27 February

February 2015 Newsletter

Synergy Restaurant Consultants | Blog, newsletters

Greetings!

This month the weather in many parts of the country, including the Midwest and the Northeast, has been tough on restaurant sales. Chicago and Boston, in particular, have had record-breaking “snow events,” with school closings and mass-transit headaches adding to the usual travail of winter weather.

Don’t let that put a damper on the fact that the National Restaurant Association is forecasting the strongest rate of growth in three years for 2015—good news indeed for the beleaguered restaurant industry and its up-and-down economic recovery. If anything, the bad-weather blip illustrates the essential challenge of a service industry like hospitality.

More than ever, survival and success depends on taking business away from the other guys on the block, at a time when the competition itself is increasing to include not only direct competitors but also vibrant new sectors like chef-driven fast-casual restaurants and restaurant-quality retail foodservice. (And you can be sure we’ll be writing about both of these in future newsletters.)

So it’s important to get it right the first time, not just the food quality, service and décor, but also the overall experience you’re delivering to guests. You can read about in the story “What Do Consumers Want? Everything.”
To your success,

Sign up for our Email Newsletter

What Do Customers Want? Everything.

By The Synergy Team

A lot of ink has been given lately to consumer psychographics and what customers want when they spend their money. For the restaurant industry, it all comes back to the growing notion that American society has shifted toward an Experience Economy—and that in order to be successful, businesses must orchestrate memorable events for their customers, and that memory itself becomes the product. Food, service and ambience aren’t enough anymore; in fact, they’ve become a given, without which a restaurateur doesn’t have a prayer of keeping the doors open.

As author Joseph Pine points out in a recent TED talk about “What Customers Want,” goods and services have already been commoditized, and the next step is customizing services to a particular individual or group of individuals, in order to create an experience. And that means extreme sensitivity to who your customers are and what they might want at any given time.

Back in the June Synergy newsletter, our marketing and branding expert Karen Brennan wrote about “Winning in the Experience Economy,” with some great examples of restaurant brands that had succeeded in creating experiences for customers, not just a place to grab a meal. Not surprisingly, the list included places like Starbucks and Chipotle, with their robust component of customer engagement, concept evolution, and proven customer loyalty.

According to the NPD Group, the coming year will underscore just how crucial it is to understand changing customer dynamics. The Millennial generation is emerging as a dominant force in the restaurant industry, with all that implies for high-energy environments, and food and service concepts that encourage sharing and socializing. At the same time, don’t count the long-ascendant Baby Boomers out, with their desire for comfort, personal attention and a warm welcome.

Sandelman Associates, in fact, in a recent Tracks newsletter, reminds us that “Millennials are less than half the story” when it comes to traffic at both QSR and fast casual venues; “matures” aged 35-64, with their own set of demands, are also frequent visitors.

And in the meantime, the counterbalancing drivers of futuristic high-tech (such as mobile marketing and online ordering systems) and high-touch authenticity—including the demand for ethnic foods, local sourcing and sustainable business practices—will only accelerate. And both age groups—younger diners and matures—are demanding technology and ideology from their favorite restaurants.

As part of its January 2015 issue of “FoodBytes,” Datassential singled out “Big Changes” as the top trend to watch this year. It’s telling that while many annual lists of trend projections focus on the next big sauce or the latest wave of comfort foods, Datassential earmarked disruption of the norm, in particular the kind of progressive segment blurring that is forcing older, established players to react more forcefully to precocious new concepts.

Even the way that consumers are using restaurants is evolving, as the mix between dine-in and takeout, and breakfast/lunch/dinner/snacks changes, according to Technomic’s MarketBriefing. A deeper dive into need-states revealed how different needs and emotions correlate with specific dayparts. For instance, convenience is associated with weekday breakfast and weeknight dinner, while the weekend is time for relaxing, celebrating, and getting together with family and friends.

With so many options for convenience dining, just to cite one need-state—from the ability to order restaurant food on a smartphone to the availability of restaurant-quality food at a supermarket—consumers have multiple ways to meet their every need. And this, of course, blurs the segments all the more.

All of this has implications for the way operators design, develop, staff, promote and run their businesses. The marketplace is changing, and so are consumers. Operators will have to ride along.


Groupon and Living Social: A Death Sentence for Restaurants?

By Emily Callaghan, Communications & Marketing

 

We’ve all seen them: $20 vouchers that will score the buyer $50 to spend. Or a bargain-priced $35 for a four-course meal costing nonsubscribers double that amount. While the guest might get a bargain, are the Groupons and LivingSocials of the world a death sentence for restaurants?

