November 1, 2008
Michael Sanson EDITOR-IN-CHIEF [email protected] www.restaurant-hospitality.com
Over the past couple years we've written frequently about the glut of casual restaurants in this country. The problem in this category has been exacerbated by the growing homogenous nature of the beast: Way too many restaurant concepts look alike. Even in a strong economic climate this is a serious problem. In today's battered economy, it's a disaster.
Technomic president Ron Paul predicts that a minimum of 1,000 casual dining units will close in the next year. That should ease the overall problem, created by a copycat mentality. If Paul is right, and there's no reason to think he's not, those who lack originality and creativity will soon pay for their sins.
“In the eyes of consumers, these restaurants are the same. There are too many. And their prices got out of whack,” says Paul.
As a result, a clear majority of casual concepts are convinced that they will not see same-store sale improvement until at least the second half of 2009. In fact, a growing number of economists are writing off 2009 as a year in which there will be little growth in most segments of the economy.
According to a GfK Roper Report, 55 percent of Americans are eating out less than last year. And of those who believe eating out is a necessity and not a luxury, 48 percent are spending less at restaurants or are choosing to eat at less expensive restaurants.
There is some good news in all this mess. Ironically, a Technomic Consumer Pricing Strategy Report concluded that a clear majority of consumers understand that menu price increases are a result of rising costs related to gasoline and food ingredients, not greed. More than half said they just wish restaurants would increase prices slowly over time.
Consider that a tip. When you do raise prices, do it slowly to prevent customers from feeling like they got mugged. Many may not even notice a smaller price increase.
The important thing to remember here is that when there's too much competition and too few customers, you'd better focus on value. Customers are looking for the biggest bang for the buck. And that doesn't necessarily mean your portions are bigger than the other guy's, but they're better.
It's time to get off your butt! Don't just sit there waiting for something good to happen. Make it happen. Do you serve breakfast? Maybe it's time to add it. Do you close between lunch and dinner? Think about staying open and offer an interesting, limited menu. Do you close on Sundays and/or Mondays? It may be time to stay open seven days a week. Perhaps, you may want to stay open later. The luxury of taking a breather is gone for now. It's all about capturing incremental business. Above all, be interesting; be different. Ask your customers if there's anything they would like to see you do differently. E-mail me with your successful ideas.
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