The New “Value Menu” — Why Recession-Proofing QSR Must Go Beyond Low Cost

Indifferent service is all too often the norm at fast-food chains, but with gloomy economic headlines dominating the news, Quick Service Restaurants (QSRs) need to create exceptional customer experiences to survive—and even thrive—during a recession.

COVID triggered a forced acceleration of digital transformation across the QSR category. Historically, QSR has operated as a functional category where value has been equated with cost. But consumer perceptions around value involve far more than just price. QSRs have been struggling to keep up with wide-ranging consumer demands that go beyond category table stakes such as affordable price point, convenience, and fast service.

To gain deeper insight into the health of brand and consumer relationships as we emerge from the pandemic, Material launched a propriety diagnostic that allows brands to measure the quality of their customer experience.

Keeping score with the Material Fidelity Index™

Material Fidelity™ aggregates a brand’s performance based on a distinct set of drivers—categorized under Useful, Proven, and Personal—developed by our Behavioral Science & Customer Experience experts and validated by third-party data. The higher a brand scores across these drivers, the greater the chance of a high-fidelity relationship between brand and consumer. Here’s why this is so exciting:

• People are 2x as likely to buy and/or try new products, advocate for, and be loyal to High Fidelity brands.
• On average, financial performance for High Fidelity brands is 3.5x greater than Low Fidelity brands.

Out of the twelve QSR brands surveyed for Material’s inaugural Fidelity Index™, which analyzed 24,000 US consumers across 27 categories and 165 brands, only two QSRs (both pizza brands) made the top quartile of the index. Pizza brands are high fidelity because they are successful at fulfilling the core needs consumers bring to this category. Thanks to availability and customization, Domino’s and Pizza Hut have an advantage when it comes to metrics in the Useful and Personal pillars. But their appearance in the top quartile of all ranked brands signals that they are doing much more to establish and keep connections with their consumers.

To help you better understand the implications of these results, we’ve put together three tips QSR brands can use to become high fidelity and survive an economic downturn.

1. A frictionless and consistent customer experience is key

QSR brands will only be able to achieve high fidelity status if they increase value through frictionless experiences. This requires establishing and investing in an infrastructure that supports employees as they interact seamlessly with customers in both physical and digital spaces.

Chick-fil-A ranked among the top three QSR brands evaluated in the 2022 Material Fidelity™ Index, outranking others in the category (like McDonald’s, Subway, Chipotle, Taco Bell, Dunkin’, Panera Bread, and Papa John’s) thanks to its effectiveness in the Proven pillar.

Not only is Chick-fil-A, which had $16 billion in sales and $5.8 billion in revenue in 2021, relatively low cost, but it edges out competitors in the Index in terms of dependability, trust, safety, and value—the latter encompassing not just cost but the overall experience. Part of Chick’s-fil-A’s success can certainly be attributed to a best-in-class customer experience that has evolved with changing consumer demands around convenience. Since 2001 (when the brand borrowed a tactic from the Ritz Carlton), Chick’s employees have been encouraged to say “my pleasure” whenever they are thanked by a customer—and the brand is now associated with that sunny response (which is even printed on its merchandise).

Its brand voice is consistent across the in-restaurant, drive through, curbside, and app experiences, a consistency that resonates with consumers.

2. Remember that customized, omnichannel experiences are table stakes

The Material Fidelity™ Index is a more effective predictor of loyalty, advocacy, and growth than traditional brand & CX metrics, but grouchy employees are only one reason most QSRs rank disappointingly low on the list. A lack of customization is also to blame.

Consumers today are not only used to, but demand the hyper customization offered by companies like Starbucks, Pizza Hut, and Domino’s. They expect brands across industries to deliver customized, omnichannel experiences and will consequently be frustrated by QSRs that offer inflexible menus and a lack of customization, which can go beyond the food and beverage experience itself.

QSRs that offer a range of ordering touch points provide a customized ordering experience where value and convenience intersect. Having a variety of channels makes it easy for consumers to engage —and also provides incentive for doing so (think Chipotle and Starbucks).

3. Learn how and why different age groups view your brand

Gen Z consumers, who wield huge influence even when not making buying decisions themselves, are particularly eager for customized, omnichannel experiences. Gen Z engages in co-design with brands and expects timely feedback across all channels. To increase fidelity with this cohort, value, dependability, quality, safety, and trust are paramount.

Overall, brand fidelity differs across age groups. The Material Fidelity™ Index reveals that Panera Bread is the only QSR brand to perform equally across younger and older generations, with Chick-fil-A also demonstrating strong performance across generations. While older generations tend to lower most QSR brand scores, they actually increase Chick-Fil-A’s score

Meanwhile, Subway has the biggest gap between younger and older generations (with Gen Z and Millennials driving up the overall ranking). Strong pizza brand performance is driven by younger generations.

QSRs need to re-think value through the lens of customer experience

The ranking of QSR brands in the Material Fidelity™ Index provides a case study for the changing perceptions of value in the minds of consumers: being the cheapest product on the market is no longer the biggest driver for customer loyalty in the QSR space. Providing an exceptional, customizable and omnichannel experience is key.

Relevant brands must look beyond simply having a presence on every street corner: they need to be innovators with world-class loyalty programs and multiple ordering options.  To be Personal, brands should elevate the experience with customization options such as in-app perks based on individual preferences.

If a recession does indeed arrive, QSRs that recognize how consumer perceptions around value are shifting to include more than just cost will be far more likely to weather the storm.