Restaurant Trade Area Research

21. November 2011

The `New Again’ (Aware Non-Users) `Fast Food Mystery Shop’

One of the ideas that I’ve personally stressed over the years to clients is to look at their customer base in two manners, trade area and customer frequency segments (heavy users, etc.). And, one of those categories is the VERY occasional user - especially customers that either live in the trade area or frequently use other retail nearbyand therefore pass by said FF brand often. These aware non users (lets say haven’t been to the restaurant in over a year or so) often were users at a higher frequency `back in the day’ (or may have fallen off the usage chart since the new normal). Some FF brands may even consider this market segment to be in the trier-rejector category; often seeing no reason to even market to them.

(Which is silly. Getting those early in life visits to RE-visit is perhaps JUST as easy as getting REAL new users.)

I bring all this up to clarify what my usage of these restaurant brands were before a `re-introductionary’ visit recently (for blogging purposes and for a rotation of tastes, a phrase often heard in FF customer research, especially with male customers). Anyway, here’s a review of a recent visit to Schlotzsky’s,  and Krystal’s.

(These visits happened in summer 2011.)

The Krystal’s my daughter and I visited for a weekday lunch (during her summer teacher break) was located on Canton Rd. (Marietta) - something I drive by anyday I go inside the perimeter or even down to a near `farmers market’ type location further `down’ (south) on Canton. Despite going past the restaurant several hundred times at least since my last visit ,this was our/my first visit inside in several years;(and perhaps we had used the drive thru once in that time period). All this low frequency despite loving the mouthfeel of the Krystal Steamed Burger for decades now. LOW frequency does not mean rejection of brand something FF marketers should remember.

First, upon entry, the Reader Board seemed VERY confusing to look at, and was very strange in that NO combo’s were priced at the 3.00 dollar(s) level at all. Indeed, it was hard to even find the prices for ANY individual products, and they only appeared shuffled over to the side and corner last read (lower right for me).

In fact, after consideration, the combo meals almost seemed designed for parties of two (which isn’t necessarily a bad idea) almost — I’m speaking of combos with 4 and 5 hamburgers being featured.

I saw the Angus Offerings - but internally I think of only the key signature product, the Krystal.(Back of mind thinks, steamed angus?)

We entered about 11:35 AM or so, with the counter having no customers and the order taker cleaning or straightening the front lobbyish area. She gave a nice greeting saying it would be a moment and then apologized again for the 10 second delay, if that, when she was at the register. She was friendly when we told her we needed to look the menu over, and that it had been a bit of time since our last visit.

Eventually, I got 2 Cheese Krystals, fries, and a sweet tea. (Certainly, there should be a combo for this, right? But wasn’t.) - And, my daughter got a sampler of corn dog, Chile dog, mini chicken and Krystal (I think) - this came in a combo with fries and a drink. After paying @12 bucks total, we were given the `number flag’ that have become famous at the `fast casual’ segment - signifying that our food is cooked fresh (or fresher) and that `service’ is being given as we no longer have to `lobby wait’ as customers did in the `old’ pre-new normal days of commerce.

We entered the carpeted eating area - which consisted of 6 or so parties, including at least one person using the free trendy `fast casual mandatory’ Wi-fi service offered. We waited under 3 minutes for our meal delivery.

Which turned out to be wrong (daughters order, not the sampler mix ordered). She kept the right stuff and waited for I believe a chili dog to arrive a minute or two later.

We began eating.

We both thought the fries were VERY good - meaty, yet crispy and hot. Restaurant quality. All the `junk’ food for both of us was satisfying with a great remembering of `the tastes of Krystals’ for myself. My sweet tea was very good also.

The ambiance was okay and had fun images/pictures on the wall, mainly depicting a younger set of folks than was represented in the restaurant ultimately. (Surprisingly, the customer mix was nearly 50/50 sex, white/black race mix, parties of two/one about equal, strong majority over 35). I liked the music although the format now escapes me.

