Multi-Unit, Multi-Brand Restaurant Operators Growth Quagmire

 

In the dynamic world of multi-unit, multi-brand restaurant operations, growth often presents a unique set of challenges. While operating diverse brands under one umbrella can diversify risk and tap into various market segments, it also introduces complexities that can stymie growth. Steven Johnson the Grocerant Guru®, at Tacoma, WA based Foodservice Solutions® wants to delve into why these individual brands struggle and explore five strategic fixes to steer them toward growth.

Growth Struggles: The Quagmire

1.       Brand Identity Dilution: Managing multiple brands can lead to a dilution of each brand's unique identity. When marketing resources are spread thin, it’s challenging to maintain a distinct and compelling narrative for each brand.

2.       Operational Inefficiencies: Diverse brands often mean diverse operational needs. This can lead to inefficiencies and inconsistencies in service quality, supply chain management, and customer experience.

3.       Resource Allocation: Allocating resources—financial, human, and technological—across multiple brands can be a juggling act. Some brands may feel underfunded or neglected, leading to uneven growth.

4.       Market Cannibalization: Without careful market segmentation and positioning, brands under the same umbrella can end up competing against each other, cannibalizing market share instead of expanding it.

5.       Customer Confusion: Multiple brands can confuse customers if the differences between them aren’t clear. This confusion can dilute customer loyalty and impact overall brand strength.

Five Fixes to Foster Growth

1.       Strengthen Brand Identity:

o    Develop a clear and compelling brand story for each brand. Invest in targeted marketing campaigns that highlight what makes each brand unique.

o    Regularly engage with customers through personalized and authentic communication, using social media, loyalty programs, and email marketing.

2.       Streamline Operations:

o    Implement standardized operating procedures where possible to reduce complexity and increase efficiency.

o    Invest in technology solutions that offer integrated management across brands, ensuring consistency and quality.

3.       Optimize Resource Allocation:

o    Use data-driven decision-making to allocate resources effectively. Analyze each brand's performance metrics to identify where investment is most needed.

o    Consider shared services for non-core functions such as HR, finance, and IT to reduce costs and improve efficiency.

4.       Strategic Market Positioning:

o    Conduct thorough market research to identify and segment target audiences for each brand. Ensure that each brand has a distinct value proposition that appeals to its specific market segment.

o    Develop complementary offerings across brands to avoid direct competition and enhance customer value.

5.       Enhance Customer Clarity:

o    Clearly communicate the unique selling points of each brand through distinct branding elements like logos, color schemes, and messaging.

o    Offer cross-brand loyalty programs that allow customers to experience the variety without confusion, reinforcing brand identities while promoting cross-brand engagement.

Think About This:

Navigating the growth quagmire for multi-unit, multi-brand restaurant operators requires a strategic approach that balances individual brand needs with overarching operational efficiency. By strengthening brand identities, streamlining operations, optimizing resource allocation, strategically positioning in the market, and enhancing customer clarity, these operators can turn their growth challenges into opportunities. As the Grocerant Guru®, I see immense potential for those who can master these complexities and create a cohesive yet diverse brand portfolio that delights customers and drives sustainable growth.

Success does leave clues. One clue that time and time again continues to resurface is “the consumer is dynamic not static”.  Regular readers of this blog know that is the common refrain of Steven Johnson, Grocerant Guru® at Tacoma, WA based Foodservice Solutions®.  Our Grocerant Guru® can help your company edify your brand with relevance.  Call 253-759-7869 for more information. 

Cost of Food Forcing Consumers to Switch Brands

 

With inflation rising at 4.9% which is less than a year ago, all the while, food prices still rose 7.7% between April 2022 and April 2023 consumers don’t like it and are migrating to other food brands or restaurants and that shift aka trial 61.3 percent of time leads to customer migration according to Steven Johnson Grocerant Guru® at Tacoma, WA based Foodservice Solutions®. Are you selling what you always sold and selling it the same way? How is that working for you?

Now according to industry expert Darren Seifer, food & beverage industry analyst at Circana, “Adding to the impact of food inflation are economic factors like increased consumer credit debt, depletion of savings built during the pandemic, and cutbacks on pandemic-related government credits and subsidies. To manage their food spending, U.S. consumers are finding ways to manage higher food costs by shopping at value retailers, spending less on non-food purchases, switching to store brands and canceling committed expenses, like subscriptions.”

