Restaurant Trade Area Research

When it flashed across the newswires and TV headlines - most readers were stunned - suddenly, a restaurant icon was `shutting its doors’ - Bennigan’s. No, this was not your lowly newbie who was closing after 50 stores; this was one with hundreds and a history. And, if you have been under a rock for the last 18 hours - the news is that the company owned stores are closing. You will find the link below.

Is there any marketing trade area information in all this? Perhaps.

For example, if a company unit was near a franchisee restaurant - some of that company unit customer base may become part of the large  `occasional’ users customer base of any given unit. Certainly billboard ads in the vicinity of the closed store with an `open stores location’ could be effective - or - targeting the likely home zipcode of the closed store with direct mail. (Perhaps corporate will share such info if they have done the appropriate research at the store level in the past.)

Finally, not ALL of the corporate units would have been `bad’ sales - aggressive restaurateurs could open franchisee units and fill in the void in valid market areas. That said, suddenly the market has many more empty restaurants waiting for a new concept.

Today’s Links

Bennigan’s

http://www.marketwatch.com/news/story/bennigans-franchising-company-lp-steak/story.aspx?guid=%7BE5283276-F8A1-44C4-8D83-EB9857B37D11%7D&dist=hppr   Franchisee’s to remain open.

Bennigan’s Wake

http://www.chicagotribune.com/business/chi-wed-bennigans-closing-jul30,0,6474654.story Longer, more in-depth read on the industry.

Denny’s Second Quarter Numbers

http://www.marketwatch.com/news/story/dennys-corporation-reports-results-second/story.aspx?guid=%7B2B41FDD2-AB42-402E-BCB2-42880BCED8F6%7D&dist=hppr Hard to put up `up’ numbers these days.

Banning Fast Food Drive Thru Windows

http://network.nationalpost.com/np/blogs/posted/archive/2008/07/29/better-watch-your-butts-in-calgary.aspx Beware of this sentiment.

Cheesy Macaroni Bites

http://laist.com/2008/07/29/simply_wrong_food_jack_in_the_boxs_1.php New Product of Jack In The Box; interesting product picture.

This blog is saddened to report the continuation of government restrictions into how you run your business and where you run your business. In this instance, the `how’ would be the government demand to use or not use a particular cooking oil (regardless as to the outcome of the final product - including taste - one of the most important attributes to your customer base) and the `where’ is the new restrictions on where fast food restaurants CAN’T be developed. Can fast food brands eventually be expected to fund the `alternative’ restaurants too? After-all, what’s to prevent a city council on deciding that FF restaurants would be `better’ for the community if they weren’t open 7 days a week?

Today’s Links

California Outlaws Trans-fats and Bans Fast Food Outlets in Defined Area

http://www.telegraph.co.uk/news/worldnews/northamerica/usa/2461615/Los-Angeles-bans-new-fast-food-outlets-and-California-outlaws-trans-fats.html 

It was funny seeing the 800 plus article titles on this one — only a few positioned the move on trans-fats with a positive headline title. One can only imagine what may happen if politicians turn their interest againist the industry.

Fast Food Goes To The Movies

http://www.sfgate.com/cgi-bin/blogs/sfgate/detail?blogid=26&entry_id=28501 

Quick read on the movie tie-in’s currently going on. Specifically tells what each restaurant chain DID on their end of the relationship (T-Shirts for workers, special cups, etc.)

Crowd MOBS Taco Bell Opening

http://www.rutlandherald.com/apps/pbcs.dll/article?AID=/20080724/NEWS01/807240408/1002/NEWS01  

This is a wonderful article you don’t want to miss about how folks LOVE getting their fast food. A great counter balance to the desire to BAN fast food elsewhere. ———- One comment however, always be ready for an amazing first opening day crowd and have your operations in order. Remember, one bad experience can turn 15% against a second visit.

