Restaurants cut lunch prices to bring in diners

[May 27, 2009]  NEW YORK (AP) -- Whether sit-down or take-out, restaurant chains are finding the key to persuading people to spring for lunch these days is keeping the tab below $10.

"There is no reason why anyone should spend more than $10 for lunch," said Zach Brooks, a stay-at-home dad and blogger who writes about lunch spots in Midtown Manhattan.

Restaurants certainly appear to be listening. Many have conducted extensive consumer research to determine the magic price that will get customers through their doors.

Hot sub maker Quiznos, for example, launched a new toasty sandwich in March called the Torpedo at $4 after testing it with focus groups at $4, $4.29 and $4.59 to figure out what consumers were willing to pay.

"$4 really went over the cliff," said Chief Executive Rick Schaden. "If I can get fed a good-size portion for $4 and that's my lunch, they're highly interested."

Schaden said Quiznos' overall sales jumped by double-digits and traffic is up more than 30 percent this spring. Quiznos sells a variety of toasted sub sandwiches. In January, the company cut its prices on 37 of its menu items, taking 20 of its subs under $5.

For chains without waiter service, the $5 mark seems to generate the most interest, said David Urban, a professor of marketing at Virginia Commonwealth University.

"There seems to be something about that $5 price range give or take a dollar or so that seems to sing with consumers as sort of a threshold point in their minds about whether it's worth it to go out or not," Urban said.

T.G.I. Friday's is pursuing the parsimonious with nine new salads and sandwiches in April for $5 -- a move Andrew Jordan, senior vice president of marketing, said has boosted the company's lunch business. The regular prices for the nine salads and sandwiches range from $6 to $11 and will go back into effect June 1. The company is also offering "endless" refills on soup, salad, breadsticks and drinks during lunch for $6.99.

Urban said fast-casual and even sit-down chains are stealing a strategy that has long worked well for fast-food chains. McDonald's Corp., the fast-food industry leader, has offered $1 meals and value deals for years. And its same-store sales, or sales at stores open at least a year, rose 4.3 percent in the three months ending in late March, while those at most other restaurants dropped sharply.

Lunch has been an especially difficult meal for most chains since it is one of the easiest for customers to cut out or replace with a brown bag from home.

"Obviously, when money is tight, things like lunch are out," Urban said, "especially sit-down lunches at full-service restaurants."

Hudson Riehle, senior vice president of research at the National Restaurant Association, said lunch traffic goes down whenever the number of employed consumers drops. Those without jobs have less need for convenient lunch options and have less cash to spend.

Most consumers who are still working are still eating out -- just not as frequently.

"I have been brown bagging it more often recently, but sometimes I just have to get out of the office to get some quality face time with my colleagues," said Dan Brown, who works at a technology public relations company outside Chicago.

In Atlanta, brand research consultant Bryan Oekel said he goes out to lunch about three times a week and typically spends about $8. Lately, he's been cutting back on ordering drinks with a meal to save a bit of cash.

"Most of the places I go to don't have the value meal," Oekel said. "The drink typically is $1 or $2 more."

Brian McAfee, a training manager for Strayer University in Newington, Va., said he tries to keep lunches out under $6 but is willing to go up to $10 if "it's something better" like Chipotle Mexican Grill.

Urban and Riehle both said most restaurants' lunch prices aren't likely to go back up soon.

"It's actually a very good time for consumers to get great deals and restaurant meals," Riehle said.

[Associated Press; By LAUREN SHEPHERD]

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