Restaurant Spending Report

ChangeWave Research: Consumer Restaurant Spending June 27, 2011Restaurant Spending Report Consumers Pulling Back on Restaurants Mike Wrobel Overview: ChangeWave’s June Consumer Spending survey found a weakening in consumer spending behavior going forward – with Restaurants getting hit disproportionately hard. To further investigate, ChangeWave conducted two surveys during June (n=2,754) and May (n=1,108) focusing on a wide range of consumer dining habits – including which types of restaurant chains have the most and least momentum going forward.Restaurant Spending Worsens First, our June consumer survey shows a clear decline in restaurant spending going forward, with 31% of consumers saying they’ll spend less money at restaurants over the next 90 days – 4-pts worse than last month.Only 13% say they’ll spend more at restaurants going forward, a 1-pt decline.Other Restaurant Indicators:  A total of 15% are saying they’ll dine at less expensive restaurants over the next 90 days, 3-pts higher than in a previous survey in February. Another 6% say they’ll dine at more expensive restaurants – up 1-pt.  Furthermore, only one-in-five respondents (20%) now say they expect to dine out More Frequently over the next 90 days – down 3-pts since February. At the same time, 19% say they’ll dine out Less Frequently – a 1-pt increase.This information is from ChangeWave Research and contains confidential business information. It may not be copied or distributed without permission. ©2011 ChangeWave Research. All rights reserved. ChangeWave Research: Consumer Restaurant Spending Top Reason for Dining Out Less: Higher Energy Costs. Among consumers who plan to dine out Less Frequently, 37% cite Higher Energy Costs as a primary reason why – more than triple the 12% reading just 3 months ago. Rising Food Costs (31%) also jumped 9-pts as a reason for pulling back on restaurants and 31% simply cited a General Increase in Cost of Living – up 4-pts.On a positive note, the percentage of respondents who say they’re dining out less due to Reduced Income (19%) has fallen another 6-pts since February – a further sign that the overall U.S. economy is slowly managing to improve. Restaurant Categories With MomentumWe asked respondents to tell us which types of restaurants they'll be eating out at more or less often over the next 90 days – and Fast Food Restaurants (Change in Net Difference Score = +3) are showing the most improvement compared to our February survey. Quick Casual Restaurants (+1) also show a very slight improvement.High End Casual Restaurants (-8), however, are showing the biggest decline, followed by Moderate Casual Restaurants (-4) and Upscale/Fine Dining Restaurants (-3).This information is from ChangeWave Research and contains confidential business information. It may not be copied or distributed without permission. ©2011 ChangeWave Research. All rights reserved. 2 ChangeWave Research: Consumer Restaurant Spending Individual Restaurant ChainsWe also asked respondents which individual restaurant chains they'll be spending more vs. less money at over the next 90 days. We then compared these results with the findings from previous quarterly surveys. Here are the chains showing the most and least momentum:Fast Food Winners Next 90 Days: In terms of fast food, Dairy Queen (+3) is showing surprising momentum as the weather heats up for the summer season.Additionally, McDonald's (MCD; +9) is maintaining its post-recession high and looks in great shape to capitalize on consumer momentum in the fast food sector.This information is from ChangeWave Research and contains confidential business information. It may not be copied or distributed without permission. ©2011 ChangeWave Research. All rights reserved. 