VERDICT - A bit high priced for the products offered IMO - causing a slight value perception problem, especially considering `old’ perceptions of pricing would be of the `cheaper days’ and cheap  Bag of Krystal’s promotions. However, the price was not totally out of line or a usage killer. 

Indeed, the pricing, for the  service of table food delivery, and wi-fi, - is NOT out of line. That said, my perception of a direct competitor of Krystal would be Checkers, not fast casual. (And, IMO, Checkers offers much more value perception.) Certainly, the ambiance isn’t of the level of an Atlanta Bread Company, or even a Boston Market or Zaxby’s, or most of the re-done McDonald’s interiors. And, the fast casuals simply have a higher quality perception with their food and health levels than any of the FF’s (except for Subway IMO, and now, perhaps, with Wendy’s regaining it a bit).

So, would the `new again’ visit be enough to have me stop for a lunch on the way to the farmers market now for an inside meal, or, for breakfast on the way to I-75? (Wrong side of street for easy evening access.)

Not really for me. A low end wi-fi with a non female ambiance FF restaurant, even with great mouthfeel, trying to be a fast casual restaurant - isn’t quite compelling enough. (It’s now been 4 months and I haven’t returned or used the drive-thru.) That said, perhaps a re-directed effort in a couple of marketing strategies might have an effect (such as a 2 Krystal combo?).

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The Schlotzsky’s we visited was in Woodstock on Highway 92 across from Home Depot. That was yesterday about 10 til noon - a weekday. It had been at least two years or more since we had been to this location. When this location opened, we used it as much as once a month for a couple of years. Back then, the store had some operation problems, order problems, even cost of order problems - with our orders - a number of times.

Upon entry, we immediately notice the interior changes, NO order window to monitor to pick up ones order (a definite improvement) and the complete removing of the drink/soup service station from the order/lobby area. Wow. Much better.

The wood furniture, tables and chairs, appears to be `darker’ and more upscale than before too. Moved also is the salad area with pre-made salads (no longer offering potato salads and other things).

The menu board is simpler than Krystal’s for sure and easy to understand. The prices are very consistant with a premium sandwich location. Combo’s are clearly marked.

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That’s how far this post got a few months ago. I have not returned to Schlotzskys either.

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The blogging is going to re-start soon. Thanks for your patience.

20. July 2011

Summer Restaurant Link Clearance - Part Four

Hello Folks - still in the summer clearance mode - but, today, with a bit more commentary on occasion than the last three posts.

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First up is something that I’ve been cautioning about and now has some evidence to back it up - Too much customer contact can hurt business - http://www.physorg.com/news/2011-07-customer-contact-business.html - the study indicates the IDEAL number of calls, e-mails, or mailings a customer base will tolerate before reacting negatively. Food for thought. ———— Next, Is the `Better Burger’ bubble about to burst? That is the premise of this article, but, IMO, NO, as the fast casual will expand until the business model of `no tipping’ is adopted by some brand of `casual’ restaurant to combat the Fast Casuals. Anyway, good article and again, food for thought - http://features.blogs.fortune.cnn.com/2011/06/17/the-end-of-the-%E2%80%98better-burger%E2%80%99-bubble/ ———- More data about the restaurant habits of Americans in the new normal - a great study - Unemployment Makes IHOP-to-Red Lobster Target Higher Incomes - http://www.bloomberg.com/news/2011-06-09/high-unemployment-makes-ihop-to-red-lobster-target-higher-income-customers.html – indeed, here’s a tease:

Spending on Takeout

Households that earned more than $70,000 in 2009, about 32 percent of the U.S. population, accounted for 55 percent of spending on takeout and food away from home, according to the most recent data available from the Bureau of Labor Statistics.

Consumers making less than $40,000 — or “aspirational diners” — cut back on eating out about five years ago and have yet to rebound much, Knapp said. This “erosion of frequency” among lower-income households forced executives at quick-service and casual-dining restaurants to figure out how to broaden their appeal as the market began to weaken in 2008, he said. Now, many of their plans are becoming reality.

