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Tuesday, Dec. 30, 2008
Premium burger sales sizzle in recession
Fast food chains predict robust growth as their value-added fare draws family-style restaurant clientele
Despite of, or maybe because of, the recession, hamburger chains are doing a brisk business as they introduce premium fare.
Each chain has a different reason to release value-added products. But their forecast is bullish, and some have posted robust sales despite weakening overall consumption.
On Nov. 21, fast food chain Lotteria Co. debuted a new version of its smash-hit Zeppin (excellent) cheeseburger, this time with bacon, to stake a bigger claim to the premium burger market.
It was followed by McDonald's Holdings Co. (Japan), which on Nov. 28 brought into Japan the Quarter Pounder, a popular choice in the U.S.
MOS Food Services Inc. on Saturday began offering the Tobikiri (exceptional) Hamburger Sandwich (phonetically: hanbagu sando) made from 100 percent local beef and pork at MOS Burger outlets.
Shun Tanaka, chief economist at SMBC Friend Research Center, sees a new trend in which people who would otherwise go to family-style restaurants are now turning to fast-food joints and convenience stores.
Value-added hamburgers offer a chance for people to dine out while saving money compared with normal restaurants, he added.
"After all, consumers want to eat something delicious while they are saving money," he said.
"Customers will pay if a product has a certain level of additional value," Tomoyuki Yuasa, chief planning officer of Lotteria's product division, told reporters at the launch of the new Zeppin Cheeseburger.
The Zeppin includes a beef patty double the weight of Lotteria's ordinary cheeseburger and two kinds of natural cheese — Gruyere and red cheddar. The new version, priced at ¥420, compared with ¥100 for a regular burger, comes with a strip of high-quality smoked bacon 3.5 mm thick.
One month after its launch, 23 percent of Lotteria's overall sales now comes from the two Zeppin cheeseburgers, compared with its previous record 20 percent solely from the first Zeppin cheeseburger a year ago.
MOS Burger also believes additional value is important to whet customers' appetites.
"We know low-priced burgers are popular, but at the same time people will pay more for something with higher quality," said Yumiko Matsuda, a spokeswoman for MOS Food Services.
MOS launched the Tobikiri burger priced at ¥390 and a cheese version for ¥420, with the meat patty about 1.5 times bigger than its ¥320 mainstay burger. The chain aims to boast product safety by emphasizing that its fare is made in Japan, she said.
MOS has a bullish goal of selling 5 million burgers over a 59-day campaign that began Saturday, compared with past campaigns whose sales averaged between 3 million and 3.5 million products.
McDonald's surprised the industry when it debuted the Quarter Pounder, which has been popular for decades in the U.S. and Europe.
The chain started by opening stylish, no-sign red-and-black outlets in the Shibuya and Omote-sando shopping districts of Tokyo on Nov. 1. The two shops only offered the Quarter Pounder, and customers lined up to get in.
When the Quarter Pounder was launched Nov. 28 at 1,240 outlets in the Kanto region and Kumamoto Prefecture, the two outlets closed.
"The Quarter Pounder is our most premium burger," President Eiko Harada told a news conference Nov. 26. "There are many people who used to come to McDonald's but said they haven't come lately."
Letting consumers get wind of the Quarter Pounder's arrival at the two signless shops was part of the November campaign, he said.
The Quarter Pounder with cheese, which sells for ¥350 to ¥360 each, has a beef patty 2.5 times bigger than its basic hamburger. The chain declined to divulge how many it sold over the past month, or its sales target.
The launch of the Quarter Pounder was largely prompted by research data that McDonald's products selling well in the U.S. — including McGriddles and Cinnamon Melts — have recently also sold well in Japan, according to spokeswoman Miwa Yamamoto.
McDonald's in Japan did not always sell products from the U.S. original menu. It also sold locally developed products catering to Japanese tastes.
"The data show that more and more young Japanese people prefer typical American fare," Yamamoto said.
Thus far, the high-end tack has not led to endless, money-losing price wars.
"The hamburger chains are trying to attract customers with low-priced burgers. At the same time, they are trying to sell expensive products to improve their lineups," Tanaka of SMBC said. In that way, they can also increase sales per customer, he added.