Why is Restaurant Traffic Declining?
It all comes down to value. Consumer expectations have changed. Foodservice has begun to experience a new pain that is requiring current and detailed analytics, and then a team approach to solutions. For many operators, sales continue to be above previous years, but profitability is down. Much of this has come from declining consumer traffic. This article expands on why traffic is down, what consumers are looking for, and how operators can make the necessary adjustments to eliminate this pressure. The thought that a consumer would trade down stems from the fact they are not getting the value for the price. People look at value in many different ways, but in order for them to remain loyal to a brand, operators must be able to meet or exceed their customers’ expectations. It is not necessarily about the price itself. Below we look at how consumers define value and how operators can satisfy consumer demands. Seven ways consumers are looking at value and how operators are approaching this dilemma:
- Food Quality
- Portion Size
- Pricing-Discounting
- Service
- Experience
- Cutting Corners
- Consistent Execution
Customers Return to Restaurants, But They Use Them Differently
A new Deloitte survey found that restaurant dining has returned to pre-pandemic levels. The future of the restaurant industry will be shaped by consumer demand for convenience and frictionless digital experiences. That takeaway was a key point in “The Future of Restaurants: The New Normal and Beyond,” a new survey from Deloitte released Wednesday. Restaurant dining has rebounded to pre-pandemic levels, Deloitte reported, with 55% of the 750 survey respondents saying they are dining out as much or more than they did pre-COVID. But some behavior has shifted.
- 37% of dine-in guests and 40% of takeout customers are looking for less expensive options along with promotions and discounts.
- Higher quality products are less of a driver than value, with quality resonating with only 19% of dine-in guests and 15% of takeout. But 60% of consumers said they are unlikely to accept lesser quality when ordering takeout food.
- 13% of restaurant customers use third-party apps or websites to order delivery or takeout, but 40% prefer to order through the restaurant’s own app or website. Deloitte’s conclusion is that this demonstrates the importance of a restaurant owning its digital experience.
- A strong majority of consumers—87%—believe a delivery fee of $5 or less is fair for the convenience it brings.
- More than half of respondents (52%) indicated they would order from a ghost kitchen that offers takeout and delivery only.
Diners Are Losing Patience With Restaurant Service
There’s no quick fix. Americans are becoming fed up with lousy service while eating out. Many restaurants face a continued drought of experienced workers and are still working to get new hires up to speed. At the same time, customers are giving restaurants less leeway than earlier in the pandemic recovery, chefs and restaurant operators say, as customers remain peeved about rising prices and pandemic-era surcharges that linger on bills. To address the complaints, a number of restaurant companies say they are working to improve service through more hands-on training of workers and better technologies to speed up meals. At Union Square Hospitality Group, which runs New York City restaurants such as Union Square Cafe and Gramercy Tavern, the company now uses hand-held devices that allow servers to spend more time with customers and less in front of ordering systems. “You’re investing in technology that will allow their jobs to become easier,” said Chip Wade, the company’s chief executive, in a session at The Wall Street Journal Global Food Forum on Wednesday. In Sedona, Ariz., the longtime restaurateur and chef Lisa Dahl is taking a different approach to her restaurants, which include the Latin-inspired Mariposa. She is changing how frequently she rotates staff between positions, aiming to build up greater expertise and avoid situations where a worker is a “jack of all trades and a master of none,” she said.
Is Restaurant Tipping Getting Out of Hand?
American diners may be reaching a tipping point. Not long ago, a restaurant tip was a 15 percent gratuity for the server, calculated on a napkin and scrawled on a credit-card receipt at the end of a sit-down meal. The server didn’t know the sum until the diner had departed. In 2023, tipping, or choosing not to, has expanded into a near-universal ritual of food service. Customers at a humble takeout joint might face a choice among three double-digit gratuities on a touch screen, under the penetrating gaze of a cashier. Two societal forces, the COVID-19 pandemic and touch-screen point-of-sale tablets, have conspired to transform American tipping culture. The gratuity has colonized the food-service universe, from fast-food restaurants to food trucks to farmers markets. “My family went strawberry picking last weekend,” said Ted Rossman, a senior industry analyst at Bankrate.com. “I made the reservation. They asked me for a tip. I asked my wife, ‘What are we tipping for?’” Before the pandemic, most Americans understood the restaurant tip as an elastic reward system for servers, a labor force whose salaries depend on them. Outside of table-service restaurants, gratuities were largely confined to tip jars. Then, touch screens arrived and changed the tipping dynamic. Counter-service restaurants could present customers with a default tip: 18, 20 or even 25 percent. The easiest response was to pay it. “They present you with three options, and the middle option is always most appealing,” said Deidre Popovich, an associate professor of marketing at Texas Tech University. “I can just click the default and then move on with my life.”
