Customers participating in focus group studies last year for Tropical Smoothie Café gave executives of the 280-unit smoothie and sandwich chain plenty to chew on.
“They told us what they loved about us and what they didn’t love,” says Barbara Valentino, Tropical Smoothie’s vice president of marketing and communications. “They loved our smoothies and said we were a destination for those. But they also told us there was a lot of room to improve our sandwiches.”
Those focus groups sparked an extensive 18-month-long development process that resulted in some significant alterations to the Destin, Fla.-based brand, including a comprehensive overhaul of the sandwich menu. “We needed to hear what our customers had to say,” Valentino says.
With the nearly 2-year-old recession showing few real measurable signs of retreat and competition remaining as fierce as anyone has ever seen it, operators can afford to ignore their customers’ feedback only at their own peril. Although Americans still retain a deep-rooted desire to patronize their favorite restaurants, many are wary of spending a hard-earned paycheck that could end up being their last for quite a while.
In addition, consumers are being tempted with more choices than ever before by competing restaurants and food retailers who would like nothing better than to persuade them that it’s cheaper—and as enjoyable—to eat at home.
For years many restaurateurs operated in a kind of “Field of Dreams” fantasy land regarding customers, observes Bob Barry, chief operating officer of the Greene Turtle, the 22-unit casual-dining chain based in Edgewater, Md. “Five years ago if you built a restaurant, they would come,” he says, referring to a line from the popular Kevin Costner movie. “Today, we’re seeing more closures than openings, and [to survive] you had better make sure that you’re executing everywhere in your operation in the best possible way.”
That fact hasn’t been lost on the restaurant community, either. More than ever, operators are tuning into what customers are saying and trying to give them what they’re asking for in the form of value offerings, new products, improved service, new forms of merchandising and communication, and even stepped-up community involvement.
But some observers speculate that even if operators were to present consumers with everything they want, the business climate is not likely to improve rapidly—even after the nation has extricated itself from oppressive weight of the recession.
“While issues relating to the recession have shaken our confidence in the short term,” says Harry Balzer, vice president of the NPD Group, a consumer marketing research firm based in Port Washington, N.Y., “what we’re seeing chiefly is not a short-term thing. It’s not so much that people are dining out less, it’s that they’re not dining out more.”
Balzer notes that while the recession has impacted spending, a more profound sea change has occurred with regard to Americans’ level of disposable income. “We haven’t seen the median household income increase in almost a decade,” he says. “People just don’t have more money to spend [than in previous years].”
Until about 2000, Americans were getting progressively wealthier, he says. But no longer. “The median household income in 2000 was about $50,000, adjusted for inflation, Balzer says. “The [real] median household income in 2007 was still about $50,000.” These days, he says, Americans are finding there is just no extra money in the pipeline on payday.
NPD data also reveals that in 2000 the average American ate 211 meals at restaurants over the course of the year. Today, that figure is around 202, Balzer says. “Basically, we’re flat for the decade; there’s been no movement in particular.”
Many restaurateurs are seeing the same flattening trend line stretch out in front of them, too. Fred Wolfe, president of the Los Angeles-based Patina Restaurant Group, says, “Our collective opinion is that even when the recession ends, things will not return to the way they were.”
And with disposable income mired in no-growth mode—at least for the foreseeable future—operators find themselves locked in a continuously escalating market share battle for consumers’ hearts and minds.
More than ever, Balzer says, restaurateurs “have to be what consumers want them to be.” And mostly, he says, the American consumer craves new iterations on items they already enjoy—like sandwiches, burgers, pizzas and coffee—“and things that save them time or money. Convenience and value continue to be important factors.”
Tropical Smoothie Café’s Valentino says the focus group studies helped guide the brand as it made some necessary alterations to the business. Executives assembled three focus groups early in 2008 in three cities—Tallahassee, Fla., Virginia Beach, Va., and Phoenix. Among the information consumers shared with executives was that they loved the smoothies but were not particularly fond of the chain’s sandwiches.
“They said the bread-to-meat ratio was not good,” she says, noting that the chain’s sandwiches were being served on handcrafted focaccia bread. “They thought it was a lot of bread and a little meat.”