Majority Stake in Applebee’s Franchisee Sold

http://www.nrn.com/breakingNews.aspx?id=356918&menu_id=1368

I was involved with Applebee’s findings when they had one unit on Memorial Drive in Atlanta and W.R. Grace was the interested party. Want to have a researcher like that - give me a shout - find my number on my squidoo site www.squidoo.com/tradeaareasurveys .

 11.23 For Lunch At Steak and Shake

http://www.indystar.com/apps/pbcs.dll/article?AID=/20080721/BUSINESS09/807210323/1109/BUSINESS09

Yet, somehow, that is not the ultimate problem? Article covers the challenges to the new company leader.

In my decades of doing Trade Area Research, specializing in `attrition estimates’, — I’ve often done projects that involved market expansion considering new store locations that involved one franchisee vs another. Usually, these project originated with companies in which I was the National Supplier of this service (two national fast food chains) but occasionally not (being known by different franchisee’s in the same market who hired me as an arbitrator/fact finder).

Most national fast food brands have a policy concerning `trade area infringment’ - with the establishment of `what level of attrition’ is `acceptable’ with new store development (those `acceptable’ dollars leaving YOUR pocket and bottom line). And, most fast food brands have a policy of `who pays’ for such research too. Want to find out that type of info? — Then send me an e-mail at southernsurveys@aol.com - describe your situation and I will tell you more specifics (please include a contact phone number).

Today’s Restaurant Links

Brown Bagging at Lunch Hurting Restaurant Sales

http://www.qsrmagazine.com/articles/news/story.phtml?id=6996 —A fantastic, research supported, four minute read with many insights - but, perhaps an exaggerated title about brown baggers as the `increase’ is barely measurable (35 increasing to 38 times (a year?)) and is probably within the range of `plus or minus’ for the two compared surveys. Here’s a quote from the article :

“There are a number of factors adversely affecting the mid-day meal business at restaurants, and brown-bagging is one of them,” says Harry Balzer, vice president, The NPD Group, and author of Eating Patterns in America. “Certainly the economy, growing unemployment, the erosion of disposable personal income, slow-down in number of women entering the workforce, and more telecommuting options are also influencing consumers’ lunchtime behaviors

Frankly, to me, the decrease of sales is likely the erosion of disposable income and telecommuting - brown bagging is the result as opposed to a cause. Indeed, for consumers living in under-penetrated fast food markets (one FF several miles away) the increase in GAS prices is probably a factor too. After all, the 3.99 combo is REALLY 5.99 if the roundtrip is 10 miles and you get 20 miles a gallon.

The reality of smaller trade areas is increasing - and - not just because of the gas price — I will talk more about that in future posts.

KFC’s Vegetarian Sandwich - Isn’t

http://consumerist.com/5027777/kfcs-vegetarian-sandwich-isnt-stop-kidding-yourself-that-fast-food-restaurants-have-vegetarian-options  I almost had to laugh at this article due to the HARD vegetarian position. Indeed, make sure to read the comments as they are most insightful.

Drive-Thru Reseach Study 2007

http://www.qsrmagazine.com/reports/drive-thru_time_study/  This is a MUST read about how different fast food brands are dealing with Drive-thru business - vital, of course, to nearly all FF and the bottom line. This is not a short read but worth it. Here’s a sample table:

Having done scores and scores of projects in fast food restaurants over decades - I’ve often advised clients to do `operation ratings’ on our questionnaires. This might involve asking respondents (your customers) to rate things like speed of service, cleanliness of the unit, value for the money and so forth. But, the one attribute that when `crossed’ with frequency of usage that stands out is `friendliness of the employees’.

It seems that in this day and age - despite being told by the media we are off in our own world and don’t want to be bothered - that customers react to friendliness MOST. Since the person who interacts with the customer is the main person to project this image — it is imperative to make sure that person has a friendly engaging voice (at the drive thru speaker) and in-person on the cash register - that the person is one of your BEST employees for eye contact and smiling. (Again, a good clear voice is needed).

In future posts, I’ll tell you specific figures for how often a customer uses a restaurant when they rate friendliness an 8 rather than a 10 — once you know, you will act quickly. Don’t wait - do it today.