Seifer continued, “Consumers need to eat no matter what and will adapt to higher food costs by finding lower cost options or cutting back on discretionary spending, and that’s what we’re seeing play out now,”.

He went on to say, “Seventy-eight percent of consumers plan to or already have cut overall spending on products due to inflation, and 75% of those report that their reason for cutting spending is higher food costs, according to Circana. The low-hanging fruit for spending cutbacks is to decrease purchases of discretionary retail spending and cancel subscriptions.”

Now then, in April, general merchandise retail sales revenue fell 7% compared to April 2022, and unit sales fell 8%. Over a quarter of consumers said they’ve canceled subscriptions over the past few months, and 66% of those cancelations were for entertainment subscriptions, like streaming services.

The team at Circana reported, “Regarding food and beverage sales in April, revenue increased by 6%, but unit sales fell by 2%. Eighty-six percent of annual eating occasions are sourced from grocers and other retail outlets. This supports data that reflects that at-home spending remains a more significant portion, 60%, of food and beverage sales. The April CPI shows at-home food prices increased by 7.1%. To mitigate higher food prices at retail, 49% of consumers said they shop at food stores that offer lower prices, 42% reported they buy more store brand/private-label food and beverages, and 41% said they buy essential items only and forego impulse purchases.

Food away from home grew 8.6% in April compared to a year ago. In the 12 months ending March 2023, foodservice costs were 4.3 times more than the cost of at-home eating occasions, per Circana. The average cost of an at-home meal purchased from retail was $1.78, and $7.48 away from home. This doesn’t mean that consumers didn’t make use of foodservice. Coming off four consecutive quarters without growth, visits to restaurants and commercial foodservice outlets in the quarter ending March grew by 1% compared to a year ago. Still, the use of foodservice shifted to less expensive dayparts, like breakfast and morning snack or quick-service restaurants rather than full-service restaurants.

“Food manufacturers, foodservice operators and retailers can meet the needs of price-sensitive consumers by understanding the best pricing and promotional strategies,” said Seifer. “Also, consumers have returned to their pre-pandemic routines, and aligning with their shifting needs will increase the value of their offering.” It’s time to try to do things with a little more relevance, or a twist. Youi just might consider doing somethings a bit differently.

Invite Foodservice Solutions® to complete a Grocerant ScoreCard, or for product positioning or placement assistance, or call our Grocerant Guru®.  Since 1991 Foodservice Solutions® of Tacoma, WA has been the global leader in the Grocerant niche. Contact: Steve@FoodserviceSolutions.us or 253-759-7869

Looking for US Foodservice Investments or Opportunity

Foodservice Solutions® team has fielded more inquires for food industry investment opportunity in January 2017 than any January since 1991.  Regular readers of this blog know we regularly work with clients outside of the United States that are looking for quality United States food industry investments.

The United States has always been a melting pot of inclusion.  A place where opportunity is available for every one of every culture; balancing people, vision, profits, with hard work, and intellectual capital.  Are you looking for long term stable food industry focused investments? Give Foodservice Solutions® a try.

Our services include identifying, quantifying, qualifying, opportunity, and conducing due diligence for your prospective investments.  We can conduct due diligence anywhere you like in the United States, we specialize in the food space. 

Our clients can invest in, buy, and have the team at Tacoma, WA based Foodservice Solutions® manage operations from chains to single units we specialize in food focused companies the ilk of Restaurants, C-stores, Hotels, Grocery Stores, Orchard’s, Wineries, Foodservice Equipment, any regional /national branded retailers, or buildings including strip centers, technology food focused star-ups, mobile marketing companies, Gas Stations, Fuel Companies, and food magazines.

Global chaos and uncertainty are the new reality and undercurrent driving the increase in clients seeking investments in the United States. The US is not immune to that uncertainty either however the size of the US marketplace provides sustainable strategic advantages over the long term.

So let’s cut to the chase of course there is a fee for our service.  That fee is for up-front due diligence.  That fee is required whether you invest / purchase or not, the fee is for the process of due diligence.  Questions and inquires can be emailed directly too:  Steve@FoodserviceSolutions.us .   Success does leave clues if you are looking remember since 1991 www.FoodserviceSolutions.us has been the leader within the Grocerant niche.