by subtracting negative feedback from positive. A zero score means equal positive and negative feedback.)
CASUAL DINING — VALUE SCORES (July 10, 2009)
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Resident Shop Talk Expert
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