Consumer research by the NPD Group suggests that 18-24 year old customers consume fewer combo meals in the retail campus environment than they do when making purchases in the commercial restaurant environment off campus.
This suggests that some college operators could more profitably use them to drive higher transaction averages or for other purposes, according to Kyle Olund, the senior product manager for NPD Group's CREST OnSite® data service.
NPD's research into college dining behavior is based on almost 6,000 campus dining visits, 85 percent of them by students. Nearly 40 percent of these visits were paid for outside of standard meal plans, says Olund. If projected to the college dining market at large, the whole sample would typify 1.5 billion visits a year—890 million of these paid for as part of a meal plan and the remainder paid for in cash or other ways (Fig.1).
Higher Check Averages
"Combo meals incent higher order sizes and drive value perceptions," says Olund. "In commercial restaurants, they result in a check average that is typically a dollar or more higher than meals ordered a la carte (Fig. 2)."
"The a la carte environment is a perfect application for the combo meal," says Art Korandanis, director of auxiliary services for College of the Holy Cross and a long-time member of the NACUFS' Benchmarking Committee. "You want the students to spend their debit cards down and combos that raise the check average help you do that.
"Increasing the check average also has a very good effect on an operating statement that goes beyond just an increase in the top line numbers. It drives down your labor costs as a percentage of sales, your paper and disposables costs as a percentage of sales, and so on. The drop down effect to the bottom line can be very significant."
At the same time, Korandanis says "it's important to remember that in college dining, menu options are typically much more extensive than they are in quick-service restaurants.
"To make them effective, menu boards have to be designed so that they dominate the high attention spots, and are presented in a way that makes them an attractive choice relative to others because of perceived value. This requires some subtle but sophisticated menu engineering because you also want to ensure that these choices also retain high profitability for the operation."
Shawn LaPean, director of Cal Dining at UC Berkeley and another benchmarking committee member, argues that, depending on the dining program, combos will not necessarily drive higher transactions.
"In the case of a point or declining balance plan, many students will buy a sandwich and a fairly expensive bottled drink. They may also skip a snack or impulse buy at the point of service. Remember, you don't find too many racks of impulse buy options at a quickservice restaurant, so the comparison is not exactly parallel."
LaPean also notes that in programs where students get meal equivalency credits, it is difficult to measure combo meal frequency because of the way equivalencies are applied, even though equivalency meals are often combo meals under another name.
At Holy Cross, Korandanis has eliminated meal equivalencies, but says when they are used, combos could help eliminate the problem equivalencies cause at the register when a customer finds his or her a la carte choices don't quite add up to the full equivalency.
"Every time a customer at the register sees he or she has 40 cents left, it slows down the transaction if they then want to find a small purchase to use up the credit," he says. "If you have equivalencies, you want to structure their use in approved venues so that it is easy to use up the full value with an easy-to-order meal purchase."
Combos can play other roles than simply offering a packaged "value meal," Olund says. "For example, they can be used to appeal to those concerned with portion size and diet."
In that context, Korandanis says combos can fit into the all-you-care-to-eat environment, where they would not otherwise make sense.
"Healthful meal choices involve portion sizes as well as the nutritional value of individual components," he adds. "In a dining hall, combos that are well defined and for which an operator provides a clear nutritional profile can help customers make sound choices more easily."
Olund also notes that over time, consumers have come to see combo meals less as a promotional offer and more as just a convenient method of ordering. In the cafeteria environment, this can help speed up cashier lines by enabling a "one button ringup."
"While a simple combo meal option might seem to limit choice, that doesn't have to be the case," says Olund. "Instead of having three choices, they might offer five, or have a choice of alternate combo grab-and-go components.
"In that sense, noncommercial operators could use them as a way to provide a ‘mass customization option," she adds.
For information on the CREST OnSite data service, go to www.npd.com or contact Kyle Olund at kyle_olund@npd.com