3 ChangeWave Research: Consumer Restaurant Spending Quick Casual/Family Chains with Momentum – Next 90 Days: Denny's (DENN; +2) is up 1-pt in May and looks good going forward.Golden Corral (+1; up 2-pts) has also recovered nicely after their drop in the previous survey.Weakening Restaurants. On the downside, Olive Garden (DRI; +9) has fallen 4-pts since our February survey to their weakest reading in a ChangeWave survey for the past two yearsThis information is from ChangeWave Research and contains confidential business information. It may not be copied or distributed without permission. ©2011 ChangeWave Research. All rights reserved. 4 ChangeWave Research: Consumer Restaurant Spending Red Lobster (DRI; +3) has fallen 3-pts from previously.And P.F. Chang's has also fallen 3-pts from previously.Coffee Buying Trends More than one-in-four respondents (27%) say they typically buy fresh brewed coffee from a coffee shop or restaurant, and among this very important group Starbucks (SBUX; -7) has fallen 6-pts in the current survey back to its 2010 low.This information is from ChangeWave Research and contains confidential business information. It may not be copied or distributed without permission. ©2011 ChangeWave Research. All rights reserved. 5 ChangeWave Research: Consumer Restaurant Spending At the same time, Tim Hortons (+2; up 4-pts) and McDonald’s (+3; up 3-pts) show signs of momentum in the coffee market. Here’s a look at coffee spending trends at McDonald’s:Coffee Brewed at Home: Importantly, the survey found a net 7-pt increase in the percentage of coffee drinkers who plan to 'Brew Coffee at Home' over the next 90 days. Starbucks (27%; down 1-pt) retains its lead as the top 'brew at home' coffee brand. Folgers (17%; down 2-pts) is in second, while Costco's Kirkland brand (16%; up 7-pts) has overtaken Maxwell House (12%; down 3-pts) for third. Single-Serve & Instant Coffee: The percentage of respondents purchasing Single-Serve coffee (16%; down 4-pts) such as Pods, T-Discs and K-cups over the past 6 months has eased somewhat – understandable as we’re no longer in the holiday season when sales of coffee machines tend to spike. That said, this is still 5-pts higher than the same time a year ago (May 2010).Green Mountain (26%; down 1-pt) remains the most popular brand of Single Serve/Instant coffee, followed by Keurig (23%; up 1-pt) and Folgers (23%; up 3-pts). On the other hand, Starbucks (14%; down 5-pts) has fallen in the Single Serve/Instant coffee market as well. We note that Starbucks plans to release K-cups later this year to better compete in the Single-Serve coffee space.This information is from ChangeWave Research and contains confidential business information. It may not be copied or distributed without permission. ©2011 ChangeWave Research. All rights reserved. 6 ChangeWave Research: Consumer Restaurant Spending Bottom Line. Our latest Restaurant survey points to a tougher consumer spending environment, with overall inflation and higher food/energy costs a major concern among those who say they’re cutting back on dining out.In terms of categories, we’re witnessing a shift towards Fast Food and Quick Casual restaurants, and it’s coming at the expense of High End Casual and, to a lesser extent, Moderate Casual and Upscale Restaurants. Summary of Key Findings Consumers Pulling Dining Categories Restaurant Chains Back On Restaurant Most Improvement With Momentum  Fast Food (up 3-pts) Spending Fast Food:  31% say they’ll spend less at Slight Improvement  Dairy Queen – up 3-pts restaurants over the next 90  Quick Casual (up 1-pt) since previous survey in February days – 4-pts worse than last Downturn Among Higher  McDonald's – unchanged – month End Restaurants but maintaining their high  Only 13% say they'll spend  High End Casual (down 8- for the past 12 months more – a 1-pt decline pts)  All told – restaurant spending  Moderate Casual (down 4- Quick Casual: is a net 5-pts worse than in pts)  