A Twist to Points-Based Loyalty, Restaurant Brands Seek to ‘Surprise and Delight
Operators seek to drive excitement around the possibility of free rewards. Loyalty programs that include the concept of “surprise and delight”— rewards that are not directly tied to specific spending or points goals — are helping some restaurant operators drive excitement around their brands. These types of rewards appear in many forms in the industry and are often offered alongside traditional points-based loyalty programs as added benefits for customers. Surprise-and-delight loyalty programs also exist on their own as the primary rewards strategy for some brands, such as Jimmy John’s and The Cheesecake Factory. “When you’re going to get a coupon or a special reward that you don’t know about, and you don’t necessarily know how you’re going to get up to that point, it could be exciting for the consumer,” said Brad Jashinsky, director analyst at research and consulting firm Gartner. “But it’s also limiting to a certain point, because you’re not necessarily going to get a consumer to do that extra visit because they’re close to getting a reward.” In fact, Gartner research found that consumers prefer loyalty programs that allow them to accumulate points. The 2022 Gartner Consumer Priorities Survey, conducted across a range of industries, found that redeemable points were the top loyalty reward favored by consumers, cited by 50% of respondents. These structured programs are easy for consumers to understand and track, Jashinsky said. “I think that’s the one danger of restaurants that are only offering surprise and delight,” he said. “It could be hard to get that kind of engagement when a customer doesn’t really know what to expect.”
The Power of Storytelling
Secrets to content marketing for franchise restaurants. Franchise brands have many goals in common: enter a new market; attract new franchisees, employees and loyal customers; increase average unit volume (AUV); and accelerate franchise expansion strategies. Yet, there is nothing common about your specific brand. Every brand has a story, and that’s what makes customers, employees and franchisees take notice, choose you and keep coming back. Let’s talk about how to tell your story. You have multiple audiences, and they are all looking for very different information. Before you can start crafting your content, you need to understand exactly who you’re trying to reach. Customers are interested in learning about the experience they can expect when visiting your restaurant. As you think about this audience, break it down further into the demographics of your customer base, recognizing there might be different audiences depending on the day of the week or time of day, as well as the ideal locations for your restaurants (i.e., business park or neighborhood shopping plaza). Are you trying to reach the after-work dinner crowd, leisurely weekend brunch groups, or families looking to celebrate a special occasion? Think about each of your customer audiences and what they’re seeking in their dining experience. Consider prospective employees and their interest in learning what it’s like to work for your company and what opportunities are available for their growth and advancement. Potential franchisees are interested in your track record and the expected return on their investment, as well as the expertise of your team in growing the business and how you partner with franchisees and support their success. Depending on the size and stage of your company, you may have other audiences to consider, such as investors.
TikTok Craze Has People Stealing Dishes and Glasses from Restaurants
It’s revealing a long history of sticky-fingered diners. Sticky-fingered diners have a long history of swiping irresistible, and often collectible, tableware from restaurants but a TikTok trend is bringing the petty crimes to light. “You’re coming home with me,” TikTok creator and YouTuber Chris Klemens can be heard saying in a 2021 video where he reaches his hand out to grab a tiny three-tine fork, known as a ‘threek,’ in what appears to be a busy restaurant. Klemens did not respond to Insider’s request for comment. “I am home and the fork is secured,” the caption reads. The audio quickly became popular. There are around 150,000 videos online that use Klemen’s original audio, many of which show restaurant patrons swiping cute cocktail glasses, a fancy pizza server, or unique utensils from restaurants while lip-syncing “You’re coming home with me.” There’s no way to tell whether the posters are in fact stealing these items or just kidding (in some videos, in fact, posters clarify that they did not steal the items). Restaurant owners told Insider that customers who deploy the five-finger discount have been around for as long as they can remember but TikTok has given people an opportunity to share their exploits. ‘I’m sure this TikTok trend will inspire more cutlery kleptos and glassware thieves,” Andrew Rigie, the executive director of the New York City Hospitality Alliance, told Insider.
Did You Know?
Chick-fil-A ranked No. 1 for customer satisfaction for the 9th straight year. Chick-fil-A has once again topped the American Customer Satisfaction Index, but its gap over No. 2 is the smallest it’s been since 2015. Chick-fil-A once again outpaced every other restaurant brand in this year’s American Customer Satisfaction Index, released today. The perennial favorite for nine years running scored an 85 on the index, up 2% from last year’s ranking and higher than every other quick-service and full-service brand on the list.
Employee Tip
Compelling restaurant consumers through sensory connections. How, exactly, do our five senses stimulate our desire for quick-service eateries, and affect our emotions as a result? When consumers are immersed in the restaurant experience, sensory stimulations are impacted, sometimes without even realizing it. In the order of how we’d experience these stimuli (sight, smell, sound, touch, and finally taste), concepts and strategies are outlined that can lead to winning solutions for quick-service restaurants.
Bielat Santore & Company – Restaurant Industry Alert
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