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Are Chain Restaurants in a Self-Made Quagmire?

For many years, Foodservice Solutions® team shared the viewpoint that the consumer is changing faster than the food industry's ability adapt as regular reader of this blog know.  Wage inflation is here. More inflation is on the way over the next several years according to most economic experts.  The Federal Reserve Bank is intentionally keeping interest rates low to help drive growth, avoid deflation, and the ‘Fed’  is doing all it can to drive inflation. 

Reality check: There are very few executives in the food retail segment who understand the undercurrents of both the economy and continued restaurant customer migration. Consumers continue to struggle, re-adapt, and migrate from one food channel to another.  That migration continues to eat away the restaurant industries year over year customer count base, eat away at top line growth, and eat away bottom line profits for chain restaurants. 

 

Continued Discontinuity

In fact since 2009 restaurant executives blamed declining year over year customer counts on the economic turmoil, brand malaise, industry quagmire, and weather has been to blame.  If one were to listen to earnings conference calls conducted by many major restaurant chains. However others are evolving fast. 

Grocery store prepared food departments along with C-stores selling fresh food have been growing at double digits the past five years. C-stores and grocery stores have an advantage over restaurants they have built-in “basket size” advantage creating a platform for new product testing as well as a cushion absorb both product and wage inflation. 

Combine that with the seemingly unlimited Mix & Match product bundling advantage grocery stores and c-stores have you can understand why they are today and will be in better position in the future to keep prices low and yet meet employees demand for higher wages, better medical benefits and sick leave according to our Grocerant Guru®.  In fact grocery prices have dropped 7% last year while restaurant menu prices are up 2.7%.   Customers continue to have a heightened since of price awarnerss.

Simply put:  consumers are not eating any less today. They are in fact eating somewhere else. The restaurant industry overall has been stagnating since even before the recession, according to Harry Balzer of NPD Group. In 2000, the average American ate out 215 times. Last year, that number shrank to 192, according to NPD data.

Millennial Discovery

Today’s consumers are actively looking for answers to their problems, solutions for their issues, products that save time, while offering healthy choices, in new non-traditional fresh food outlets, and doing so via personalized applications that allow customization, differentiation, and individualization. 

Grocery stores and convenience stores have evolved their business model and garnered new customers selling fresh prepared restaurant quality Ready-2-Eat and Heat-N-Eat food while the restaurant business model has in large part stagnated.

Most chain restaurant leaders justify and rationalize why they are not adapting to the consumers shifting preferences quicker by blaming missteps on a slow global recovery or the weather. Isn’t the anomaly good weather in January and February?  January and February still arrive in WINTER, don’t they?  Restaurants need to re-evaluate relationships with employees while they look at their existing business model.

Millennials have helped drive a new era of “transparency”.  That transparency may become the platform to help drive change with C-level executives at restaurant chains.  In an era of increased transparency it might appear hypocritical when executives tout the value of its employees while lobbing simultaneously for a lower minimum wage and fewer benefits.  That business model just might prove costly when courting both employees and customers.  

Real Numbers Trump Earnings Call Spin

The time to take the undercurrents of food industry change seriously has arrived.  Continued justification for bad weather during the winter months is an excuse / joke that has been accepted just too long.  Consumers are not eating any less today.  They are in fact eating fresh prepared food from somewhere else and those outlets are hiring trained restaurant employees.  It’s time for the restaurant industry to evolve according to our Grocerant Guru®.

 

If your restaurant chain still selling the same food in the same way it did in 1980, 1990, or 2000 I bet you have had flat or declining total customer counts the past five years.   Has your brand lost customer relevance?  Do you need outside-eyes for inside profits?  What will drive more consumers in the door; robot cashiers or robot CEO’s?   It just maybe we have some of both today.

When a chain grocery store, convenience store or restaurant brand is not distinguishable, memorable, or connected emotionally with consumers today, that is when you know your brand is more yesterday than tomorrow.  Is your brand growing?  If not then in today’s reality check it is dying. 

Success does leave clues. www.FoodserviceSolutions.us   specializes in outsourced business development. We can help you identify, quantify and qualify additional food retail segment opportunities or product ideation or placement opportunity.  Foodservice Solutions of Tacoma WA is the global leader in the Grocerant niche since 1991 Contact: Steve@FoodserviceSolutions.us

Grocerant Food Garners Success

Within the foodservice sector, success does leave clues.  Duane Reade, Pinkie’s Liquor stores, Coles, Wegmans, Sheetz, Wawa, Central Market, and Green Zebra Grocery all have found success within the grocerant niche garnering customers from full-service restaurants, casual dining restaurants, and fast food outlets according to Foodservice Solutions® Grocerant Guru®.

 

Consumer Reports estimates that prepared meals purchased from grocery stores are now a nearly $29 billion-a-year business. We ask; are you taking advantage of food retail customer migration?  Ikea the furniture store is they report sales of fresh prepared food at over $ 2 Billion a year back in 2013.  Are you ready to sell Ready-2-Eat and Heat-N-Eat fresh food?  Is Ikea selling more food than your restaurant chain?