Golden Corral – up 2-pts last month’s survey (May 2011)  Upscale/Fine Dining (down  Denny's – up 1-pt Other Key Indicators: 3-pts) Slowing Restaurant  15% will dine at less expensive restaurants going Coffee Purchasing Chains forward –3-pts higher than a Trends Moderate Casual: previous survey in February Most Momentum  Olive Garden – down 4-pts  Only 20% expect to dine out  'Brewing at Home' (up 7- High End Casual: More Frequently over next 90 pts)  Red Lobster – down 3-pts days – down 3-pts since Feb  Tim Hortons (up 4-pts)  P.F. Chang's – down 3-pts McDonald’s (up 3-pts) Least Momentum  Starbucks (down 7-pts)The ChangeWave Research Network is a group of 25,000 highly qualified business, technology, and medical professionals – as well as early adopter consumers – who work in leading companies of select industries. They are credentialed professionals who spend their everyday lives on the frontline of technological change. ChangeWave surveys its Network members weekly on a range of business and consumer topics, and converts the information into a series of proprietary quantitative and qualitative reports.Helping You Profit From A Rapidly Changing World ™ www.ChangeWaveResearch.comThis information is from ChangeWave Research and contains confidential business information. It may not be copied or distributed without permission. ©2011 ChangeWave Research. All rights reserved. 7 ChangeWave Research: Consumer Restaurant Spending Table of ContentsSummary of Key Findings...... 4The Findings...... 7(A) Overall Restaurant Spending Trends...... 9(B) Restaurant Categories ...... 14(C) Individual Restaurant Chains...... 15(D) Coffee Buying Trends...... 19ChangeWave Research Methodology...... 23About ChangeWave Research...... 23This information is from ChangeWave Research and contains confidential business information. It may not be copied or distributed without permission. ©2011 ChangeWave Research. All rights reserved. 8 ChangeWave Research: Consumer Restaurant Spending I. The FindingsIntroduction: ChangeWave’s June Consumer Spending survey found a weakening in consumer spending behavior going forward – with Restaurants getting hit disproportionately hard. To further investigate, ChangeWave conducted two surveys during June (n=2,754) and May (n=1,108) focusing on a wide range of consumer dining habits – including which types of restaurant chains have the most and least momentum going forward.(A) Overall Restaurant Spending Trends Restaurant Spending Worsens. First, our June consumer survey shows a clear decline in restaurant spending going forward, with 31% of consumers saying they’ll spend less money at restaurants over the next 90 days – 4-pts worse than last month.Only 13% say they’ll spend more at restaurants going forward, a 1-pt decline.Will you be dining at more expensive restaurants, less expensive restaurants, or similar priced restaurants over the next 90 days as you did during the previous 90 days?Current Previous Previous Previous Survey Survey Survey Survey May ‘11 Feb ‘11 May ‘10 Feb ‘10 More Expensive Restaurants 6% 5% 5% 5% Than Previous 90 Days Less Expensive Restaurants 15% 12% 12% 14% Than Previous 90 Days Similar Priced Restaurants as 75% 81% 78% 78% Previous 90 Days Don't Know/NA 5% 3% 4% 4%This information is from ChangeWave Research and contains confidential business information. It may not be copied or distributed without permission. ©2011 ChangeWave Research. All rights reserved. 