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Taking stock: What to expect in second-half 2014

Wallace B. Doolin is an NRN contributor and chairman of TDn2K, the holding company of People Report, the leader in human capital business intelligence for the restaurant industry, and Black Box Intelligence.

It’s hard to believe, but 2014 is officially half over. Whether you are dusting off your new year’s resolutions or your business plan, it’s time to take one last glance in the rearview mirror before you focus beyond the windshield.

Our hot-off-the-press Restaurant Industry Snapshot reveals that year-to-date results can officially be deemed lackluster: positive 0.7-percent same-store sales, and negative 0.89-percent traffic. Job growth is up for the industry, but so is turnover. 

We are a pretty optimistic group at TDn2K  (Transforming Data into Knowledge), but when we dive into the Black Box Intelligence data, along with the mixed macro data, it is hard to find the proverbial silver bullet that is going to break the industry out of the doldrums of flat sales and perpetual declining traffic.

In our relentless quest to provide our members with the best insight available, we recently forged a partnership with Joel Naroff, economist, writer, frequent commentator and founder of Naroff Economic Advisors. Joel will provide monthly outlook and insight into the macro data that impacts the consumer and the economy. As it turns out, Naroff is pretty optimistic about the overall economy picking up in the rest of the year. Naroff expects “growth to accelerate during the second half of the year.”

“Hiring … is a good measure of economic optimism. Job growth should remain strong, and the unemployment rate should keep falling going forward,” he said. Couple that with the fact that we are facing easier same-store sales rollovers in the third and fourth quarters, and we could get some pleasant surprises between now and December.

Stay tuned for deeper analysis into dayparts; price/value issues; technology platforms; increased competition from grocers, convenience stores and food trucks; and more in upcoming blogs. There are definitely answers in the data. However, I think the biggest shift that we need to make as operators and marketers is bigger and comes before the digging and tweaking. I believe the strategic shift we must make to emerge from these flat sales is to think differently about competition. The old paradigm is that restaurants are competing for share with their perceived menu competitors. The new paradigm is that they are competing for share of consumer occasions. 

How do you think the rest of the year will play out? Join the conversation in the comments below.

The best operators are looking to steal share occasion by occasion, whether at breakfast, snack, brunch, lunch or dinner, or through takeout, mobile ordering or extended hours. The best companies are examining each occasion one market at a time to find competitive opportunities. This paradigm shift is difficult to accept and navigate.

No matter how optimistic we are, the truth is that the marketplace is now more complex and difficult than any of us have ever experienced. We can’t count on either hope or luck as strategies. We have survived the first half of the year, but in order to thrive, we must be willing to think about our businesses in new and creative ways, and give up on that silver bullet search. Does anyone remember who won the buggy whip wars?

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