Although such leading chains as McDonald’s, Panera Bread, Starbucks and The Cheesecake Factory are reporting traffic increases for the first quarter of the year, the rest of the foodservice industry is still questioning whether consumers in general are about to step up their dining-out frequency.
While no one can answer that yet with any certainty, in the words of that iconic prognosticator The Magic Eight Ball: Signs point to yes.
Among the recent signs that the overall economy is moving from recession to recovery are an increase in GDP, higher retail sales and fewer unemployment claims.
Similar signs are beginning to emerge in the restaurant industry as well. New data from market research firm The NPD Group reveals an increase in same-store sales trends at quick-service and family-style restaurants for the first time in 11 months. In addition, NPD’s updated consumer survey reveals that Americans’ view of dining out is getting more positive.
“Consumers are starting to feel a little bit better,” said NPD analyst Bonnie Riggs. “We still have our challenges, but I do think we are starting to see a light [at the end of the tunnel].”
According to NPD’s latest SalesTrac Weekly report, which measures 47 quick-service and family-style chains, same-store sales increased over a year earlier in six of the past eight weeks. This is a trend not seen in more than a year, Riggs said. The increase is being led by the pizza and sandwich categories.
“There’s a lot of pent-up demand,” Riggs said. “Consumers are starting to spend.”
In March, NPD updated its survey asking consumers about their economic concerns and how those concerns have influenced their restaurant habits. The results reveal that consumers may be shifting away from their controlled-spending ways.
“There’s been quite an improvement in consumers’ perception of restaurant visit behaviors,” Riggs said.
Price is less of a concern for consumers today than it was last year, NPD found. In March, just 27 percent of consumers surveyed said they were choosing less expensive restaurants, as compared to 32 percent in June 2009. Only 22 percent said they were looking for good deals more often, as compared to 29 percent last year. And only 14 percent said they were visiting restaurants less so they could do other things, as compared to 19 percent back in June.
Although money still matters, when it comes to returning to restaurants more often, consumers are less motivated by price discounts and deals today than they were last year, NPD found. Among those who claimed to cut back on visits, just 25 percent said price discounts on regular menu items would entice them to visit more often, as compared to 31 percent a year earlier. Today, a mere 17 percent said dollar or 99-cent offerings would do it, as compared to 23 percent a year earlier.
Fifteen percent of consumers who said they had cut back on restaurant visits said polite staff and service would bring them back, up from just 13 percent in June.
“All of these are positive indicators that the mind-set of the recent past, which emphasized controlled spending, is shifting,” Riggs said.
Getting guests back
While some of the industry’s leaders are ahead of the curve, serving more guests and experiencing same-store sales increases as a result, most are not. So, what should operators not yet feeling the love be doing at this critical juncture to get consumers to choose them more often? Four industry experts weigh in on what to do now.
• Rebuild traffic, then the check. For operators wondering how to get more butts in seats and when to raise prices, Dennis Lombardi, a restaurant consultant with WD Partners of Columbus, Ohio, has some answers.
“First focus on rebuilding traffic, and once that is done, think about rebuilding check average,” Lombardi said. “Right now, it is more important to get guests back into the habit of going to your restaurant versus a competitor. As a restaurant operator I would want to make sure returning customers feel good about price-point and price-value so they have less incentive to go elsewhere.”
Second, Lombardi suggests stepping up local-store marketing to contact lapsed users and make their eatery more visible in the community.
“The total restaurant experience needs to be positive, so as customers walk out, they feel good about the money and the time they invested,” he said.
• Keep what works. While operators might be quick to eliminate discounts, deals and promotions, they shouldn’t throw out the baby with the bathwater.
“Proceed with caution. Don’t get rid of something good [too quickly]. It will piss people off,” said Andrew Freeman, owner of the San Francisco-based restaurant consulting firm Andrew Freeman and Company. “There’s a real sense of loyalty that was built in this down time. Guests who were loyal to you when they had little cash could become even more loyal ... and they’ll come back with more money in their wallets. So introduce everything slowly.”
In addition, “if you created something during the recession that works, you can build on that,” he said.
• Get integrated. According to Duke Marketing’s Linda Duke, the key to getting customers coming back more often is integrated marketing.
“With today’s highly fragmented media, to reach consumers communications have to be integrated to achieve the maximum impact and provide the biggest bang for the buck,” Duke said.
Among her suggestions of integrated promotions are hosting a VIP tasting event or contest; advertising in the local newspaper and on radio; sending e-mail and text messages; supporting a local community organization by hosting events and raising money; and even hosting a publicity stunt like building the biggest burrito or a pizza-eating contest with local celebrities.
• Give more, get more. The last few years have forced many operators into self-preservation mode, giving the least to customers just in order to survive.
“The big problem I see, most people are playing a small game: ‘What’s in it for me?’” said restaurant consultant Bill Marvin. “The issue isn’t what can you do for me, but what can I do for you.”
Marvin isn’t just Monday-morning quarterbacking the state of the industry; he has a plan for recovery from it all: “Put the hospitality back in the hospitality business.”
One way he advises clients to do that is by giving that “unexpected extra.” For example, he suggests doing little things that people will talk about, such as offering customers a complimentary cup of coffee while they wait, comping a dessert, or, “just for fun,” comping a deuce each night.
“The more you give, the more you get,” he said.