9 ChangeWave Research: Consumer Restaurant Spending A total of 15% are saying they’ll dine at less expensive restaurants over the next 90 days, 3- pts higher than in a previous survey in February. Another 6% say they’ll dine at more expensive restaurants – up 1-pt. Which of the following changes to your dining and food shopping habits - if any - have you made over the past 90 days in order to save money or use money more efficiently? (Check All That Apply) Current Survey May ‘11 Eating Out Less at Restaurants 25% Going to Coffee Shops Less Often 15% Shopping Less at Natural/Organic/Gourmet 10% Foodstores (e.g., Whole Foods, Trader Joe's) Shopping More for Groceries at Discount Stores 33% (e.g., Walmart, Costco, Target) Using More Coupons at Grocery Stores 27% Buying More Generic Products Instead of 22% Branded Products at Grocery Stores Shopping More for Groceries Online (e.g., 2% Amazon, Schwan's, Local Store Online Services) Haven't Made Any Changes to My Dining and 38% Food Shopping Habits Other 3%Changes in Habits - Past 90 Days. Looking back at the past 90 days, one quarter of respondents (25%) say they’ve been Eating Out Less and 15% say they’ve been Going to Coffee Shops Less. A total of 33% say they’ve been Shopping More for Groceries at Discount Stores, 27% said they’re Using More Coupons at Grocery Stores and 22% have been Buying More Generic Products Instead of Branded Products at Grocery Stores.This information is from ChangeWave Research and contains confidential business information. It may not be copied or distributed without permission. ©2011 ChangeWave Research. All rights reserved. 10 ChangeWave Research: Consumer Restaurant Spending For each of the following meals, please estimate the average amount you and/or your family are currently willing to spend per person while eating out at restaurants. Breakfas Lunch Dinner t $3 or Less Per Person 6% 1% 0% $4-5 Per Person 24% 9% 0% $6-8 Per Person 31% 27% 4% $9-11 Per Person 13% 29% 9% $12-15 Per Person 3% 17% 19% $16-20 Per Person 1% 5% 24% $21-25 Per Person 0% 2% 15% $26-30 Per Person 0% 1% 11% More Than $30 Per Person 0% 1% 11% None/Don't Eat This Meal Out 10% 2% 1% Don't Know/NA 10% 7% 6% Consensus Estimate: $6.70 $10.30 $19.60 The average amount respondents are willing to pay per person when dining out has hit a new high.Will you be dining at restaurants more frequently, less frequently, or about the same amount over the next 90 days as you did during the previous 90 days? Current Previous Previous Previous Survey Survey Survey Survey May ‘11 Feb ‘11 May ‘10 Feb ‘10 More Frequently Than Previous 90 Days 20% 23% 23% 20% Less Frequently Than Previous 90 Days 19% 18% 18% 19% Same Amount as Previous 90 Days 59% 58% 57% 60% Don't Know 1% 1% 2% 1% Only one-in-five respondents (20%) now say they expect to dine out More Frequently over the next 90 days – down 3-pts since February. At the same time, 19% say they’ll dine out Less Frequently – a 1-pt increase.This information is from ChangeWave Research and contains confidential business information. It may not be copied or distributed without permission. ©2011 ChangeWave Research. All rights reserved. 11 ChangeWave Research: Consumer Restaurant Spending For those who will be dining at restaurants less frequently over the next 90 days, what are the primary reasons why? (Choose No More Than Three) Current Previous Previous Previous Survey Survey Survey Survey May ‘11 Feb ‘11 May ‘10 Feb ‘10 Higher Energy Costs 37% 12% 5% 5% Rising Food Costs 31% 22% 8% 9% General Increase in Cost of Living 31% 27% 23% 22% Saving More Money 26% 32% 33% 33% Reducing Debt 20% 21% 26% 29% Reduced Income 19% 25% 31% 32% Traveling Less 18% 14% 18% 18% Restaurants are Too Expensive 15% 17% 15% 15% Recent Purchase of Big Ticket Item(s) 8% 7% 7% 8% Investing More Money 8% 8% 7% 9% Job Security Concerns 5% 9% 12% 9% Other 17% 14% 13% 14%Top Reason for Dining Out Less: Higher Energy Costs. Among consumers who plan to dine out Less Frequently, 37% cite Higher Energy Costs as a primary reason why – more than triple the 12% reading just 3 months ago.Rising Food Costs (31%) also jumped 9-pts as a reason for pulling back on restaurants and 31% simply cited a General Increase in Cost of Living – up 4-pts. On a positive note, the percentage of respondents who say they’re dining out less due to Reduced Income (19%) has fallen another 6-pts since February – a further sign that the overall U.S. economy is slowly managing to improve.This information is from ChangeWave Research and contains confidential business information. It may not be copied or distributed without permission. ©2011 ChangeWave Research. All rights reserved. 