Let’s consider which restaurants participate in such promotions. Since restaurants receive a poor return on every deal after paying service fees—typically earning around 25% on every dollar—a busy, successful establishment isn’t likely to offer these deals. Those that do choose to ride the deal train are dearly hoping one or both of two things: a) a final bill higher than the voucher’s redemption value (due perhaps to liquor sales or other add-ons), or other party members paying full price; and/or b) repeat business. But if there aren’t enough butts in seats—a typical reason to use a deal site to drive guest traffic—it may continue to stay that way. Here’s why:

1. There are Bigger Issues

“Unless the restaurant is in a poor location or is new and hasn’t been able to get the word out, an empty restaurant equals problems,” notes Dean Small, founder of Synergy Restaurant Consultants. “Some critical component, be it the food, service, atmosphere, pricing—or all four—is not quite right.” By driving guests to the restaurant without solving an internal issue, the guest experience will likely suffer, and those diners will doubtfully return and potentially voice their negative meal on sites like Yelp or TripAdvisor.

What’s more, with many deal sites’ group-buying approach, requiring a minimum number of purchases for the deal to be “on,” restaurants must anticipate an unnatural increase in volume: a slew of guests that their kitchen and waitstaff may not be prepared to accommodate.

2. It Cheapens the Brand

Just as many retailers and successful brands vow to never discount their product, fearing it will alter consumer perception, restaurants must be wary of the psychological effect. Though discounting negatively impacts some brands and industries more than others, the value attached to a meal experience can drastically decrease when a guest pays 50% of the asking price—or less. Suddenly, that $70 tasting menu only feels worth what the guest paid: $35

3. Full price is for Fools

“Think of brands like Bed, Bath & Beyond,” says Warren Ellish, Synergy strategic partner and founder of Ellish Marketing Group. “They’re constantly sending out coupons, so if you’re the unlucky shopper that shows up without one, you feel like a fool.” If the restaurant is discounted on a regular basis, people may not be willing to pay full price, fearing that they’re being overcharged.

In the end, each restaurant operation is unique, with deal sites like Groupon and LivingSocial making more sense for some than others. The bottom line? A shortage of diners is likely due to issues that operators are too entrenched in to notice; issues that a discount promotion won’t solve.

If you need to get getting more guests in your doors, Synergy Restaurant Consultants can help.


Bowling for Dollars

By Joan Lang, Editorial Director

 

Acai Bowl from Backyard Bowls | Photo credit: Flickr user Robert License CC by 2.0
Acai Bowl from Backyard Bowls | Photo: Flickr user Robert License CC by 2.0

Bowls as a menu platform have been coming and going for a while now, as QSRs in particular experimented with all-in-one vehicles for portable meals. This time around, however, the idea of building an entire meal—protein, produce, carbohydrates and flavor systems—into something other than a sandwich is really taking hold.

Bowls are a great solution to multiple menuing and operational challenges. In addition to being portable, they’re customizable—just look at what the industry has done with salad bars and toss-to-order salad concepts like Salata and Tossed. They’re infinitely versatile, adaptable to anything from Asian noodle dishes to DIY fro-yo sundaes… and then the guest can do it again with different ingredients tomorrow. Not coincidentally, the bowl strategy also allows for the appearance of infinite variety with a finite list of SKUs. Just look at the number of different kinds of options Freshii is able to menu with its ingredients.

From the guest’s perspective, bowls have the healthy halo of being appropriate for ingredients like fresh vegetables and whole grains, and they’re fun and tasty, allowing for a little bit of every flavor, texture and even temperature in every bite.

And now, with the ascendancy of new fast-casual concepts deigned to allow guests to custom-tailor their own meal experience, bowls are suddenly everywhere.

Backyard Bowls promises “Better Life Through Better Food” in the distinctive form of acai bowls, build-your-own meal platforms based on the trendy Brazilian berry (pronounced ah-sah-EE) which is widely reputed to be an anti-aging superfood. Bowls start with a smoothie-like acai puree, variously topped with granola, yogurt, fresh fruit or vegetables, and honey, to which guests can add a la carte enhancements such as bee pollen, flax seeds and spirulina. There are also breakfast bowls based on oatmeal, quinoa and muesli, as well as “real food” smoothies. With three units in the Santa Barbara area and born of the surfer culture there, the concept is tailor-made for today’s generation of diners who may eschew dairy, meat and gluten—standard ingredients include nut milks and protein-rich hemp, but no animal products save for organic yogurt and honey/pollen (for which agave can be substituted).