More soon.

15. July 2011

Summer Restaurant Link Clearance - Part Two

One more time - Links without commentary.

New Concept, Coal Burger, Set to Sizzle in the Woodlands - http://www.restaurantnews.com/new-concept-coal-burger-set-to-sizzle-in-the-woodlands/ ——— New 1/4 Pound Southern Style Chicken Sandwich Debuts at Church’s Chicken Restaurants - http://www.restaurantnews.com/new-1-4-pound-southern-style-chicken-sandwich-debuts-at-churchs-chicken-restaurants/  —- Jack in the Box Introduces New Bourbon BBQ Steak Grilled Sandwich - http://www.restaurantnews.com/jack-in-the-box-introduces-new-bourbon-bbq-steak-grilled-sandwich/ —- Benihana Sizzles with Five-Course Filet Mignon and Hibachi Chicken for Two - http://www.restaurantnews.com/benihana-sizzles-with-five-course-filet-mignon-and-hibachi-chicken-for-two/ —— and today’s fun link - http://www.hamburgerchains.com/

Part Three tomorrow

17. December 2010

Recent Restaurant Research Findings - And More

Market Research done with 1,000 adults over 18 by Harris Interactive (internet sample?) conducted for Cintas — showed the top reasons a person would `never eat at a restaurant again’ - here’s the findings:

• Unclean Dishware   86%
          • Unpleasant Odors   85%
          • Dirty Restrooms   75%
          • Unclean Tables   74%
          • Poor Service   74%
          • Dirty Floors   68%
          • Poor Staff Appearance   65%
          • Dirty Glass and Windows   51%

Source: http://www.restaurantnews.com/top-three-reasons-why-restaurant-customers-dont-return/

In other research findings: 1,300 Restaurant Owners say - Half of Restaurant Owners Proclaim, “Social Will Never Work” -http://technorati.com/business/small-business/article/half-of-restaurant-owners-proclaim-social/#ixzz18NLxwNLT - The study was conducted by MustHaveMenus - a company specializing in Menu Templates. Anyway, here’s the key findings:

• 42% of restaurant owners and managers invest in social media efforts (including blog participation, and managing their Twitter and Facebook accounts.
• 12% of restaurants and caterers hire someone to manage their social media presence.
• 23% of respondents do not believe that they need to use social media as a marketing tool.
• 23% of respondents believe that they don’t have time to devote to social media, along with all their other restaurant management duties

My concern is that like all `offers’ - interest fades as time goes onward and fades quicker the more `restaurant social media’s’ that the customer is signed up to receive.

And, yes - a THIRD research study by Intellaprice - a pricing intelligence firm (now THERE is a niche) - gave the results of a 21 market study of
12,000 beverages and 14,000 food items from casual dining brands - —- And, the results? (Drumroll) According to Intellaprice’s research, lunch entrées are up by $.93, dinner entrées rose by $.72, and kids entrées spiked by $.30.
Drinks also were UP in prices slightly. The article speaks of the loss-leader products hoping to bring in customers who will switch or bring in others who are not ordering the loss leader — more details at http://www.restaurantnews.com/casual-dining-entree-and-drink-prices-up-in-2010/ (no wonder Fast Casual continues to make inroads)

In other news:

An example of the loss leader is what Burger King is now promoting - it’s two for one Chicken Sandwich deal - http://www.restaurantnews.com/burger-king-offers-two-for-one-original-chicken-sandwich-deal/ and in more BK news - BK will be slashing their Miami Corporate staff - http://www.miamiherald.com/2010/12/06/1959749/burger-king-to-cut-261-jobs-in.html

Meanwhile - O’Charley’s Inc. Announces Restaurant Closings - http://www.restaurantnews.com/ocharleys-inc-announces-restaurant-closings/ – 11 stores to be exact and 5 of another brand.

