Restaurant customer migration continues to eat away at top line growth and bottom line profits for chain restaurants. Since 2009 the economic turmoil, malaise, or quagmire has been to blame if one were to listen to earnings conference calls conducted by many major chains.
The truth is consumers are not eating any less today than they did in 2009. They are in fact eating somewhere else. The restaurant industry overall has been stagnating since even before the recession, according to Harry Balzer of The NPD Group. In 2000, the average American ate out 215 times a year. Last year, that number shrank to 192 visits a year as reported by NPD.
Many chain leaders justified, and rationalize why they are not adapting to the consumers shifting preferences quicker, blaming missteps on a slow global recovery, the weather. Of late they are the same ones claiming victory when in fact price increases provided top line growth all the while year over year customer counts were down or continue trending down.
Might it be that the customer has changed? Foodservice Solutions® Grocerant Guru favorite saying is the “consumers are dynamic not static” simple enough, but why. Brands must be dynamic, reposition or risk becoming non-relevant to consumers. Even worse some brands could become extinct.
Think about Sbarro. Recently Sbarro announced they were closing 155 units. NRN’s Top 100 census of chains ranked by U.S. systemwide sales, Sbarro’s domestic sales fell 5.66 percent in its 2012 fiscal year to $400 million, compared with $424 million in fiscal 2011.
We know that mall traffic has been declined for the past five years. This past Christmas it was reported that mall traffic was down 15%. If you are a restaurant on a pad outside a mall how did you fare? If you’re restaurant was in the food court how did you fare? Now after thinking about Sbarro, think Burger Chef. How are you evolving? Interestingly Restaurant analyst Michael Whiteman says The Cheesecake Factory revenue increased 16 percent in 2013 and says “shopping malls have actually been relying on restaurants to fill empty retail space and bring in more customers.” So is it really the shopping mall causing problems?
Is your restaurant chain still selling the same food in the same way?
Maybe you should consider product mix adjustments, brand repositioning, or new products all together. Who are your customers and where else are they eating? Are your customers Millenials on a quest for food discovery?
Consumers are not eating any less. They are eating somewhere else. The consumer is on the move. Is your brand?
Millenial Consumers Drive Change
In Eating Out By Eating In the study, “The Why Behind the Buy” published by Acosta Sales and Marketing found Millenials migrating toward buying Ready-2-Eat and Heat-N-Eat fresh prepared food. That is something all food retailers need to pay particular attention too. In fact that study found just how significant Millenials are as future customers for Ready-2-Eat and Heat-N-Eat:
- Bought Home Prepared Foods - GenY / Mellennials 78% Gen X only 68%, and Boomers 60%
- Ordered Food From A Restaurant for Pick-Up / Carry-Out in the past 30 days - Gen Y / Millennials 78%, Gen X 72, and Boomers 58%
- Ordered Food From A Restaurant for Delivery in the past 30 days - Gen Y / Millennials 67%, Gen X 57, and Boomers 36%
When a chain restaurant brand is not Understandable, not Memorable or not connected Emotionally with consumers today, that’s when you know your brand is more like yesterday than tomorrow. Is your brand evolving with consumers? Does your company, brand, or franchisor need outside eye’s to drive inside profits?
Want to read more about supermarkets seeing the “seismic shift” to online shopping for foods?
Non-Traditional Fresh Food: Amazon Fresh is Bold, Brave, Branded
Amazon Fresh launches new Seattle Spotlight program offering access to restaurant meals and ingredients limited to the Seattle area. “Seattle Spotlight” is an interesting blend of takeout and home cooking.
How Amazon Selects Food Vendors for Seattle Spotlight
Online Grocery Shopping business models have fallen on that “last mile of delivery”. Well Amazon Fresh’s Seattle Spotlight program has the solution for selecting vendors and getting your food to you fresh.
Visit: www.FoodserviceSolutions.us if you are interested in learning how Foodservice Solutions 5P’s of Food Marketing can edify your retail food brand while creating a platform for consumer convenient meal participation, differentiation and individualization or learn more at Facebook.com/Steven Johnson, Linkedin.com/in/grocerant or twitter.com/grocerant
-- Steven Johnson is Grocerant Guru at Tacoma, WA based restaurant and hospitality consultancy Foodservice Solutions® visit: www.FoodserviceSolutions.us