Fighting Back
Through Building Traffic
By John Miko
The Situation Operators face formidable challenges. These challenges include steep food inflation, high gas prices which decrease consumers’ willingness to drive and eat out, rising unemployment, continued housing concerns, and low rates of consumer confidence.
These factors have conspired to constrain growth in all segments of the foodservice industry. In 2007, restaurant industry traffic grew just 1%, which is far below the industry’s historical rate of growth, and check size grew at its slowest rate in a decade.
Confronted with these challenges, operators are asking, “What can we do?”
As the expression goes, the best defense is a good offense. For foodservice operators in challenging times, the best strategy is often an offensive strategy which focuses on building traffic. In partnership with
SYSCO, operators can fight back by:
- Learning and applying lessons from past periods of economic softness
- Looking at best practices from the present
- Leveraging tools and resources from SYSCO
Lessons from the Past
Over the past 30 years, the U.S. economy has experienced several periods of economic softness.
Analysis of these periods—of what worked and what didn’t—provides valuable perspective to help operators decide on the best course of action in the current period. Among the important lessons from the past:
- We’ve been here before. While the current situation is difficult, the U.S. economy and the foodservice industry have been through this before. Those who make good decisions now will be even stronger once the economy picks up again, which it inevitably will.
- Passing on higher food costs to consumers is risky. Operators who did this in previous periods of food inflation didn’t fare particularly well. Instead of simply raising prices, a better strategy is menu rearchitecture.
- Consumers still value convenience. Historically operators that have focused on delivering convenience have done okay during soft times. During such periods, convenience items (such as handheld foods) and off-premises dining have remained strong, which appears to be the case during the current period.
- Some dayparts and customer segments decline more than others. In the past, family parties and lunch saw the biggest declines. At the moment, lunch and dinner are showing the greatest softness.
- Consumers look to trade down. Historically when the economy has been tight, consumers have traded down in a variety of ways. They have ordered fewer and less expensive items; have traded from mid-scale to QSR; have switched from entrees to appetizers and sandwiches; have gone from ordering á la carte to bundled “value meals”; and have decreased consumption of beverages (choosing tap water) and desserts. Operators should be conscious of this inclination to trade down and should offer menu items and promotions that facilitate the process in a profitable way.
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- Continuing to invest in marketing pays dividends. Organizations that invested in marketing, promotions, and deals tend to fare better during periods of economic softness and emerge from such periods even stronger. (Recent research indicates that menu price and use of coupons/special promotions are among the most significant factors affecting consumers’ decisions to visit a particular restaurant.)
Along with these lessons from the past, a few trends are emerging that are unique to the present. These include:
- More at-home preparation. Concurrent with the decline in female workforce participation rates, households are preparing more of their own meals at home. This trend was underway but has been exacerbated by the soft economy. The result: operators aren’t just competing with other operators; they are increasingly competing with home-based meal preparation.
- Greater emphasis on health. Increasingly consumers are concerned about eating healthier fare, a factor that is influencing where and what they eat.
Ideas and Best Practices
Across the country, operators are fighting back by going on the offensive. They are taking a variety of steps to drive traffic. Among them:
- Targeting dayparts where traffic is growing. The two strongest dayparts are breakfast and afternoon snack. Many operators are placing a major emphasis on breakfast, promoting itmes such as breakfast burritos and breakfast sandwiches. Operators are also seeing success with premium/specialty coffee. Snack wraps are a popular item in the afternoon snack period.
- Targeting loyal, repeat customers. In challenging times, operators need to define exactly who their target customers are and need to ensure they are delivering a compelling, differentiating value proposition to their target. By marketing to loyal customers and increasing the traffic from this group, operators can grow even in tight times.
- Targeting specific consumer segments. Many operators are developing specific offerings and promotions to target families with kids. Also, operators are targeting older consumers (those over age 65), which is a prudent strategy as these consumers continue to eat more of their meals away from home.
- Emphasizing value. Because consumers are seeking value, those operators that deliver it will fare best. Interest in “value menus” remains high.
- Maintaining marketing activities. This includes advertising, promotions, coupons, and deals of all sorts.
- Offering healthier items. As consumers seek healthier items, operators are taking this into account and adjusting their offerings. This can even be seen in QSR where salads and other healthier options are increasingly common.
- Continuing to innovate. New products are necessary to continue to stimulate consumer interest.
Sysco offers a wealth of tools and resources to help operators boost traffic. To see more great promotional tips, visit www.syscotabletop.com.
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