Next up - three stories on Panera Bread - How Panera Bread Kept Rising Through the Recession - http://www.businessweek.com/investor/content/nov2010/pi2010118_183529.htm - and one method was NOT cutting costs. Up next, Panera Bread Introduces MyPanera Loyalty Program - http://www.restaurantnews.com/panera-bread-introduces-mypanera-loyalty-program/ - with some unique twists. And, finally, Panera Opens ANOTHER non-profit place - http://www.restaurantnews.com/panera-bread-foundation-opens-second-panera-cares-community-cafe/ in Michigan.

A&W uses social media for a `contest giveaway’ as a promotion point for introducing a 3 dollar value meal positioning - A&W Restaurants New $3 Big Taste Meals Bring Back Big Taste to Bland Value Menus - http://www.restaurantnews.com/aw-restaurants-new-3-big-taste-meals-bring-back-big-taste-to-bland-value-menus/ - the top prize is a trip worth up to 4K and three other prizes.

Thanks for visiting today - have a look around the sidebar for more.

25. October 2010

No Tipping Fast Casual Segment - The Staycation Of The New Normal

Just a few posts ago - I suggested that as a result of the new normal for the restaurant segment of American Business - that perhaps we could look for some restaurant chain which currently has tipping as part of the experience to drop it altogether or modify it significantly. http://restauranttradearearesearch.com/2010/09/13/could-new-business-model-for-casual-restaurants-be-no-tipping/ Wondering out-loud if the rise of the fast casual segment (Panera Bread and many other variations) has to do somewhat with the perceived savings involved with tips; especially with party sizes such as families.

A way, seemingly, of giving the family a cooked to order experience usually in what can be described as a busy but fun atmosphere; while still having the image not being fast food to boot. Simply, a less expensive, substitute, for the old `casual’ restaurant experience. A trade down with benefits - both in being `better’ than fast food (heat lamps, uncertainty) and less costly than smiling for a wait person.

Also, one has to wonder if the new normals overall effect of bringing the range of travel somewhat towards home if not at home for vacations - the so-called Staycation - might allow for the consumer to justify at least a level of maintenance to the previous level of restaurant usage (after having adjusted somewhat downward in frequency). The adjustments of the middle class to the economic outlooks around them.

Which further begs the question? Can a no-tipping option at the causal restaurants really be off the table? Is a new business model really that hard to envision? Would business BOOM? (To whoever did it first?)

13. September 2010

Could New Business Model For `Casual Restaurants’ Be - NO Tipping?

It’s Friday night, you decide to take `the fam’ of 4 (two growing teens) to dinner at a place that will have good food and good times (where you can have a beer). In the `olden days’ that might mean a visit to Chili’s or Friday’s - but - with the rise of the `fast casual’ segment of the restaurant business - it might mean taking `the fam’ to one of those new `upscale’ burger places; such as a place called Canyon’s in Woodstock, Georgia; but, most likely, such a place now exists within your community too with one of a thousand names.

These `fast casuals’ often have beer, wine, big screen TV’s and a fun atmosphere - AND - serve your food to your table when ready - with the `house waitresses’ (whoever grabs your food immediately when it become available from the kitchen - as opposed to IT sitting under a lamp while YOUR waitress is busy with others). And, when the good, hot, quality food is served by a friendly wait person -  it mentally hits the `restaurant decision maker’ - who has already paid for the food at the counter when ordering the made to order food - “I can save a LOT of money here (compared to a `casual’ style restaurant) — BECAUSE I don’t even tip anyone.”

And, in this economy of the new normal, where any purchase demands Quality of product AND at a VALUE price- can the days of 5-10 dollar tips be with us much longer for a `fam’ meal? Or, is it more likely that some casual restaurant will begin to treat `wait staff’ like other businesses models that do NOT depend on `customers supporting’ the employees paylevels - AND ATTITUDES? (Wait staffs can easily have `attitude’ problems when being overworked, undertipped, or having fewer customers and income than in the past - which makes one feel more obligated to tip 20% than before.)

