4 Things Every QSR Should Know to Increase Profitability– Part 2

In a recent post, we shared two essential things quick-service restaurants (QSRs) should know in 2023 to increase their profitability. If you missed it, take a moment to catch up on why and how loyalty programs, coupons, menus and the ordering experience can play a significant role in keeping guests happy and growing check this year.

The remaining top two factors Revenue Management Solutions (RMS) believes can have the most impact on boosting QSR profitability in 2023? Bundles and family meals, digital payments and suggestive tipping. Here’s the lowdown:

Bundles and family meals

As Food Away From Home (FAFH) prices remain steep (the CPI in December 2022 was 6.5% higher than in December 2021), saving money remains top of mind for consumers. Yet so does eating out. When socializing with family and friends, RMS found back in November 2022 that 45% of guests are likely to go to a restaurant instead of cooking at home. And, looking ahead, guests intend to increase restaurant frequency across all channels.

Enter bundles and family meals, which offer an excellent opportunity to drive off-premise profits even further. RMS recently found that more than 50% of households with three or more people order family meals at least every two weeks. When asked why they opted for family or bundle meals, 67% mentioned getting better value, pricing and deals. Portion sizes (26%) and ease of convenience (16%) were also mentioned.

Digital payments and suggestive tipping

Our final insight involves a preference and a word of caution. When surveyed about the use of technology at QSRs, 50% of respondents said they preferred a digital checkout. That’s not surprising, as the option offers time savings and accuracy for all parties, not to mention additional data for you.

However, one aspect of the digital payment scenario — suggestive tipping — is far trickier and possibly alienating. Customers’ standard of value has changed since 2020 (there are multiple versions and definitions), and almost 1 in 2 dislike tipping suggestions at checkout screens. Additionally, 44% find tipping suggestions to be too high, and 51% feel obligated to tip when suggestions are displayed, which causes resentment.

A better option leans on context. Customers believe tipping is justified, depending on when and where. Among guests, 1 in 3 believe tipping is not justified at coffee shops and limited-service restaurants. Guests also leave a lower tip percentage on takeout orders.

Putting these insights into action

To make the most of these insights, RMS proposes the following responses:

  • To increase off-premise family orders, create channel-specific bundles for takeout and delivery.
  • Create a “good” bundle: This means shareable meals (the possibility of leftovers is popular among guests) with a variety of offerings to satisfy varying preferences. Consider a balance of customization and scale, and keep value and quality top of mind. Among guests looking to cater to the entire family, RMS found that 26% appreciate the portion sizes and the ability to meet everyone’s needs.
  • On your menu, instead of offering just the main component of a meal, advertise price-pointed bundles to drive customers to buy bundles or family meals.

If you offer suggestive tipping, take your restaurant segment into consideration and make sure you are not off-putting your customers by suggesting a percentage that they will consider too high. Also, ensure that your overall experience matches the value customers are expecting. Creating an enjoyable experience will increase the likelihood to tip when checking out.

Increase profits in 2023

Boosting profitability in the face of ongoing inflation is possible. Test and learn what works best by making incremental changes to your menu design or offerings — then assess and repeat. Keeping a steadfast focus on your customer pain points and pocketbook will go a long way, particularly when supported by data-driven decisions.

RMS is committed to supporting restaurant brands with practical strategies to optimize your menu profitability, sales and financial health. Reach out — we’re here to help. Or schedule a demo today!

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