• Made-to-order sushi and a trio of bowl platforms are the customizable elements of Tokyo Joe’s, with 30 locations in Arizona and Colorado. Guests can choose such Soup Noodle and Signature bowls as Classic Ramen and Green Curry Shrimp, or they can order an entirely bespoke bowl from four categories of ingredients: protein, veggies, carb (or double veggies), and sauce; the latter includes such options as teriyaki, peanut and oyako (light broth). Appetizers, salads, and the distinctive Joe’s Tea Bar round out the ordering options.

• Bowl of Heaven, which recently inked a 30-unit development deal, also does the acai, smoothie, and juice bar approach, offering dessert-like combinations of ingredients like fruit, granola, honey, peanut butter and chocolate almond milk. Beneath it all is the signature MAQ 7 juice, described as a “synergistic blend of nature’s most exotic and powerful antioxidant rich super fruits and berries”—seven of them altogether. In addition to 12 brick-and-mortar locations, most in Southern California, there’s also a food truck.

• In Toledo, OH, Balance Grille offers a mix-and-match menu of pan-Asian items promising attributes like Decadence, Fit Fare and Spicy, with selections that further break out into snacks like nachos and edamame, slider-like buns, and eight different bowls. These include the Thai Guy (“Our spin on a classic Thai peanut sauce is served with Carrots, Peapods, Fresno Peppers, and Fresh Sprouts”), Wiseman (“Customer favorite! A simple szechuan sauce served with Broccoli, Carrots, Corn, Fresh Sprouts, and Kale”) and Nuts 4 Pao (“A spicy kung-pao sauce served simply with Scallions, Roasted Peanuts, and Fresno Chili Peppers”), as well as the customer’s choice Build-a-Bowl.

• Strictly speaking, Asian Box may feature, well, boxes—but the concept is all about the custom build that you get with a bowl. In fact, this is the prototype for the DIY meal, in which guests choose a noodle, salad or rice base; a protein; and such toppings and sauces as steamed vegetables, chopped peanuts, and tamarind vinaigrette that are delivered all boxed up for convenient travel and enough shelf-life to get to home or office without compromising the quality.

• Yamas Mediterranean Grill in the D.C. area is a full-menu Mediterranean restaurant specializing in mezze and sandwiches, but it also has a custom rice bowl option as part of a multi-format Build Your Own offering that also includes pitas, wraps and salads. The build starts with a basmati and orzo blend that can be topped with items like gyros, chicken or pork souvlaki, or falafel, plus vegetables, cheese, hummus, yogurt, and other flavor boosters.

• Full-service restaurants are also embracing the bowl. HG Sply Co. in Dallas serves a paleo-style menu of specialties like steak, chicken, fish and fresh, nutritious vegetables and protein-laced salads, but its most unusual feature are the bowls. There are menued combinations such as The Free-Range (chicken, sweet potatoes hash and broccoli & bacon) and the Build Your Own Bowl section, which allows customers to put together an all-in-one feast of two vegetable base items (such as toasted quinoa pilaf and black beans) a meat (Mexican pulled pork, seared ahi tuna) and a topping (guacamole, walnut-arugula pesto). This, with or without the addition of two eggs, makes a meal designed to fuel the day.

Of course, any operation with a somewhat flexible kitchen package and labor pool can offer a bowl platform, and indeed El Pollo Loco has done LTO Pollo Bowls, the B. Good burger chain offers four Kale & Quinoa Bowls, Panera has its new Asian-accented Broth Bowls, and while Yum Brand’s new Banh Shop entry is mostly about the Vietnamese sandwiches, it also features a trip of Wok’d Bowls on its menu.

As with so many new restaurant ideas, it will be up to those operators who execute well and attract a loyal following to ensure their own success in the long term.

Need help executing your new restaurant idea? Contact Synergy Restaurant Consultants.


Tip of the Month

For more information on “The Why? Behind the Dine,” download the free report prepared by Technomic and Acosta Sales & Marketing by registering with Acosta here. Included is information on meal choices; share of spend for food at-home and away-from-home; and more on The Intricate Path to the Plate. And to read about the seven things diners look for when choosing a restaurant, read this article from the National Restaurant Association.

Blog, newsletters