Penny Wise 185 Million Pounds Sterling short Real Mex not so Real or Relevant

The popular definition of insanity is “doing the same thing over and over and expecting a different result.”  This sums the mind-set of many legacy chain restaurants operators today. (Guest Blogger Bill Cross)

The bankruptcy of Real Mex (whom the Grocerant Guru® and I offered to help years ago with their retail operation, and which my company tried to help a few years after that when I colleague came over there from another client) shows the bankruptcy of the restaurant and private equity way of thinking. Restaurants act as if the go-go-go 2000s are coming back, when consumers were eating out more than at home for the first time since records were being kept.

So that mind-set got Real Mex nearly $42 million in first lien debt, meaning it gets paid first in a bankruptcy, and $195 million in second lien debt most of which will never be paid back. I your company closing stores, are you reducing you menu, reducing your inventory, and reducing the number of managers in a store?  If so those are clues you might be on the same track as Real Mex.

Today’s food marketplace is so very different from then: EVERYONE sells food these days, and you can even get complete meals delivered to your home. Packaged foods have improved lightyears over the old TV dinners I grew up with, and better-for-you options are flooding the country. Yet many chain restaurants pretend they don’t need to compete, not just with other restaurants, and not even with other foodservice vendors, but EVERYONE. If you’re looking for success clues, that is one of them.

 What’s the answer? Don’t think about channels, or service, think about MEAL OCCASIONS. Consumers are hungry and aren’t asking themselves “should I eat fast casual, casual, fast food, white tablecloth or take out?” They don’t stand in supermarket aisles and ask themselves “do I want to buy this package of Tony Roma’s ribs or go to Tony Roma’s tonight and eat out?”

They are four different meal occasions. If you don’t get that, then you’re just repeating the same old (failing) mistakes expecting a different result. Don’t let you legacy restaurant brand practice brand protectionism of the 1980’s, 1900’s or 2000.  If you do your brand will look more like yesterday that today or tomorrow.

Looking A Customer Ahead drives top line sales and bottom line profits, year over year sales increases, and incremental customer counts.  Do you need outside eyes to drive inside results? If so contact:

Bill Cross is SVP of Business Development for Broad Street Licensing Group, the global leader in taking restaurant brands to retail. www.bslg.com or

Steven Johnson, Grocerant Guru® at Tacoma, WA based Foodservice Solutions® www.FoodserviceSolutions.us

Are you prepared to with the Battle for Share of Stomach or share of Dollars?