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Better Sales Don’t Change Your Restaurant’s New Reality

Better Sales Dont Change Your Restaurants New RealityRestaurants take heart: change seems to be coming.  After two years of declining growth and slowing spending, it appears that consumers are finally going to spend more this holiday season, not less.

A flock of reports have been circulating in the retail and food service worlds pointing to positive growth on the horizon for both industries.  As the Thanksgiving holiday approached last week, many restaurateurs held their breath, waiting to see if the news was good or too good to be true.  Would shoppers be hungry on Black Friday?  Would they even bother to come out at all?

After hopeful reports by many in the food service industry that we had reached the bottom, and the only way out was up, the Friday after Thanksgiving seemed like the best time to find out if it was really true.  And initial reports have been very positive.  There were no major jumps in consumer spending over the Thanksgiving holiday, but spending was definitely up, which is better than the alternative.  Consumer watchers are fairly certain the trend will continue into the Christmas holiday, which is another shred of good news for restaurants.

Even as spending rises, however, value remains the watchword of the day.  That means consumer spending habits have fundamentally changed.  No one is interested in anything besides a deal, and if your restaurant wants to cash in on this little holiday surge, you can bet that the best way is through continuing the aggressive discounting that has become the norm across the food service industry.

There has been grumbling by many in the food service industry that price reductions dilute brand value, but the reality is a bankrupt brand is the one that has no value.  If you don’t find ways to provide value to your customer, you’re going to find yourself bankrupt.

Granted, aggressive pricing is only one way to provide value to your customer.  Superior quality food, sustainable operating practices, top notch service, and a unique concept are all ways to add value to your brand.  Effectively marketing the things your restaurant does well is another thing you must do well to survive in this new reality.

So take heart: the worst may very well be behind us.  But watch out: you better be ready to do what you do even better in the world of heightened customer expectations.

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5 Responses to Better Sales Don’t Change Your Restaurant’s New Reality

  1. Lisa December 2, 2009 at 7:54 am #

    There is a good point made here. Retail stores have great deals this time of year (although, not as many as last year) and it’s enticing to save money at the table too! Simple deals like “Three Courses for $20″ sounds a lot better than a $8 to-go sandwich.

    • Greg McGuire December 2, 2009 at 9:58 am #

      Chili’s has been killing it on that 3 courses for $20 deal as well, despite concerns when it first came out that such a bargain basement deal was unsustainable.

  2. Don Moyer December 2, 2009 at 1:13 pm #

    I’m often surprised that more restaurants don’t offer a few very enticing deals when they normally have the room to lower prices. The reason retail stores can offer such great deals because there is a lot of margin, especially in clothing. I would think that $1.50 worth of ingredients that is turned into a $10 salad could be put on sale every now and then. It seems like Chili’s has the right idea.

  3. Gina December 2, 2009 at 11:42 pm #

    I wonder what the ultimate fall out will be for business in general with all industries deep cutting their pricing or “value packaging” on a regular basis. Do you really think consumers, who now expect a “deal” everywhere they go, will be willing to pay full price for anything anymore? ”

    That little bump you might get by discounting or value packaging over the holidays will not be sustainable once the holiday bills come due. And can you pay your bills with a decrease in profits over the holidays once the season is over and the slow season kicks in?

    Ultimately, working leaner without sacrificing food quality and service while marketing the heck out of your business is the only way I can see of making it to the other side of this recession. There are other ways to offer value to your customers without cutting pricing.

    • Greg McGuire December 3, 2009 at 8:46 am #

      Thanks for the comments Gina. I agree with everything you said. Check out the post I put up the next day after this one, in which I discuss how to add value for your customers without cutting prices further: How To Give Customers Value

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