I just returned from the Restaurant Finance & Development Conference – and while our industry continues to be a popular place for investment – a good deal of uncertainty exists as we head into 2018. Tax reform remains unclear, and the number of restaurants has far outpaced population growth since 2010. We are currently in the third longest economic expansion in history and some people are asking the question: “How much longer can it continue?”
Online ordering now is pretty much a requirement for conducting business today! Now we have Delivery, the latest trend, which could account for as much as 30% of total industry sales growth, according to some experts. Boston Consulting Group’s projection is that Delivery could grow from its current 5% share of industry sales to 10-15% within 5 years!
But no one truly knows if the product fulfillment will satisfy consumers or not. This is currently a somewhat disorganized free-for-all– with third-party firms being able to charge aggressively; in time, this will likely sort itself out. In the short term, profitability is going to undoubtedly take a hit.
The Four Key Delivery Criteria:
The Better Restaurants Can Meet These Criteria, The More Likely Delivery Will Be a Prosperous Sales Driver
Technology is coming at our industry quicker than ever. The lines between Marketing and IT have blurred, and increasingly Chief Digital Officers are being named to 1) deal with the vast number of products and 2) make smart “bets” on ideas that can pan out.
In the meantime, we know that Millennials (now age 22-38) will become the largest Restaurant buying group by 2020…less than three years from now. They are marrying later, have college loans to repay, and have found a lower-paying job market …so how do we meet their needs?
Millennials are the New Majority
Source: Trinity Capital Investment Banking
So, what do you do? How do you “win” in today’s uncertain environment?
My response: Focus on what’s most important and actively test new possibilities for your brand.
What’s most important? McDonald’s “QSC&V” philosophy still applies today –Quality, Service, Cleanliness, and Value. However, the definitions for each of these has changed and you need to embrace this in order to keep up with today’s expectations. To “QSC&V”, I would add:
✭ Accessibility – consumers today have many ways to access your brand. Be sure you are where they are looking for you.
✭ Uniqueness – today’s hyper-competitive environment demands that your brand have a clear point-of-difference. Millennial and Gen Z consumers, who do not have a lot of history, but do now have spending power are coming your way, and they are interested in you and what you stand for.
Testing new ideas/methods has always been important, but it has even greater significance today. Wendy’s, Chili’s and Red Robin are all brands that I admire. Recently each of them made major decisions after serious internal evaluation:
▶️ Wendy’s announced their decision to expand delivery to >2500 units;
▶️ Chili’s rebooted its menu by dropping 40% of its items and focusing on what it’s best at;
▶️ Red Robin put a stop to new unit development until it can fully assess what its facility should look like to meet this new customer.
So today nearly every brand should embrace some change, and test some new approaches, including technology. But don’t get carried away by chasing the next “thing” and lose sight of QSCVA&U.
What do you think? I would love to hear from you.
For nearly fifteen years, Growth Partners, LLC has provided outsourced Chief Marketing Officer consulting to restaurant companies. I am a fresh set of eyes for current CMOs, as well as an Interim or Part-Time CMO for concepts looking to grow their businesses and brands. Learn more at www.growthhq.com.
Good thinking and insight Neil. I enjoy your communiques. Hope all is well! NED
P.S…………..I was told “there would be no math”!! (below)