Today’s Links

NYC Chains Have to Post Calorie Counts

http://www.bloggernews.net/116809   Yep, right next to the product on the menu, in the same font, must be the calorie count. Logic would suggest that some shift in food orders will be the result of such laws. It would also suggest some erosion of usage perhaps by less committed users of your brand.

Calorie Counts on Menu Boards

http://www.chattershmatter.com/2008/07/20/nyc-fast-food-chains-add-calory-counts-to-menu-boards/  Same story, slightly different slant.

Law to Restrict Location of Fast Food Restaurants in LA

http://thepacker.com/icms/_dtaa2/content/wrapper.asp?alink=2008-16452-821.asp&stype=produceconcepts&fb= In South-Central LA - to improve health of youth. Here the hope is that by restricting Fast Food Brands that `other healthier’ choices will open shop.

Based on today’s links - Government involvement in FF seems just another example of our BIG government.

Of course, one of the main reasons to do on-site research at your restaurant is when you decide to build a new unit in your same market. Obviously, you don’t want to build a new location in a likely spot that is within your existing stores main trade area. This is when you need to conduct a Trade Area Survey at your restaurant that includes a `cannibalization question’ for your customer base.

The exact wording of  the cannibalization question is of vital importance to the accuracy of the data your interviewer will gather (or is this going to be YOU speaking with your customers). Since I have written questionnaires that were used in 100’s of cannibalization studies - I know that answer for you. You can find more at www.squidoo.com/tradeareasurveys .

Today’s Link

Starbucks Introduces New Drinks

http://www.slashfood.com/2008/07/15/starbucks-new-vivanno-nourishing-blend/?icid=200100397×1205764383x1200288208

New `food’ choices (or a new menu) are real reasons for returning to a restaurant - another reason to introduce a new product is to jump on a trend or stifle a competitor. Seems to fit with the `new’ Starbucks of 2008.

I once pulled into a fast food restaurant in Tennessee off I-75, and, was going thru the drive-thru, when, after the speaker, I encountered a smiling young lady doing `surveys’. Being a marketing researcher who has conducted thousands of similar surveys and also who has trained hundreds to do the same - this was the big moment - a validation of what I did. But, after my answer to the first question (the coming from question) I was asked to move ahead to the window (my answer was that I had traveled from KY on a vacation). Knowing that they would want more info than that - I asked what the survey was about - she indicated it was about a new store that would be north of this one, also on a I-75 exit (I would have passed this first). I said, don’t you want to ask me more questions - “no, I can fill it out myself”.

Unfortunately, it’s very unlikely this interviewer was doing her job and certainly there were more questions about an attrition situation — which is of vital importance to the operator of the exisiting unit in question. And, while this level of `research’ is not usual, and also is WORTH NOTHING, it often represents a fair portion of the data (using interviewers not trained or supervised upon beginning real interviewing). As you know, as an owner of a restaurant — millions may ride on the outcome of `cannibalization’ surveys - if done at multiple units in a market.

Having the highest level of data collection is of utmost importance to expansion within a trade market - a service I provide - read more about trade area surveys at www.squidoo.com/tradeareasurveys .

Today’s Links

1. http://money.cnn.com/news/newsfeeds/articles/apwire/e6edbb1117015e037cd739ba89205815.htm

DineEquity Inc releases 2Q sales for same stores - shows IHOP up, Applebee’s down. Quick read.

2.

http://www.bizjournals.com/triangle/stories/2008/06/23/daily27.html

Olive Garden has same store increase, not as good for others in company.

3. http://www.streetinsider.com/IPOs/Dave+&+Busters+Holdings+(DANB)+Files+$170M+IPO/3816999.html

Dave and Busters files IPO. We have D&B in Atlanta - the evolution of this concept has been well executed. The TV ads of the combo food and fun price were well positioned. FUN sells.