12 ChangeWave Research: Consumer Restaurant SpendingFor those who will be dining at restaurants more frequently over the next 90 days, what are the primary reasons why? (Choose No More Than Three) Current Previou Previous Previous Survey s Survey Survey May ‘11 Survey Feb ‘11 Feb ‘10 May ‘10 Traveling More 52% 48% 55% 53% More Special Events 28% 25% 29% 20% Less Time to Cook at Home 21% 23% 22% 23% Restaurants Offering Better Value 14% 20% 18% 19% Economy is Improving 8% 16% 10% 11% Increased Income 7% 14% 13% 13% Not Trying to Save as Much Money 5% 10% 8% 8% Increased Entertainment Budget 5% 7% 6% 4% Less Concern About Job Security 3% 6% 10% 9% General Decrease in Cost of Living 0% 1% 1% 2% Other 16% 9% 9% 11%Reasons for Dining Out More Frequently: Among those consumers who expect to dine out 'More Frequently' over the next 90 days, 52% say it's because they're Traveling More – up 4- pts since November. Only 8% say it's because the Economy is Improving – a decline of 8-pts from previously. Similarly, only 7% say it's because of Increased Income - down 7-pts.This information is from ChangeWave Research and contains confidential business information. It may not be copied or distributed without permission. ©2011 ChangeWave Research. All rights reserved. 13 ChangeWave Research: Consumer Restaurant Spending(B) Restaurants Categories With MomentumWe asked respondents to tell us which types of restaurants they'll be eating out at more or less often over the next 90 days – and Fast Food Restaurants (Change in Net Difference Score = +3) are showing the most improvement compared to our February survey. Quick Casual Restaurants (+1) also show a very slight improvement.Change in Net Difference Score – Current Survey (May 2011) vs. Previous Survey (Feb 2011) Current Previous Survey Survey Change in Net Net Net Difference Difference Difference Score Score Score (May '11) (Feb '11) (a) Upscale/Fine Dining Restaurants – $25 or -16 -13 -3 More Average Per Person (e.g., Ruth's Chris Steakhouse, Morton's) (b) High End Casual Restaurants – $16-25 -9 -1 -8 Average Per Person (e.g., Outback Steakhouse, Cheesecake Factory) (c) Moderate Casual Dining Restaurants – +2 +6 -4 $11-15 Average Per Person (e.g., Chili's, Applebee's, California Pizza Kitchen) (d) Quick Casual/Family Restaurants – $6-10 +2 +1 +1 Average Per Person (e.g., Panera Bread, Corner Bakery, Chipotle, Friendly's) (e) Fast Food Restaurants – $5 or Less -6 -9 +3 Average Per Person (e.g., McDonald's, Wendy's, Taco Bell) This information is from ChangeWave Research and contains confidential business information. It may not be copied or distributed without permission. ©2011 ChangeWave Research. All rights reserved. 14 ChangeWave Research: Consumer Restaurant SpendingHigh End Casual Restaurants (-8), however, are showing the biggest decline, followed by Moderate Casual Restaurants (-4) and Upscale/Fine Dining Restaurants (-3).(C) Individual Restaurant Chains We also asked respondents which individual restaurant chains they'll be spending more vs. less money at over the next 90 days. We then compared these results with the findings from previous quarterly surveys. Here are the chains showing the most and least momentum:Fast Food Winners Next 90 Days: In terms of fast food, Dairy Queen (+3) is showing surprising momentum as the weather heats up for the summer season.Additionally, McDonald's (MCD; +9) is maintaining its post-recession high and looks in great shape to capitalize on consumer momentum in the fast food sector.This information is from ChangeWave Research and contains confidential business information. It may not be copied or distributed without permission. ©2011 ChangeWave Research. All rights reserved. 