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Voting with their credit cards, patrons at high-end steakhouses say knowing the ranch of origin is important to them.
December 29, 2011
It’s a case of saying one thing and doing another. And when it comes to a customer ordering an expensive steak in a high-end steakhouse, the implications of that conundrum are far-reaching.
“We know there is information in the literature that suggests that when customers see a product that has been source-verified, that gives them some confidence,” Chris Calkins, University of Nebraska-Lincoln meats scientist, said at the recent Range Beef Cow Symposium in Mitchell, NE. “They feel like they know something of the methods, how those products were produced, and there’s some accountability in the system.”
But will they pay for that confidence?
The upshot of a recently completed research project says the answer is yes.
The research involved an email survey of 1,000 patrons who frequented six restaurants – three in Connecticut and three in Phoenix. That email survey was followed up by a “tasting event” at three of the restaurants – two in Connecticut and one in Phoenix – where patrons were able to select from four identical strip steaks that the restaurant prepared. The only difference between the steaks was the degree to which they could be source-verified. The options were: not at all (generic steaks much like patrons typically order in a restaurant), identified to region (Midwest), identified to state (Nebraska), and identified to the ranch of origin.
In the email survey, however, the high-end steakhouse customers showed a bit of a contradiction in their attitudes toward source verification. While 60% said they would be willing to pay more for source-verified product, only 15% ranked it in the top-three factors important to them. In fact, when asked to list the factors they consider when ordering a steak, source verification was number 14.
So what factors are important? In the email survey, 61% said the cut of meat was most important in their decision of what to order, with filet mignon by far the most popular, earning a 41% vote. New York strips were second at 17%, followed by ribeyes at 14%, and prime rib at 12%. Price was the second-most important factor, and a tenderness verification/guarantee was third.
Interestingly, when these customers are dining at a nice restaurant and aren’t sure what to order, 46% said they would not seek advice, while 41% said that sometimes they would seek advice from others. Of those who said they would ask for advice, 91% said they would ask their server.
And that, Calkins says, is an opportunity. “In high-end restaurants, the wait staff considers themselves to be professionals and, in my assessment, they (the wait staff he worked with in the tasting events) were anxious, interested and open to learn about the project, and to learn about the product we were preparing,” he says. “I think we have a conduit to the customer through the wait staff that we could do more with than we do.”
Beyond that, the email survey revealed that the majority of customers think flavor is the most important factor in the overall eating experience (52%), while tenderness ranked second at 27%, and degree of doneness was third at 25%, Calkins says. And, he points out, these are customers who know what they want in a steak, as 30% of the participants dine out 2-3 times a month and 28% dine out weekly. When dining at a nice restaurant, 52% said they prefer to order beef and 34% order fish.
When it came time to put their money where their mouth is, 68% of restaurant patrons who participated in the three tasting events were willing to pay more for steaks that were source-identified to state or ranch of origin, Calkins says. However, steaks identified to region held no more value to these restaurant patrons than generic steaks.
“When they could identify the ranch where that animal came from, they were willing to pay, at high-end restaurant prices, an extra $8.75. And if you could tell them it was from Nebraska, that was worth $4.74,” he says. “So, there was roughly a $5 to $9 premium for source-verified product at high-end restaurants. That tells me there’s enough money in the system to give us some incentive to move forward with that.”
The reason these customers were willing to pay more for source-verified steaks, Calkins says, is because along with verification comes a promise. “It clearly indicates that customers care about where their meat comes from,” he says.
And the take-home for cattlemen? “When it’s source-verified and there’s accountability in the system, they think you have made a promise to them that they’re going to get a high-quality steak. I think that’s something important for us to think about. We have expectations on behalf of our customers, who believe we’re doing the right thing.”
To see recaps and view PowerPoints from presentations at the Range Beef Cow Symposium, click here.
Senior Editor, BEEF Magazine
Burt Rutherford is director of content and senior editor of BEEF. He has nearly 40 years’ experience communicating about the beef industry. A Colorado native and graduate of Colorado State University with a degree in agricultural journalism, he now works from his home base in Colorado. He worked as communications director for the North American Limousin Foundation and editor of the Western Livestock Journal before spending 21 years as communications director for the Texas Cattle Feeders Association. He works to keep BEEF readers informed of trends and production practices to bolster the bottom line.
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