Let’s compare a now typical choice in the restaurant marketplace.

                                  Casual Dining                      Fast Casual

Four meals                    36.00                                    28.00

Soft Drink/2 Beers      10.00                                      9.00

Tip                                       7.00                                      0.00

Total                                  53.00                                  37.00 

Is tipping beginning to be perceived as `needless markup’ and as `hidden costs’? Would customers be happy to know that a wait person is a salaried employee? Will customers really miss the 3 `checkbacks’ on how the meal is/was - or the dessert selling? Would wait person `turnover’ be reduced? Would wait person attitude be improved knowing livelihood was not dependent on upselling and frugal customers?

Would meals really cost that much more if tipping was eliminated? Shouldn’t business models exist that are not tip dependent in table service restaurants? If the new normal continues - I think we will find out - after all - wouldn’t `we pay our employees well, so you don’t have to’ - make sense?

(Customers could still have a voluntary 1.00 `check off `superior service recognition’ box on a bill too.)

Restaurant Food Service Equipment
Design and Equipment for Restaurants and Foodservice: A Management View

5. September 2010

Links To Restaurant Coverage

Today, I’m going to clean out some links that have been building up - most are from a bit back in time (earlier this year):

How to Market Your Restaurant in a Bad Economy - http://restaurant-owner.com/restaurant-marketing/how-to-market-your-restaurant-in-a-bad-economy/ - great advice almost to a T. Quick read. Bookmarkable.

grill linesUMMM Grill Lines - http://www.qsrmagazine.com/articles/features/140/graphics/grilled.jpg

Fire Up the Grill - http://www.qsrmagazine.com/articles/features/140/grilled-1.phtml - Covers those grill lines that are so popular.

10 most popular franchises - http://money.cnn.com/galleries/2010/smallbusiness/1004/gallery.Franchise_failure_rates/index.html - Subway #1.

Fast Casuals - A Tip from Fine Dining - http://www.qsrmagazine.com/articles/columnists/george_green/141/finedining-1.phtml excellent coverage of why fast casuals will grow in the new normal.

Here’ some of the important posts in 2009 around here. http://restauranttradearearesearch.com/important-posts-of-2009/

Please check out the sidebar for more info and products.

28. August 2010

NPD Says - Restaurant Traffic To NOT Keep Pace With Population Increase

Interesting report that focuses on the aging population and how that segment uses restaurants less than other age groups - more insights at the link - http://www.restaurantnews.com/us-restaurant-traffic-will-grow-less-than-population-growth-over-next-decade-reports-npd

No tipping, quality food - Fast Casual Establishes Itself as Niche Restaurant Category, According to Mintel - http://www.restaurantnews.com/fast-casual-establishes-itself-as-niche-restaurant-category-according-to-mintel/ is the real question when will the `casual’ restaurants - with tipping - change their business model? Will waiters and waitresses soon be `salaried employees’?

Firehouse CEO: Sites Thriving - http://www.swtimes.com/business/article_470f9536-aaca-11df-b0f2-001cc4c002e0.html - Comps are UP.

More aggressive price point focus of the new normal - Luby’s Introduces All You Can Eat Breakfast for Only $4.99 - http://www.restaurantnewsrelease.com/lubys-introduces-all-you-can-eat-breakfast-for-only-4-99/853387/ - and, as you know, the only segment growing is Breakfast.

More about my services can be found at www.squidoo.com/tradeareasurveys

18. August 2010

Fast Food Trading Up To Catch Customers Trading Down

The evidence is starting to pile up about one response to the new normal is that Fast Food brands should enhance the  restaurant experience available - almost regardless of price point - because in large part it is aimed at those `trading down’ from the sit-down and tip waitress at lunch segment - and at the already existing non-tip fast casual (such as a Five Guys).