In recent work our friends at NPD found “In the 10-month period ended December 2015, that more than 40 percent of the population purchased prepared foods from a grocery store, compared to 77 percent from a quick-service restaurant.”  Times they are a changing. 

More stunning than that, the study found “In a four-week period, consumers made an average of five visits to a grocery store for prepared foods”.  Many in the restaurant industry dismiss the growth at grocery stores as not a serious threat; thinking the food is not ‘restaurant quality’.  That thinking is simply outdated, when the customer’s moves the retailer must move with them according to our Grocerant Guru®.

While Foodservice Solutions® team identified, quantified, and qualified that restaurant customer migration was linked directly to “The 65 Inch HDTV Sysdrome”.  Bonnie Riggs team at NPD, QSR Plus Retail Market Monitor data found “grocery prepared-food buyers are above-average quick-service restaurant users. In addition, the heaviest grocery buyers account for nearly 30 percent of grocery visits (about seven per month) for ready-to-eat meals.”  So, still wondering where your customers are going?

Echoing Foodservice Solutions® warning and call to arms, NPD food research icon Bonnie Riggs stated “The greatest weakness for quick-service restaurants in competing with grocery stores is dinner... Dinner is most important, followed by lunch, for visits to grocery stores.” 

Riggs continued “I don’t think QSR operators realize the magnitude of their vulnerability, especially at dinner, the daypart they have the greatest challenges,” Convenience may be driving consumers to grab more prepared meals to go, but the reason they are increasingly getting those meals from a grocery stores is all about quality, variety, freshness and healthy options. 

Grocery stores the ilk of Winn Dixie have successfully repositioned within the grocerant niche filled with Ready-2-Eat and Heat-N-Eat fresh prepared food. Others the ilk of Kroger are experimenting with fresh food and have not been as successful.   In Kroger’s case they have time, money, and a large store count to help carry them until they get it right according to our Grocerant Guru®.

 

Chain restaurants need to be aware that Duane Reade, Pinkie’s Liquor stores, Coles, Wegmans, Sheetz, Wawa, Central Market, and Green Zebra Grocery all have in the minds-eye of the consumer restaurant quality fresh food.  Does your brand complement the consumer?  Does your brand have a component to edify the consumers “65 Inch HDTV Syndrome?  

Visit: www.FoodserviceSolutions.us  if you are interested in learning how Foodservice Solutions® Five P’s of Food Marketing can edify your retail food brand while creating a platform for consumer convenient meal participation, differentiation and individualization or request a Grocerant Program Assessment or Grocerant Scorecard for more Email: Steve@FoodserviceSolutions.us

Waffle House Omni-Channel Retail is at its Core

Love Waffle’s then you most likely have visited a Waffle House.  Since 1955 Waffle House restaurants have provided a unique dining experience where regular customers are greeted by name. Waffle house has had a display kitchen from the start providing a consumer interactive and participatory experience. 

All Waffle House restaurants are open 24 hours a day 365 days a year and they have been selling a lot of food. Here is a big number since 1955 Waffle House has sold 2,501,866,574 Eggs! While today’s menu is filled with many new options (photos posted to blog).   Here are some fun facts on what they are selling every minute of every day: 341 strips of bacon a minute

1.       238 Hash browns orders a minute

2.       145 Waffles a minute

3.       127 cups of coffee a minute

4.       33 hamburgers a minute 

 But did you Know that Waffle House, has been pumping out singles on its own record label since the mid-1980s, according to NPR. Yes, Waffle House is an Omni-channel retailer and has been long before other chains even began to think about non-traditional points of distribution. 

Here is a look at some of the 40 songs they've produced over the years which include, "There Are Raisins in My Toast", "A B-side With Your Bacon?", "They're cooking up my Order," and "Color Me Gone." Ok, I have to say I just love this and yet there is more.

Shelby White, who heads Waffle Records told NPR that the songs lift the mood and send a message.  You read that right Waffle House has a head of Waffle Records Foodservice Solutions® Grocerant Guru® calls that contemporized relevance. 

White stated "So, it's not 'Waffle House, Waffle House, Waffle House' over and over again," she says. "It's about our food. It's about our people. It's about the things that happen if you just sit in a Waffle House and listen to the conversations around you. We try to represent all that to some degree in the songs." 

So if you are looking for fresh food fast, a display kitchen, and a song I suggest Waffle House.  If you want to hear some of the Waffle House tunes more you can buy the 2011 Waffle House album for $8.99 on Amazon. Success does leave clues and at Waffle House you can taste success, see success and hear success. 

Visit: www.FoodserviceSolutions.us  if you are interested in learning how Foodservice Solutions Five P’s of Food Marketing can edify your retail food brand while creating a platform for consumer convenient meal participation, differentiation and individualization or you can learn more at Facebook.com/Steven Johnson, Linkedin.com/in/grocerant or twitter.com/grocerant