Posts Tagged ‘economy’

Methods of Communicating With and Luring In Cautious Customers

May 3, 2013

Our economy over the last several years has created a lot of fear and anxiety for both customers and businesses alike. That said, as a restaurant owner it’s important not to cut back on your marketing budget, but rather to simply shift the types of marketing messages you are putting out. Doing so will not only help your retain your customers when the economy shifts, but can actually go a long way toward branding yourself as a positive, responsible establishment which people truly enjoy patronizing.

Shift Your Marketing Message to Reflect the Minds of Your Customers

Even after the recession lifts, customers are unlikely to return to the willy-nilly spending habits of years gone past. That said, a reduced price on your menu items is far from the only (or even the best) way to catch your customers’ attention. In fact, you need to be careful about marketing based on discounted price points, or you may forever relegate your establishment to being associated with ‘cheap’.

A smarter way of marketing to your more cautious customer base happens when you not only acknowledge their mindset, but also give messages that resonate with them in a positive way. Rather than making your message just about price (which can inadvertently remind customers of how hard up they feel), it’s smarter to emphasize value.

For example, you could draw their attention to menu items which could serve as two meals allowing them the convenience of not having to deal with tomorrow’s meal prep. Or, you could emphasize the opportunity to spend more quality time with the family by eating out, rather than having to waste that time on shopping, cooking, and cleaning.

Emphasize Responsibility in Your Marketing Messages

Given our economic circumstances, the word ‘responsibility’ is particular resonate with the average consumer. Gone are the days of gaudy extravagances and in their place consumers want less excess and more discipline and sustainability from both themselves and the businesses they patronize.

When you consider a ‘marketplace of responsibility’, picture upscale styles and experiences delivered with moderation and class. Going ‘local’ is one way to demonstrate your commitment to responsible practices, and is something that many consumers consider when making their choices about where to eat and shop.

Get Creative with Your Marketing Appeal

There are numerous ways that you can creatively appeal to your newly cautious consumers. Aside from simply providing positive (don’t remind them of the bad times), responsible and value-based marketing messages, you can also appeal to your customers’ need to have some control in terms of both finances and food choices. Letting customers order the portion sizes they want, being flexible about what they can substitute, and showing them how to find better value in your menu all serve to give customers feelings of comfort and control and end up creating loyalty to your establishment.

The take home message here is that while today’s economic situation does dictate some changes in behavior, the opportunity to attract more cautious consumers still exists through the appeal of value, experience, and quality.

Adjusting Your Menu Prices to Reflect Rising Costs: Is There a “Sweet Spot”?

December 17, 2012

According to the National Restaurant Association, menu prices are projected to inflate this year by 2.7% across the industry due to the increasing costs of wholesale foods. Since price is by far the most important factor determining a restaurant’s traffic, this creates a challenge for restaurateurs. They have to increase their prices to cover their costs, but to do so across the board would be suicide.

Instead, restaurant owners need to be selective about their price increases and take steps to identify where the ‘sweet spot’ lies in terms of a customer’s sense of value about buying a meal at their establishments.

 So What’s the Menu Price ‘Sweet Spot’?

In an effort to determine what price points would bring consumers back to restaurants, the NPD Group recently conducted a study examining the relationship between a customer’s level of satisfaction and the amount of money they spent on their check. The measures of satisfaction were affordability, good value for the money, and intent to return to the establishment again. The results of the study were revealing, showing that there are, in fact, some ‘sweet spots’ in the price points where customers feel the most satisfied.

For the fast casual dining sector, this sweet spot sits at about $9-11 for a dinner time meal. Surprisingly, the results for regular casual dining establishments were more mixed. The study showed that while over 35% of consumers were paying more than $17 per dinner, their results showed that they would be more ‘satisfied’ with the value of the meal if it were between $10-13.

This difference between where a customer would feel satisfied with the value of their meal versus what they are actually paying may be one of the factors contributing to the struggle for some restaurants in the casual dining sector to stay afloat.

Rising Costs and a Recession have Created a Different Type of Consumer

During the course of 2011, the national inflation rate was 3.2%, bringing costs up for everyone. Consumers were hit even harder by inflation of the cost of groceries which rose by 4.8% during that same period.  Ironically, the gap between the amount of inflation in menu prices versus that of groceries actually works somewhat in the favor of the restaurant industry.  After seeing the price of things in the grocery stores, customers aren’t quite as surprised or turned off by seeing an increase in menu prices.