15 ChangeWave Research: Consumer Restaurant SpendingThis information is from ChangeWave Research and contains confidential business information. It may not be copied or distributed without permission. ©2011 ChangeWave Research. All rights reserved. 16 ChangeWave Research: Consumer Restaurant Spending Quick Casual/Family Chains with Momentum – Next 90 Days: Denny's (DENN; +2) is up 1-pt in May and looks good going forward.Golden Corral (+1; up 2-pts) has also recovered nicely after their drop in the previous survey.Weakening Restaurants. On the downside, Olive Garden (DRI; +9) has fallen 4-pts since our February survey to their weakest reading in a ChangeWave survey for the past two yearsThis information is from ChangeWave Research and contains confidential business information. It may not be copied or distributed without permission. ©2011 ChangeWave Research. All rights reserved. 17 ChangeWave Research: Consumer Restaurant Spending Red Lobster (DRI; +3) has fallen 3-pts from previously.And P.F. Chang's has also fallen 3-pts from previously.This information is from ChangeWave Research and contains confidential business information. It may not be copied or distributed without permission. ©2011 ChangeWave Research. All rights reserved. 18 ChangeWave Research: Consumer Restaurant Spending Overall Favorite and Least Favorite Restaurants We also asked consumers about their overall favorite restaurant chains, and Olive Garden (10%) and Outback Steakhouse (7%) remain at the top of the list.Of all the restaurants mentioned in this survey, which one or two are your overall favorites and why? (Open-Ended)Current Previous Previous Previous Survey Survey Survey Survey May ‘11 Feb ‘11 May ‘10 Feb ‘10 Olive Garden 10% 11% 9% 10% Outback Steakhouse 7% 9% 7% 8% Red Lobster 6% 7% 4% 8% Panera 6% 6% 4% 6% Applebee’s 5% 5% 6% 6% Bonefish 5% 4% 4% 4% Chipotle 5% 4% 5% 3% Subway 4% 5% 3% 4% P.F. Chang’s 4% 5% 3% 3% Carrabba’s Italian Grill 4% 4% 3% 4% McDonald's 4% 3% 3% 4% Chili’s 4% 3% 3% 4% Ruth’s Chris Steakhouse 3% 4% 3% 3% Cheesecake Factory 2% 4% 4% 5%We also asked which restaurants they were least likely to go back to in the future.And which one or two restaurants are you least likely to go back to in the future? Please mention why. (Open-Ended)Current Previous Previous Previous Survey Survey Survey Survey May ‘11 Feb ‘11 May ‘10 Feb ‘10 Ruth Chris Steakhouse 7% 7% 6% 7% McDonald’s 6% 8% 9% 10% Outback Steakhouse 5% 5% 3% 5% Olive Garden 5% 4% 4% 2% Morton’s of Chicago 5% 3% 3% 4% Applebee’s 4% 6% 7% 8% Red Lobster 3% 5% 6% 7% KFC 3% 3% 3% 5% Taco Bell 3% 3% 3% 1% Burger King 2% 3% 2% 3%Least Favorite Restaurants: Ruth Chris Steakhouse (7%) now tops the list of least favorite restaurants while McDonald’s (6%) is at number two.This information is from ChangeWave Research and contains confidential business information. It may not be copied or distributed without permission. ©2011 ChangeWave Research. All rights reserved. 19 ChangeWave Research: Consumer Restaurant Spending (D) Coffee Buying TrendsDo you typically buy fresh brewed coffee from a restaurant or coffee shop (including cappuccinos, frappucinos, latte's, and/or iced coffees)?Current Survey May ‘11 Yes 27% No 73%More than one-in-four respondents (27%) say they typically buy fresh brewed coffee from a coffee shop or restaurant.We want to learn more about where you will be purchasing fresh brewed coffee over the next 90 days. For each of the following places, please tell us if you plan to purchase coffee more often, about the same amount, or less often over the next 90 days compared with the previous 90 days. Current Previous