CHR

Hospitality Leadership Through Learning
CHR

The Target Market Misapprehension: Lessons from Restaurant Duplication of Purchase Data

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Vol 13 No 3
By: Michael Lynn Ph.D.

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Executive Summary:

This study tests the supposition that different types of restaurants appeal to or attract substantially divergent market segments. Instead of targeting specific markets, the analysis suggests that restaurant brand managers should take a mass marketing approach. The study examines the "Consumer Picks" survey data collected by WD Partners and the National Restaurant Association to determine the extent to which a particular restaurant brand shares its customers with other restaurant brands. The analysis finds that the extent of sharing is almost completely explained by the restaurants’ market share, rather than by market targeting. Five sets of restaurants were tested: (1) hamburger quick-service restaurants (QSRs); (2) chicken, Mexican, and pizza QSRs; (3) fast casual concepts; (4) full-service casual restaurants; and (5) table-service restaurants. Each restaurant brand shared its customers with the other brands in proportion to the other brands’ shares of customers and in inverse proportion to its own share of customers. While some restaurant brands shared customers substantially more or less than expected given the sizes of their customer bases, these cases did not occur more frequently than one would expect from chance. This pattern of data suggests that the different restaurant brands do not attract substantially different types of consumers, which in turn suggests that restaurant brands should aim most of their marketing efforts at increasing their appeal to all restaurant customers. That is, most of restaurant marketers’ time, energy and money should be devoted to mass marketing and not targeting subsets of consumers.

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