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What Does ‘Value’ Mean Today?

Brought to you by Land Mark Products.

For today’s consumers who want quality and variety at the same time, dollar menus and discounts may have meant more in the past. Thus, convenience stores and quick-service competitors seem to sit in the same boat with the same nagging question: How do you navigate the science of pricing?

“Value and price are often thought of as one and the same,” said Sara Monnette, vice president, consumer insights and innovation at Chicago researcher Technomic. “However, value tied to price for consumers is much more than just about the dollars being transacted.”

And the definition of value varies widely. “Millennials find greater value in menu variety and uniqueness,” said Monnette, who cited that 47% of millennials—consumers born between 1977 and 1992—indicate they are seeking higher-quality fare more now than just two years ago. “But overall, consumers place the greatest value on order accuracy, friendliness, speed and of course, quality.”

Foodservice-forward c-stores realize this, and that’s precisely the challenge. While cheap food might have been the c-store reputation of the past, more retailers nowadays want to offer better-quality food to compete.

“How do you offer ‘better-quality value’? That is the ultimate question,” said Dana Evaro, vice president of marketing for Land Mark Products Inc., which recently introduced two new value sandwiches as part of its Day N’ Night Bites line: a chicken breast and biscuit sandwich, and a sausage and biscuit sandwich.

Expanding Market Share

Evaro warns that c-stores might take a profit-margin hit when offering value items, which typically have a 40% or lower profit margin compared to 50% or higher for higher-cost, quality items. But the main benefits behind the value items are the variety it gives the store and the expanded customer reach.

“Not everyone can come in and buy a $10 or even a $5 sandwich,” said Evaro. “By offering some value items, you’re reaching an important market share that is still very relevant today. Those items might not represent a huge part of overall sales, but it’s an important part of a store’s portfolio.”

Millennials in particular, while they seek quality, also tend to buy more items if they are priced lower; 33% of millennials compared to 25% of boomers say they can order more items if the prices are lower, according to Technomic.

For convenience retailers, this means that if millennials have already made it to the store, they’ll likely order more food and drink items if prices are set lower than competitor restaurants.

In that case, value items can boost daypart sales. “Our new value sandwiches—because they are grab and go and low in retail price—can definitely be treated as a snack or another mini-meal because they’re offered all day and night,” said Evaro.

Choosing Value Items Wisely

The same could be said for many other items, but if you’re going for “better-quality value,” certain items are better suited for that category than others.

“Millennials definitely want better quality, and the simpler the ingredient list, the better,” said Evaro. “They might want a more artisan mac and cheese, but they’ll spring for a simple chicken-and-biscuit sandwich if it’s just two ingredients without any added fillers or unrecognizable labels or words.”

In that case, cleaner labels and natural foods equal a perception of higher quality. And sometimes, the food items with simple ingredient lists are less expensive for retailers, making these value items a win-win.

Better Bundling

Given that millennials are apt to buy more items if they’re less expensive, bundling can help make up for some lost profit margins.

“What motivates the consumer is the low price point, which means they might add a sandwich, a bag of chips and a beverage, and in the end, the basket ticket price runs higher than if you sold the sandwich separately,” said Evaro.

Bundling also offers a certain perception of variety—something all consumers look for these days, and, depending on the pairing, it can help boost sales of value items during different dayparts (coffee at breakfast, soda at lunch).

“The c-store industry is moving in a great direction, with a focus on quality even when offering value,” said Evaro. “It’s all started with consumers, who push us to improve the quality for all types of foods.”


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