4 - LINK OF THE DAY — “TGI FRIDAY’S” Research study. - http://www.chainleader.com/article/CA6578744.html?industryid=47553

Wonderful research study showing the benefits of research and customer satisfaction - and, what attributes to focus on to achieve that result. Free food, of course - but much more. A great marketing article.

Hello store owners and corporate restaurant folk - welcome to the Saturday edition of Restaurant Trade Area Research - the restaurant blog of Rick Phillips  - a market researcher with over three decades of real fast food customer research at the street level (in the stores).

Today’s topic - drive thru operations. —- Over the years, many attributes have been associated with drivers/customers experiences while waiting to purchase your product without leaving their comfort cage (the car). But only one attribute will almost immediately turn away a customer if they have any alternatives for food - the long line before the speaker. Only with previous good experiences with the restaurant at the drive thru (with long lines), will maintain the customer in line for today.

With the drive thru often contributing over 50% in sales - this is not a lecture on the need for speed. And, indeed, many issues related to drive-thru’s will be explored in future postings. So, what this post is imploring in all operators minds is the new reality of 4.00 gas - to the point that the operator realizes that `while idling’ the customer is probably having this thought `what a waste’ (of money, more than time).

Marginal customers to the fast food customer base may be weakened more than usual by drive thru delays - especially those in SUV’s (if you get what I mean). So, this is more a time than ever to get your best crew on the window - don’t idle your drive-thru traffic away.

Now, onto today’s links.

Today’s Restaurant links (July 12th 2008)

Second Q Wendy’s Sales Up

Link - http://www.bizjournals.com/wichita/stories/2008/07/07/daily32.html

Up over 1% at franchisee locations - up at company stores too - after a down first Q.      RTAR - rating - 8 - Being from Ohio many years ago; yeah for Wendy’s. Perhaps the `choice’ of sides attribute helps.

Ruby Tuesday’s Same Store Sales Off for 4th Q

Down over 5% at both company and franchised units this Q. That said, many indicators look good according to the two minute article with quotes from the founder. >>>>>>>>>> RTAR  rating - 5 - No one likes sales to fall significantly at a signature national restaurant (could it be those who loved the German Potato Salad?) - that said, much is sited in the article of importance including the satisfaction scores. So; is it a shrinking total trade area? (Trade area research on stores with prior existing studies done at the store level reveals this information. Indeed, this is the exact information I’ve given to clients on repeats within their markets.) Or, just the competitiveness for the discretionary dollar?

Green Fast Food - Really Here or a Green Dream

Link: http://www.socialfunds.com/news/article.cgi/2529.html  This article is about a 4 minute read. It rehashs alot of the grist of what the environmenalists want out of companies and fast food restaurants inparticular. Styrofoam is the big meanie. However, several hundred have committed to a more aggressive program - this could be for you if you live in a highly committed `green community’ and could aid store usage by limited few - hippy, yuppie, and student oriented trade areas come to mind.     >>>>>>>> RTAR rating - 6 - Just make sure you aren’t the LAST to do this if you are in one of the above stated communities. But, wait, do `environmentalists’ comprise a worthwhile worry or significant market for FF restaurants - not yet. Lastly, however, remember the Karma factor.

Hello to everyone in the restaurant industry, welcome to my new blog, my name is Rick Phillips. In this blog, I intend to draw on over 30 years of direct, in the field, restaurant research that I have conducted for numerous restaurant chains. Some of this research was qualitative - focus groups or one-on-one research; most of it was quantitative - done on-site with 10’s of thousands of restaurant customers over three decades.

