Published on Tuesday, 25 June 2013
Written by Jerry Stiegler
The American Customer Satisfaction Index reports that consumer satisfaction with restaurants is higher than other industries and that a number of factors, in addition to food quality, go into shaping their perceptions.
Last week we reported that Dunhumby found customer service was poor in fast food restaurants. This week, the American Customer Satisfaction Index (ACSI) released its research stating that consumers are reasonably satisfied with their dining experiences at fast food operations. The ACSI attributes this not to quality food but rather to convenience and price. Limited service restaurants scored an acceptable rating of 80, which is the same as 2012.
And, unlike the Dunhumby report which finds little difference in service ratings among the chains, the ACSI data shows a somewhat larger variance. Subway was tops this year with a score of 83 while the pizza chains, Dunkin' Donuts and Starbucks scored 80 or more. Chains at the bottom of the list include: Wendy's (79), Burger King (76), Taco Bell (74) and, as usual, bringing up the rear is McDonald's with a score of 73.
As for full-service chains, somewhat surprisingly, the overall satisfaction rating is virtually identical to that of the fast feeders. As a group, full-serve operators earned a score of 81 vs. the score of 80 for fast food chains. The consumers don't find much difference between the different chains with scores ranging from 81 to 83 and only Chili's coming in below the pack at 78.
Probably the best news is that ASCI reports customer satisfaction with restaurants is comparable or even better than its satisfaction levels with industries, airlines being just one example. Further, in the more than 20 years ASCI has studied fast food chains, customer satisfaction has risen from 69 to 80.
Economic News This Week:
- The number of initial jobless claims continued its roller coaster ride for the week by rising 354,000, an increase of 18,000 for the week ending June 14. The 4-week moving average hit 348,250, an increase of 2,500. Thus, for almost 6 months, the number of claims filed have been hanging around 350,000 per week. Just about the only thing that's positive is that layoffs are not increasing.
- The National Association of Home Builders Sentiment Index jumped 8 points to 52 in June. Any number in excess of 50 means builders have a positive opinion of market conditions. This is the first time the index exceeded 50 since April 2006.
- Housing starts increased 6.8 percent in May after declining in April. The Commerce Department says housing starts are running at an annualized rate of 914,000.
- Building permits declined by 3.1 percent in May but are running at an annualized rate of 974,000. The Commerce Department had reported the annualized rate of building permits had reached one million in April.
- Existing home sales increased by 4.2 percent in May to an annualized rate of 5.18 million, representing the best sales reading since November 2009 and 12.9 percent higher than May of last year. The National Association of Realtors also reported that home prices were up 15.4 percent over May 2012 which is the largest price increase since 2005.
- The Philadelphia Federal Reserve's Survey of economic activity in their region jumped from minus 5.2 in May to plus 12.5 in June, the best report since April 2011. Shipments and orders were both strong.
- The Gallup Organization's U.S. Economic Confidence Index for the week fell to minus 9, after hitting a 5-year high of minus 3 the week ending June 2. The Gallup folks believe that the Federal Reserve's move to scale back its stimulus efforts along with rising gas prices and weak job reports are troubling consumers.
- Leading economic indicators rose just 0.1 percent in May after growing by an upwardly revised 0.8 percent in April. Despite just 3 of the 10 indicators growing in June, a Conference Board spokesman said the data showed a "modest expansion" in the economy.
Foodservice News This Week:
- Restaurant hiring is in the news this week with Bloomberg Business Week reporting on a first time study by ADP and Moody's Analytics on franchise hiring that found that 19,000 jobs were created by franchising in May. About 14,000 of these jobs were in the restaurant industry. This is not too surprising given that roughly half of the franchise jobs in the U.S. are in restaurants but one economist has a theory that restaurants are hiring two employees who will work less than 30 hours a week each instead of hiring one full-time employee. This way the restaurant management can avoid providing healthcare coverage. Please note this is just a theory from one observer.
- Front Burner Restaurants, owner of 36 Twin Peaks restaurants and some other concepts, has weighed in on the Affordable Care Act, first noting "there's tons of confusion out there" with only half the regulations for the legislation often referred to as ObamaCare having been released. Front Burner's CFO stated that of their current 2,800 employees only 150 now have company healthcare coverage and he estimates that healthcare costs could rise by 70 percent to 250 percent. The company has ruled out cutting employees' hours to stay at the less-than-30-hour cap for fear of alienating their workers.
- Only 35 percent of college students are highly satisfied with their school's on-campus dining options according to a recent study by Technomic. None the less, 54 percent of the students surveyed eat on campus at least twice a week and 22 percent do so daily.
- Jack in the Box management's decision to close 67 Qdoba company owned locations was well received by at least one Wall Street analyst. Joseph Buckley of Bank of America Merrill Lynch believes the move will allow the company to focus on Qdoba's better markets as well as strengthen the parent company's earnings.
- Ohio's State Prisons will switch their foodservice from self-operated to a contract service provided by Aramark Corporation in a deal worth $110 million over the course of 2 years.
- McDonald's has spent $1 billion dollars remodeling its U.S. restaurants. The chain still has 40 percent of its locations to modernize.
- Growth chains: Bareburger will open its 14th and 15th restaurants in September. Sonic has plans to open 5 restaurants in San Diego and 10 in Los Angles in the next 6 years. Burger 21 has 7 units open in the tri-state area of New York, New Jersey and Connecticut will another 18 in development. Blaze Fast-Fired Pizza has agreements with two multi-unit franchisees for 8 stores in Detroit and Grand Rapids, Mich.; 7 in Columbus, Ohio; 6 in Indianapolis; and 10 in the East Bay and South Bay areas of Northern California. Jersey Mike's will open "about 10" restaurants in the Twin Cites area in the next year with a goal of eventually having 50 locations.
- Comparable store sales reports: Captain D's (up 5.3 percent), Darden (Bahama Breeze down 1.7 percent, Capital Grill up 4.5 percent, Edie V's up 4.3 percent, Long Horn up 3.5 percent, Olive Garden up 1.1 percent, Red Lobster up 3.2 percent and Seasons 52 up 1 percent). And Sonic Drive In (system up 0.1 percent, company owned down 1.1 percent and franchised up 0.2 percent).
For details as well as same store sales data for other chains, please click here for the Green Sheet.