Archive for September, 2010

New Competition From the Take-Out Counter

September 10, 2010

They say a little competition never hurt anyone, but the competition from supermarkets for breakfast and lunch crowds is cause for concern for some restaurateurs. It turns out that in addition to competing with each other, fast casual places throughout the country now have to compete with fresh breakfast and lunch available as a take-out option at many local supermarkets.

Are Supermarkets Really a Threat?

While these options will never replace the experience of sitting down for a fine dining experience while meeting a client, they are creating problems for restaurants that rely on the “grab a quick lunch and head back to the office” crowd.

In the NPD Group Restaurant Analyst Bonnie Riggs is warning in a recent report that restaurateurs will need to “take notice” of this new form of competition if they are to continue to survive and thrive. A big part of the problem, she explains, has been the recent recession.

Restaurants and the Recession

Many consumers became more price conscious and realized that eating lunch from the take-out counter at their desks was a cheaper option than hitting up a real restaurant.  And the threat isn’t just from major supermarkets, says industry commentator Peter Romeo.

According to Romeo, even the small corner grocery has started getting in on the act, offering fresh, ready-to-eat food for workers to take back to the office.  He also says that the stigma that once surrounded those who brought lunch in from the take -ut counter has started to dissipate as the quality of the food has gotten better and better.

How Restaurants can Fight Back Against Supermarket Take-Out Meals

While the new competition can make life difficult for some restaurants, restaurateurs are finding ways to compete effectively. The problem doesn’t really have an effect on higher end white tablecloth restaurants or fast food establishments.  “Fast casual,” however, has come under a bit of stress.

Fast casual restaurants are competing effectively against this new phenomenon by stressing what it is they do best – they offer customers more than just food. They offer an experience, a chance to get out and forget the office for a few minutes during their lunch break. This is invaluable to many workers–something that no supermarket has yet to find a way to compete with.

Technology Lovers Also Love Eating Out, New Study Shows

September 8, 2010

It turns out that all those people plugging in their laptops at your restaurant may be good for business after all. A new study from Technomic shows that people who embrace technology more readily, including such products as smart phones, the new Apple iPad, and social media networks such as Facebook and Twitter, are prime customers for restaurants.

What Makes High-Tech Individuals Great Guests?

Technomic surveyed about 1,000 people and found that just 8 percent of them could be called “innovators” or those who actually help create the new technologies.  Another 15 percent considered themselves “early adopters,” or people who bought into new technology almost as soon as it arrived on the market.

The important thing for restaurateurs, however, was that the study found that both these groups of people tended to eat out more than the general public.

Statistics on Innovators and Early Adopters

The survey showed that fully 83 percent of those who are classified as “innovators” are regular restaurant eaters and 72 percent of “early adopters” made the same claim. Just 65 percent of the remaining people in the survey said they eat out at least once a week.

Even more telling was that 53 percent of innovators and 35 percent early adopters told Technomic that they eat out at fast casual restaurants regularly–as opposed to just 20 percent of the general population.

But What Does it Mean for the Food Service Industry?

This means that restaurateurs need to start embracing new technology by offering various platforms to interface with their customers, including Facebook pages (Starbucks now has 10 million fans for their Facebook page) and Twitter updates.

Offering well-thought-out online ordering options may also help restaurateurs tap into this emerging market of technology buffs. Such innovations have been led by, of all places, the pizza industry, where major players such as Pizza Hut and Domino’s have made it easy to place an order online.

Restaurateurs eager to tap into this new group of consumers–“The Millenials” or “Generation Y”– can do so by making their restaurants as tech friendly as possible, offering free wifi, and laptop plugs for customers to charge their equipment.

More on Breakfast Dining

September 6, 2010

We’ve written about the new breakfast craze before and now it’s time to revisit the subject. New information has emerged on exactly how some restaurateurs are pulling ahead of the competition in order to grab more of the breakfast eat out market.

Coupons and WiFi

We recently wrote about the question of Kindles and computers in restaurants. One thing that we didn’t mention in that article is that some restaurants are deliberately installing WiFi. They’re not just trying to attract customers, but also to keep people lingering in the hope that they will continue to order more food as they sit in front of their screens.

This is especially important in attracting the breakfast crowd as this group of people often drops by quickly and then races out the door. By allowing this market segment to get something done while they eat, these restaurants could be encouraging more customers who will stay longer (and hopefully eat more).

In addition to free WiFi services, many restaurateurs are tempting breakfast diners into their establishments by offering discounts and coupons. These coupons include those sent directly to cell phones or e-mail so as to grab customers’ attention quickly and early.