Customers also didn’t care that the chain was slicing meat to order in the store. “We installed $6,000 slicers in the stores, and people didn’t care that we were slicing the meat by hand,” she says. “We were spending all of that money on bread and labor, and customers didn’t care.”
As a result of the focus groups, a task force comprising chain officials, franchisees and vendors set about to revamp Tropical Smoothie’s menu. Among other changes, the focaccia bread was replaced with ciabatta and nine-grain wheat bread. The chain also went to presliced meats. And while the sandwich menu retained some of the old favorites, many of the recipes were “tweaked,” Valentino says.
The brand also introduced a limited-time only grilled flatbread line for $3.99 in April 2009. Because of its positive reception, however, the chain upgraded it to the status of a permanent item and incorporated it into the master menu launch last month.
As a part of the rollout, Tropical Smoothie also debuted a flatbread cheese pizza for the kids’ menu. However, Valentino says, officials learned something from their younger patrons as well. “Our flatbread has grill marks on it, and to kids, that says ‘burnt,’” she notes. “So we put the grills marks underneath. It’s the perception of a child, versus the perception of an adult.”
Chain officials also discovered that customers found its menu boards confusing. “The menu was really difficult to read,” Valentino says. To help underscore the fact that the chain offers more than just smoothies, the new, more customer-friendly boards have been reconfigured to draw attention immediately to other items, like wraps, sandwiches, flatbreads and salads.
With 26,000 fans on Facebook, the chain also is looking to expand its social media outreach this year. “People are just not watching TV commercials anymore,” she says.
As a result of the changes recently implemented, the brand has seen its sandwich-to-smoothie sales mix go from a 50/50 ratio to 60/40 at the only corporate-owned store. Valentino says the chain also is planning to assemble other focus groups in the future. “It’s obviously important to listen to your customers,” she say.
Uno Chicago Grill, the 202-unit casual-dining chain in West Roxbury, Mass., did not convene customer focus groups to help develop its seasonal LTO menus. But officials did listen to what its patrons were saying.
Frank Guidara, president and chief executive of the company, said a trip to the New Orleans Jazz Festival inspired Uno officials to develop an assertively flavored LTO menu called the New Orleans’ Jazz Festival of Flavors. The menu, which showcased the spicy dishes and flavors of the Crescent City, was something of a gamble for Uno, though, he says.
“We thought this might not be successful,” he explains. “We wondered, ‘Will our customers accept this?’ [Uno’s dishes have a more] middle-of-road profile, taste-wise.”
Customers, however, embraced the more boldly flavored dishes, like spicy jambalaya pasta and blackened fish, he says. “[They] loved it. It told us, ‘Don’t limit offerings based on preconceived notions. Don’t be shy.’
“The New Orleans Jazz Festival menu really showed us that our customers would accept spicier, bolder dishes. They’re interested in being more adventurous.”
Uno followed the New Orleans LTO menu with the “Best of Summer, Starring Lobster” menu in July, and now has plans to roll out the “Fall of Surprises” menu in October. Among the 12 new dishes on the menu is boneless barbecue shortribs with Chianti sauce, and fresh pappardelle with roasted vegetables. The barbecued shortribs also feature in shortrib sliders as well as in a sandwich served with aged Cabot cheese from New England.
In addition, the fall menu will showcase other new dishes, such as avocado egg roll with sweet tamarind cashew dipping sauce, roasted tomatoes and vegetables served on a five-grain flatbread, chicken salad with goji berries, and crunchy chicken wrap with cranberries. The menu is expected to run through Thanksgiving.
Rather than poll customers directly, Patina Restaurant Group surveyed managers and front-of-the-house employees “who deal directly with guests,” says Wolfe, president of the high-end restaurant and on-site firm. “We asked for feedback about what people were saying. And while we found that they were pretty highly satisfied, we also realized that, for price-related reasons, we were serving fewer of them.”
When the industry emerges from the recession, “there will be a new reality in the restaurant world,” Wolfe predicts. “It will be a slow recovery and people may have changed their habits on a semi-permanent basis.”
To be sure, there will be some pent-up demand to go out and enjoy “a wonderful experience in a restaurant,” he says, “but many people may have become accustomed to frequenting value restaurants that can provide a great experience at lesser prices.”