Ideally, this blog will speak to the restaurant owner who wants to read frequently about store operations, marketing issues and promoting ones business. It will often feature links to daily stories in the restaurant field - spiked  with  my commentary and analysis. I hope you enjoy the daily links - such as these three today July 10th 2008:

Denny’s Responds To America’s Demand For Breakfast

Link - http://www.marketwatch.com/news/story/dennys-responds-americas-demand-breakfast/story.aspx?guid=%7B0911022C-AD79-4B44-8B1C-7376F7D1A870%7D&dist=hppr  Denny’s introduces  the `Denny’s Dome’ to facilitate To Go business. The `Denny’s Dome’ is an innovative, multi-level and task, carrying device that seems to handle any type of full sized breakfast - and keeps it fresh and hot up to a half-hour.You have to see the picture of this multi-leveled  see-thru container - which even has a method for keeping foods crispy (read to find out the science).  >>>>>>>>>>>> RATR Rating - 9 - Interestingly, in the 1980’s I conducted one-on-one research for several package good companies; even in the 80’s `tupperware’ type of containers could store foods at the same temperture they were first stored at  for HOURS. The funny part was research respondents were worried about `bacteria’ forming if the food was kept hot for an extended period — but - at 1/2 hour - that should not be a perception problem. Indeed, this is a great idea and seems like the top of the line product/device that `to-go’ food customers may have been waiting for. It also could increase the size of the stores trade area since the product would remain warm to take home to nearly any local area. For example, it could permit the `drive thru the area’  customer traffic to `stop in and pick up’ a breakfast before driving home 8 miles away - such as having a store by a Home Depot or other big box store. Additionally, in these cash strapped times, it allows for the customer to avoid the tip, possibly increasing customer frequency (viewed as a surcharge these days?) - that said, many tip at the counter on the pick-up orders.

Lack of Advertising May Have Doomed Fast Food Restaurant

Link - http://www.beaumontenterprise.com/business/local/lack_of_advertising_may_have_shut_down_fast-food_restaurant_07-08-2008_18_17_04.html Article indicates that having a poor location, and difficult obstructions to your restaurant - along with having an unfamiliar product (being the only franchisee in a market) AND a lack of advertising and community invovlement - MIGHT have been reasons for a Krystal’s demise.  >>>>>>>>>>>> RATR Rating - 7 - One of the things this blog will do is feature stories about the success or lack of success of various fast food restaurants - chains or individual stores. Indeed, my experience in seeing first hand hundreds of fast food outlets - both high and low sales units - provides me an overview of characteristics important to customers. This article, which could be written about many thousands of restaurants nationwide, is an example. One finding I’ve had for example is the near absolute neccessity of making flow of customers onto the restaurant property mindless - hurdles should NEVER have to be jumped - especially if you value your female customer base. The article implies that perhaps the demograhics weren’t the exact fit either - while demographic `fits’ might be nice - the size of home and worker bases within specific milage is more important to success. Often your demos for a restaurant won’t fit the area - but - your restaurant does fine by dominating within your subgrouping (besting your competitive environment). Finally, of course, being NEW or ALONE in a market (brandwise) does usually require some outreach or education of your market about your restaurant - and probably does require even some advertising. But, what RTAR suggests is that when one’s unit is in sales trouble (as opposed to a unit that never has good sales, after initial opening month) is to look first at the competitive environment (new restaurants) and then at operations (frequently some daypart - ie: employee group - is the problem; this will first show up slowly as only the Heaviest store user is aware of the operation problem - they are forgiving as they love the product or the location - but they will reduce frequency. If the problem, daypart related, continues - a unit can be in for a big decline suddenly after 6 weeks or so.) Finally, it’s unlikely your store will go out of business do to a lack of `community involvement’ - but - obviously, a banner at the local softball field - can be worth it’s weight in G.

Fast Food Veggie and Fruit Carts

Link - http://www.redorbit.com/news/business/1468962/call_for_fastfood_fruit_and_veg_carts/ >>>>>>>

RATR  Rating - 6 - Story is about a call in England to favor push carts that feature fruits and veggies so that folks get their needed five servings daily. —– Could the `States’ be next? Could real food be the next `brand extension’ for FF restaurants?

Thanks so much for reading this first blog post - To find out more about my services - please use my blogroll to my other `restaurant sites’. Please bookmark this site, I will try to post 3 or 4 times a week the type of stories owners of restaurants want to read.