Survey Survey Change Will Not About More Less Net Net in Net Purchase the Often Often Difference Difference Difference Coffee Same Score Score Score Here (May '11) (Feb '11) Brewing Coffee at Home 28% 1% +27 +20 +7 51% 5% Tim Hortons 4% 2% +2 -2 +4 10% 56% McDonald's 7% 4% +3 0 +3 39% 32% Krispy Kreme 1% 1% 0 -3 +3 2% 70% Local Convenience 3% 5% -2 -1 +1 18% 48% Stores(e.g., Wa-Wa, 7-Eleven) Borders Books 1% 3% -2 -3 +1 8% 63% Seattle's Best 2% 2% 0 -1 +1 10% 58% The Coffee Bean 0% 0% 0 -1 +1 9% 62% Peet's 1% 2% -1 -1 0 8% 63% Barnes & Noble 0% 5% -5 -3 -2 14% 57% Local Coffee Shops 7% 5% +2 +5 -3 38% 27% Dunkin' Donuts 3% 5% -2 +1 -3 20% 48% Panera Bread 3% 5% -2 +1 -3 22% 49% Caribou Coffee 2% 4% -2 +1 -3 6% 62% Starbucks 8% 15% -7 -1 -6 47% 20%This information is from ChangeWave Research and contains confidential business information. It may not be copied or distributed without permission. ©2011 ChangeWave Research. All rights reserved. 20 ChangeWave Research: Consumer Restaurant Spending Among this very important group, Starbucks (SBUX; -7) has fallen 6-pts in the current survey back to its 2010 low.At the same time, Tim Hortons (+2; up 4-pts) and McDonald’s (+3; up 3-pts) show signs of momentum in the coffee market.Here’s a look at coffee spending trends at McDonald’s:Coffee Brewed at Home: Importantly, the survey found a net 7-pt increase in the percentage of coffee drinkers who plan to 'Brew Coffee at Home' over the next 90 days.This information is from ChangeWave Research and contains confidential business information. It may not be copied or distributed without permission. ©2011 ChangeWave Research. All rights reserved. 21 ChangeWave Research: Consumer Restaurant Spending Over the next 90 days, which of the following brands of coffee - if any - do you plan on purchasing to brew at home?Current Previous Previous Previous Survey Survey Survey Survey May ‘11 Feb ‘11 May ‘10 Feb ‘10 Starbucks 25% 27% 26% 28% Folgers 19% 17% 17% 20% Maxwell House 16% 12% 12% 16% Dunkin' Donuts 13% 11% NA NA Kirkland (Costco Brand) 11% 16% 12% 13% Green Mountain 9% 10% 7% 8% Trader Joe's 7% 7% 9% 7% Peet's 6% 6% 7% 8% Millstone 5% NA NA NA Nescafé (Taster's Choice) 5% 4% 3% 4% Eight O'clock 4% 7% 6% 6% Gevalia 4% 5% 3% 4% Kona 4% 6% 6% 7% Newman's Own 4% 3% 2% 4% Do Not Brew Coffee At Home 3% 3% 5% 4% Other 23% 19% 27% 21%Starbucks (27%; down 1-pt) retains its lead as the top 'brew at home' coffee brand. Folgers (17%; down 2-pts) is in second, while Costco's Kirkland brand (16%; up 7-pts) has overtaken Maxwell House (12%; down 3-pts) for third.Which of the following types of coffee have you purchased over the past 6 months to brew at home?Current Previous Previous Previous Previous Survey Survey Survey Survey Survey May ‘11 Feb ‘11 Nov ‘10 Aug ‘10 May ‘10 Single-Serve (e.g., Pods, T- 16% 20% 13% 14% 11% Discs, K-cups) Instant (e.g., VIA, Nescafé) 12% 11% 15% 14% 13% Ground or Whole Bean 75% 79% 76% 77% 77% (e.g., canned, bagged) Other 1% 1% 2% 1% 1%Single-Serve & Instant Coffee: The percentage of respondents purchasing Single-Serve coffee (16%; down 4-pts) such as Pods, T-Discs and K-cups over the past 6 months has eased somewhat – understandable as we’re no longer in the holiday season when sales of coffee machines tend to spike. That said, this is still 5-pts higher than the same time a year ago (May 2010).This information is from ChangeWave Research and contains confidential business information. It may not be copied or distributed without permission. ©2011 ChangeWave Research. All rights reserved. 