Therefore, with 42 individual outlets, Patina—which operates such restaurants as Café Pinot, Patina and Zucca in Los Angeles, and Brasserie, The Sea Grill and Naples 45 in New York—is looking for ways to remerchandise its many one-of-a-kind operations.
For example, Wolfe says, “In some Italian restaurants we operate, we’ve been focused on the higher end of the check with protein items like fresh fish or prime cuts of meat for entrées priced around $30.” And while Patina does not plan to change the quality of the products it uses, he continues, “We just will feature more value-oriented products—like pizza and pasta for $12 to $15 in Italian restaurants—particularly in downtown restaurants where lunch is a factor.”
Patina also will continue offering unique, specially priced LTOs, like its recent heirloom tomato promotion, which Wolfe says has been popular with patrons.
In several restaurants, the company also is taking steps to reduce the level of formality. “A place might become a little more casual, more comfortable, more inviting,” he says, “and offer interesting, but somewhat less expensive food.”
Low commodity prices have helped to keep menu prices down over the past year, but Patina also is looking for other ways to keep costs in line, like negotiating with landlords and looking for ways to offset rising utilities costs.
While 2009 has been a particularly tough year for high-end operators, the casual-dining sector has been suffering as well. Harry Rose, chief executive and founder of The Rose Group, the Newtown, Pa.-based company that operates 59 Applebee’s and four Corner Bakery Cafes, observes: “It’s clear that there are fewer customers and more restaurants out there today than there were two years ago. In casual dining we’ve experienced an overpenetration of units, and then, when the recession hit, we suffered a double whammy.”
Applebee’s customers, however, are responding to value offerings, he says. “We’re running a promotion now that includes an appetizer and two entrées for two people for $20 that has gone over very well,” he says, adding that individual items have been moved in and out of the category to help create variety.
Rose says an increasing number of customers are responding to health-oriented options, too. “Our loyal, heavy user is not going to change,” Rose explains. “They will order ribs, burgers, chicken—that’s what they want. But another segment is becoming more conscious of what foods are healthy for them. Our Weight Watchers menu is a positive approach. We need more things like that.”
One of the keys to surviving the economic debacle, Rose continues, is to attract either new guests “or those who haven’t used casual dining in a while.” To address that end, Applebee’s increasingly is exploring ways to reach more patrons through the media.
“It’s an important avenue for us to be working on,” he says. “We’re trying to use the Internet more in one form or another to communicate our message to young people.” Twitter and Facebook also are being examined as part of the brand’s overall strategy to reach out to potential customers.
Barry says the Greene Turtle is reaching out to customers in a variety of ways as well. With people dining out less, he says, you need to treat guests who do come through the door “like kings or queens.” As a result, the casual-dining and sports-bar concept has stepped up its training programs for managers and other front- and back-of-the-house employees.
“We’re working hard to train our employees,” he says. “We want to treat the guests like they’re coming here for a party. At the same time, we want to make sure that we’re executing in the best possible way we can.”
The Greene Turtle also is attempting to meet the consumer’s demand for value with a shifting assortment of promotions. The 22-unit chain—which expects to open four more locations this year—features a Deal of the Day special that can showcase a hamburger or a cheese steak for $5 or “bottomless fries” day. Each promotion might run once a week for three or four months. “Then we change it to keep it fresh,” Barry says.
Other Greene Turtle promotions include a “Beef up your Beer” program, which allows customers to upsize certain brands of beer from a 16-ounce glass to 22 ounces for 50 cents.
In addition to offering specials and deals, the sports-themed Greene Turtle reaches out to local consumers through involvement in many community fund-raising efforts. “We do a lot with youth leagues and local sports programs, like sponsoring a 5K race,” Barry says. “We do a lot of fundraising at each of our restaurants.”
For example, The Greene Turtle in Westminster, Md., a franchise outlet operated by multiunit operator Frank Illiano, recently co-hosted a fundraiser with Amelia’s Ace of Hearts Ride that raised $27,000 for the Susan G. Komen Breast Cancer Foundation. The Westminster restaurant served as a registration and launch points for the annual charity motorcycle ride.
“We’ve found that reaching out to the local communities is a good way to reach new patrons,” Barry says.— [email protected]