What’s more, people remain willing to pay for the increased value of the restaurant experience over that of a grocery store; they’re just far more sensitive to the perceived value of the service they’re getting.

One-Size-Fits All Pricing Is No Longer Viable

The take-home point here is the importance of understanding where your consumers’ mindsets lie in regards to price vs. value and to provide opportunities for your customers to hit their pricing sweet spots.  Customers are still willing to pay more for a restaurant experience, but it is now more critical than ever that they feel that they have gotten a good value for their money.

The challenge is understanding which price points resonate with your consumer base and then featuring promotions and options within that range. Work over your menu list, discount items whose price may not have increased much, and provide options such as portion sizes to help your customers manage their checks.

Focusing on finding your customer’s ‘sweet spots’ makes them feel like they are receiving a valuable service for their money and goes a long way toward ensuring their loyalty toward your establishment.

Creative Strategies to Entice Diners and Build Loyalty during a Recession

December 14, 2012

The recession has changed the face of the restaurant industry, and those in the business are now looking for ways to retain and build their consumer base. Consumers are still eating out, but their needs and values have changed and it’s important as a restaurant owner to recognize that shift and adapt accordingly.

What’s important now is to provide a unique and exceptional service that customers value and to focus on strategies that build their loyalty toward your business.

Gimmicks to Bring People in and Give them a Rewarding Experience

As you know, customers love to feel that they are receiving great value by patronizing your business and there are several promotional gimmicks you can use to bring them in. One way to do this is to run differing discount promotions regularly throughout the week so that people have a reason to put you on their calendar.

For example, you might offer a “buy one-get one” deal on Wednesdays, a free scoop of ice cream to kids who come in with their families during lunch hour on Sundays, or perhaps a “date night” special on Friday’s where couples get half off a nice bottle of wine when they buy a meal.

Other promotional gimmicks that work well include loyalty reward programs, small contests that people can play while they eat, and a free dinner roll or chips to start the meal, to name a few. Your success with these types of promotions is limited only by your creativity and they can be a fun and rewarding tool to create a strong customer case.

Atmosphere and Experience is Everything

When people dine out, they’re doing so because they are seeking an experience. Creating an enticing atmosphere in an establishment entails more than simply having a little mood lighting, though, of course, that helps too.

It also includes factors such as the hospitality and warmth of your staff, the quality of your food, the timeliness with which it was delivered, how the layout of your establishment facilitates or discourages privacy and conversation, as well as whether or not you offer entertainment.

Fortunately, all of those points are easy to accommodate with relatively little cost. Investment in training and retaining quality staff and adapting your business to facilitate a pleasing dining experience goes a long way toward creating and retaining loyal customers.

Target Social Trends and Appeal to Customer’s Sense of Well-Being

One of the smartest ways to set your restaurant above the crowd is to demonstrate its commitment to the health and well-being of the community it serves. This can be done by offering health conscious or organic menu items, buying produce that is sustainably or locally produced, or even by giving a small percentage of a customer’s bill to a charitable cause.

Because today’s consumers dine out with more discrimination, appealing to their sense of health and well-being is a powerful way to reach out and claim their attention. Everyone loves to feel like they are supporting a good cause, and businesses that build their reputation around these types of ethical cornerstones stand out and make people take notice while creating a fiercely loyal customer base.

With the costs of operation rising and customer’s budgets tightening, survival of your restaurant depends on your ability to creatively adapt and respond to today’s situation. Focus on innovative ways to build customer loyalty by offering a valuable service experience is the key.

3 Restaurant Franchises Expecting Growth During a Weak Economy

March 19, 2012

It’s a safe bet to say that there aren’t many people that aren’t concerned about the current state of the economy. The nationwide unemployment rate still lingers at 8.3 percent and the U.S. economy is saturated in debt. Though all of us are feeling the pain of a weak economy, restaurant owners are plagued with addressing this issue on a daily basis.


Fortunately, hope is on the horizon. A recent boom in up-and-coming restaurant franchises addresses many of the concerns that Americans face in their dining choices. Three of the top franchise executives talked about their strategies to expand and at the same time cut costs.


Bill Spae of Cici’s Pizza


CiCi’s Pizza has over 584 units. They are expecting to open 30 this year and have signed agreements with 100 other franchisees. Their strategy to get investors? They are offering an internal funding program.