McDonald’s, Starbucks and Dunkin Donuts are Still the Favorites

A recent survey of consumers has shown however that smaller restaurateurs have an uphill battle ahead of them in getting people in the door. Fully 46% of those who said they had eaten out for breakfast mentioned McDonalds as their first choice, with Dunkin’ Donuts and Starbucks each tying for second with 19%. However, that doesn’t mean that smaller players can’t get in one the game, or that diners cannot be lured away from the more traditional breakfast venues.

What do all three of these heavy-hitting franchises offer that even the smallest independent can match? Free WiFi and occasional coupons that entice people to sit down and stay a while.

The New Mantra for Fast Food: Go Abroad Young Man (or Woman)

September 4, 2010

The traditional advice that was given in the 19th and early 20th centuries to any American wishing to make a fortune was to “go west young man.” Today, the advice to American fast food chains is to simply “go abroad.”

More and more American restaurant owners are finding the home market saturated and are moving to expand their offers overseas. Their hopes are that their fare may be considered somewhat exotic, or that it may cash in on America’s broad cultural appeal to foreign nations.

Two American Fast Food Sandwich Favorites

Among those making aggressive efforts to expand their operations overseas are the Quiznos chain and the Wendy’s/Arby’s Group. Other American restaurants that are focusing their expansion efforts overseas include smaller companies such as Freshli and The Great Steak and Potato Co.

Wendy’s/Arby’s created a separate entity—Wendy’s/Arby’s International—in order to compete overseas.  They have signed an agreement with the Wenrus Restaurant Group who will help them open a chain of 180 outlets featuring both brands throughout the Russian Federation.

The Fast Food Market in Russia

By contrast, McDonald’s by just finished their 20th year as a Russian restaurant. and they now boast 240 outlets across the country. Burger also recently expanded into Russia, opening their first restaurant in January of this year.

In addition to the Russian Federation deal, Wendy’s/Arby’s International just announced that they had signed a separate deal to open 24 outlets in Trinidad and Tobago, along with eight other locations in the Caribbean.

Steak and Potatoes

In other news, Great Steak and Potato Co., a smaller concern which serves cheesesteak sandwiches at their 161 American and Kuwaiti restaurants, announced they had signed a deal with Pastelerias Servicos Corporativos, SA de CV to create additional restaurants for the chain in Mexico. The company is set to open 30 restaurants across Mexico over the next five years.

Finally, Freshli, a small chain with 20 locations in the United States and Canada, has announced that they will be opening four new locations in Vienna.

Quiznos Back in the Sub Business Instead of the Litigation Business

September 2, 2010

The drama is finally over for Quiznos and now they can get back to doing what they should be doing – selling sandwiches to hungry customers instead of squabbling with current and former franchise owners (as they have been for some time now).

Franchisees vs. Quiznos: The Lawsuit

The complaints against Quiznos were numerous and far reaching. In a nutshell, the franchise owners claimed that corporate was treating them in an unfair manner, requiring them to overpay on supplies and franchise fees. In addition, Quiznos franchise owners were asked to pay extra for marketing that they claimed should have been included in the basic franchise fees.

The settlement brings to a close four separate class action law suits and will cost the company a total of $206 million. In exchange for the settlement, which a federal judge has recently ruled is acceptable, Quiznos will admit no fault in any of the charges against them. However, the company has agreed to several make changes in addition to the cash payments that they have agreed to make to the plaintiffs.

Positive Changes Ahead for Quiznos Franchise Owners

Among the changes being made are discounts for the franchise owners, debt forgiveness for some outstanding debt that the franchise owners claimed they should never have been required to pay, and the appointment by the parent company of an independent franchisee association.

This more than anything was considered a victory by the plaintiffs who charged that corporate headquarters had failed to heed their complaints in the first place. Their contention is that having a completely independent franchisee association will protect the owners from future problems with the chain.

In addition to these, the settlement requires the Quiznos chain to:

•    Offer new annual pricing. This is intended to help the franchisees to have a better handle on their positions in the market.
•    Create a program for the franchise owners to receive waivers of the maximum price ceilings, where appropriate for their markets

Finally: Resolution!

The settlement had been entered in court nearly a year ago in November, 2009, but was held up because a lone franchisee had been unwilling to accept the settlement. The judge finally brushed aside the complaints, saying that the owner in question had the right to back out of the settlement but chose not to do so, instead signing on and then protesting.