Examples include Wendy’s new redone Premium Salads priced at around 6.00 - and the large variety of `Angus’ Big Burgers available at most of the major chains now. (Can Buffalo Burgers be far away?) It would also include the upscaling of Milkshakes at Chick-Fil-A and Hardee’s - to the recent bone-in BBQ of Burger King - to the upscaling, at least perception wise, to many McDonald offerings such as the yogurt choices and coffee.

These new positionings, which often include a dash of health perceptions mixed with a sprinkle of indulgence, can be fairly and profitably priced within the fast food price points compared to fast casual and especially when compared to ANY RESTAURANT THAT DEPENDS ON TIPS FOR ITS EMPLOYEES. As today’s customer, in the new normal, is no longer disregarding any `additional charges’ as frivolous.

Indeed, when today’s restaurant using customer sees a Chili’s ad about the Burgers choices (with fries) starting at 5.99 - they know that - even getting water (the continuing trade-down) - that with tax their bill will be pushing 6.50 - which with tip (can you really tip under a dollar in a sit-down environment with table cloths) would be another buck (or two to not look cheap) - making the 5.99 advertised price point, more like 7.50+ and they are still drinking water. (The 1.79 and up prices on drinks at these places do them no help perceptually either). Indeed, throw in the drink, tax, (and now a two dollar tip) and you are talking 10.00 nearly - for the cheapest 5.99 advertised price point.

And, perceptions like that - add up to Fast Food brands having some opportunity for brand extensions with good profit price points. Doing this, while retaining the `value’ and yes - even the `dollarish’ price points too. (Dollarish (things under 1.49) would be a fun positioning.)

Lastly, since the new normal could be here for years and years, expect this trend in Fast Food brands to be a continuing process as brands find profitable brand extensions once thought of as not possible or too out of character for FF. Does this mean `value sized portions’ of something as exotic as `Prime Rib’ - before you say impossible - remember, this is the new normal. Crabcakes anyone?

Here’s some thoughts of a 50 year old multi time a day FF eater - http://www.youtube.com/watch?v=T2H_pEFuSSo - and more about my services is right here www.squidoo.com/tradeareasurveys too.

25. June 2010

Fast Casual - The I Don’t Want To Tip - Nearly A Restaurant Restaurant

Filed under: no tipping, fast casual, new normal, Sonic — Rick Phillips @ 11:45

Today’s link talks about everyone’s favorite niche in the new normal - the fast casual restaurant. And, in this link “Technomic’s 2010 Top 100 Fast-Casual Chain Restaurant Reportprovides rankings, analysis and profiles of the leading chains, and helps chain operators and foodservice suppliers understand emerging trends and players in today’s fastest growing segment.” - interesting reading with hard numbers to ignore. http://www.restaurantnews.com/fast-casual-chains-continue-to-grow-and-benefit-from-recession-finds-technomic/ 

Many FF chains are toying with the high-tech side of the marketplace - even to the point - like Sonic recently - of texting you each time you come into a trade area - When the Customer Is in the Neighborhood - http://online.wsj.com/article/SB10001424052748704238104574601944230186368.html?mod=WSJ_hpp_MIDDLENexttoWhatsNewsTop - (I would hope that it has some upper limit as one can easily transverse multi trade areas in nothing more than a trip to the mall.) Is this Jetson’s stuff - or - pure annoyance.

Indeed, the previous link leads me to this GREAT article - http://www.revenuejournal.com/blog/great-marketing-and-selling-crisis-2010-and-how-escape-it

The Great Marketing and Selling

Crisis of 2010 - and how to escape it

 - Force #1: All those “traditional” marketing vehicles and methods have lost their power, and no one is really sure how and if the new vehicles and methods can replace them.

Force #2: No one wants to be “sold to.”

Force #3: Any entrepreneur or CEO with a conscience is in the midst of a spiritual crisis.

Force #4: Shaky economic climate - on a global scale.

Force #5: Personal reluctance to spend.

On top of all this, it’s personal. ———- Make sure to read this great link and please check around this site for much more.

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