By setting aside $5 million dollars to investors that are carefully chosen through a strict criteria, they have set up a program that works for all involved. The banks are willing to loan the additional money with a large amount down, CiCi’s gets a low risk investment, and the investor is able to get the backing that is especially hard in this economy.


Mike Liautaud of Milio’s Sandwich System


Liautaud has plans for 200 new locations with 40 units in operation. Liautaud experienced a reprieve in franchising last year, but he refined his system, weeded out unprofitable locations and strategies, and targeted investors that weren’t doing well in the stock market.


Jason Chodash of Tossed System


Tossed System is a new franchise, but there are big plans in the works. Chodash now has six units with two more expected to open in 2012. Although this doesn’t seem like much, over 69 additional units are slated to open.


They feature customizable salads, as well as sandwiches, soups and wraps. All salads are freshly prepared in front of you. His franchise strategy is considered cutting edge with a flexible footprint that works in almost any location.



The Dollar is Falling and the Bottom Could Drop Out of Many Industries

November 9, 2010

The U.S. dollar has been falling drastically in value when compared to a number of other currencies in world markets. We’ve touched on it before, but now it’s time to discuss this in detail and how it could affect the restaurant industry.

What Happened

We all know about the recent (and many say current) recession, dubbed the “Great Recession.” Even now, unemployment is hovering in the range of 10% and economists say that the true number is much higher since so many people have given up looking for work or are working in part time jobs when they would really like to be working full time.

In order to help the economy, the U.S. Treasury has been printing money like it’sgoing out of style tomorrow! The Fed (Federal Reserve – the National Bank of the United States) has kept interest rates artificially low in order to stimulate demand.

All these efforts however have caused a drastic reduction in the value of the dollar when compared to many world currencies. The Euro, the Yen, the British Pound – they’re all relatively strong against the dollar.

That’s why so many exporters are having a field day selling to customers overseas. Plus, tourism is up from these countries as well sine our country is a relative bargain for vacationers.

The Bad News

So what could be bad about this you ask? Lots. First of all, a number of countries are now working to weaken their own currencies in order to keep their own exports flowing to the United States. China for example has been keeping the yuan at an artificially low value compared to the dollar in order to keep their exports cheap.

However, as more and more countries try to compete and see who can make their currencies weak compared to the dollar, it becomes in the words of one economist, “a race to the bottom.” At that point, global economic malaise begins to take over. This will have a direct effect on our industry as fewer and fewer people are able to afford to eat out.


The other side of this is that the Fed’s current monetary policy may lead to increased levels of inflation, since money is cheap and demand begins to outstrip demand. This would further push down the fund people have for eating out.

All in all, it’s a scary cat and mouse game at times is very reminiscent of the Great Depression. (But keep in mind there are many factors which mean we’re nowhere near a real depression!) And we don’t even have prohibition to get people into the speakeasies this time. Give them good food instead!

Go Green and Attract More Dining Customers in a Tough Economy

May 30, 2010

Restaurateurs throughout the nation are trying to figure out the best methods for attracting customers in a tough economy. As customers begin to return to their pre-recession entertainment and dining pleasures, restaurant owners are eager to understand this new market and the best way to build a thriving business that will last into the future.

NRA Research Supports Going Green
Restaurateurs aren’t the only ones curious about the spending habits of the recently bruised consumer. Research has been conducted by various agencies throughout the industry including the National Restaurant Association (NRA).

The NRA’s 2007 survey found that 62% of respondents weigh a restaurant’s environmental friendliness when choosing a place to dine. A full 44% of respondents in 2009 stated that they consider the restaurants’ energy and water conservation practices when choosing an eating establishment.

Even more telling was the Yankelovich data which revealed that an environmentally friendly, or green, restaurant is one which is likely to motivate them to dine there even during this tough economy.

Taking Steps towards Clearly Defined Goals
Some restaurateurs have steadily made changes over the years in order to build a more environmentally friendly establishment. Such restaurateurs are in a good position to attract the savvy “green” consumer; however be aware that some consumers are leery of being misled. It’s important that you carefully consider how you present the green efforts being made by the establishment.

Other restaurant owners have yet to create comprehensive environmental strategy. For these owners, creating clearly defined goals and taking steps to reach them is a good starting place. According to TerraChoice Environmental Marketing, consumers will reward these efforts by supporting the establishment.

Third Party Certification
One way to gain credibility with customers is to invest in third-party certification. Organizations like Green Seal and the Green Restaurant Association provide environmental assessments and consulting to help the restaurateur create an environmentally sustainable establishment.