22 ChangeWave Research: Consumer Restaurant SpendingAnd for those who have purchased single-serve or instant coffee, which brand of coffee did you choose?Current Previous Previous Previous Previous Survey Survey Survey Survey Survey May ‘11 Feb ‘11 Nov ‘10 Aug ‘10 May ‘10 Green Mountain 26% 27% 23% 15% NA Keurig 23% 22% 16% 11% 20% Folgers 23% 20% 22% 23% 22% Nescafé (Taster's 18% 16% 21% 26% NA Choice) Newman's Own 15% 17% 11% 6% 7% Starbucks 14% 19% 15% 17% 17% Maxwell House 12% 13% 14% 16% 15% Emeril's 7% NA NA NA NA Nesspresso 6% 6% 6% 4% 5% Tassimo 5% 3% 5% 3% 3% Peet's 3% 2% 1% 0% 1% Senseo 3% 2% 2% 1% NA Other 8% 8% 8% 11% 9%Green Mountain (26%; down 1-pt) remains the most popular brand of Single Serve/Instant coffee, followed by Keurig (23%; up 1-pt) and Folgers (23%; up 3-pts). On the other hand, Starbucks (14%; down 5-pts) has fallen in the Single Serve/Instant coffee market as well. We note that Starbucks plans to release K-cups later this year to better compete in the Single-Serve coffee space.This information is from ChangeWave Research and contains confidential business information. It may not be copied or distributed without permission. ©2011 ChangeWave Research. All rights reserved. 23 ChangeWave Research: Consumer Restaurant Spending II. ChangeWave Research MethodologyThis report presents the findings of two ChangeWave consumer surveys. The first survey was conducted May 19-25, 2011 and a total of 1,108 consumers participated; the second survey was conducted June 1 - June 10 and a total of 2,754 U.S. consumers participated.ChangeWave's proprietary research and business intelligence gathering system is based upon the systematic gathering of valuable business and investment information directly over the Internet from accredited members.The Research Network is assembled from senior technology and business executives in leading companies of select industries. More than half of members (53%) have advanced degrees (e.g., Master's or Ph.D.) and 91% have at least a four-year bachelor's degree. The business and investment intelligence provided by ChangeWave provides a real-time view of companies, technologies and business trends in key market sectors, along with an in- depth perspective of the macro economy – well in advance of other available sources.III. About ChangeWave ResearchChangeWave Research, LLC, identifies and quantifies "change" in industries and companies through surveying a network of thousands of business executives and professionals working in more than 20 industries.The ChangeWave Research Network is a group of 25,000 highly qualified business, technology, and medical professionals – as well as early adopter consumers – who work in leading companies of select industries. They are credentialed professionals who spend their everyday lives on the frontline of technological change. ChangeWave surveys its Network members weekly on a range of business and consumer topics, and converts the information into a series of proprietary quantitative and qualitative reports.ChangeWave delivers its products and services on the Web at www.ChangeWaveResearch.com. ChangeWave Research does not make any warranties, express or implied, as to results to be obtained from using the information in this report. Investors should obtain individual financial advice based on their own particular circumstances before making any investment decisions based upon information in this report.For More Information:ChangeWave Research Telephone: 301-250-2200 9201 Corporate Blvd. Fax: 301-926-8413 Rockville, MD 20850 www.ChangeWaveResearch.com USA [email protected]Helping You Profit From A Rapidly Changing World ™ www.ChangewaveResearch.com This information is from ChangeWave Research and contains confidential business information. It may not be copied or distributed without permission. ©2011 ChangeWave Research. All rights reserved. 24 ChangeWave Research: Consumer Restaurant SpendingThis information is from ChangeWave Research and contains confidential business information. It may not be copied or distributed without permission. ©2011 ChangeWave Research. All rights reserved. 25

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