Restaurant Trade Area Research

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?)

Once again, McDonald’s is on the cutting edge - great story - http://www.dailymail.co.uk/sciencetech/article-1322180/McDonalds-tracks-burglars-spraying-artificial-DNA-make-getaway.html

Dunkin Donuts expanding in TN. - http://www.restaurantnews.com/dunkin-donuts-announces-seven-new-restaurants-in-tennessee/ - make sure to see my questions and answers about Trade Area Surveys here before you do any expansions and to know more about your market - http://www.squidoo.com/tradeareasurveys

IHOP is re-positioning a portion of its menu to attract the light eaters - http://www.restaurantnews.com/ihop-makes-lower-calorie-dining-choices-simple-with-new-menu-items-and-tips/

When was the last time you did any research with Fast Food Rejectors? Here one here: http://www.youtube.com/watch?v=x8G9OAFlquI

Recently, I conducted the MarketView in an eastern seaboard market at all the units of a particular ADI and all owned by one owner. The MarketView is my name for a type of research design that digs into the fundamentals of any market. All kinds of interesting and useful information comes from doing real marketing research at your stores.

An example of this is shown below:

Store One                                                 Store Two

820,000               2006 Sales                             790,000

13%        Uses This FF Brand Most               24%

20%       Uses This FF At Least 1 Week       42%

161K       Annual Sales To 1+ Week User    331K

20K        Total Repeat Customer Base*        13K    *customer base formula

Smart marketing can address each of these stores specific marketing needs. Only by having real customer based information allows for smart spending of those precious marketing dollars. Make sure to visit my Squidoo page that explains more about the MarketView at www.squidoo.com/tradeareasurveys.

Today’s Restaurant Links

`Former Bojangles Exec’s Now Qdoba Men’

http://www.chainleader.com/article/CA6607112.html?industryid=47555

`Fast Food Shops To Be Banned Near Schools In UK’

http://www.dailymail.co.uk/news/article-1079655/Fast-food-shops-banned-near-schools.html 

`IS Fast Food Poised For A Fast Fall?’

http://www.forbes.com/markets/2008/10/22/mcdonalds-earnings-closer-markets-equity-cx_mp_1022markets44.html

Thanks for stopping by today — much more is below too. Bookmark this site and return for more updates. If you have some comments we’d love to hear them. 

Despite what you as a restaurant owner may have been told - the number of transactions your restaurant does, compared to another time frame (say a year ago) - does NOT mean your customer base size has a direct correlation. THE ONLY WAY TO KNOW YOUR CUSTOMER BASE SIZE IS WITH REAL MARKETING RESEARCH.

Why? Because your customer base size isn’t dependent on the number of transactions - it is dependent on WHICH CATEGORY of user makes the transaction. For example, if 24% of your customer transactions are with once a week users and 24% of your customer transactions are with customers who come every two or three weeks (see last post below as an example) — THEN OBVIOUSLY, THE NUMBER OF CUSTOMERS WITHIN THE EVERY 2-3 WEEKS CUSTOMER BASE IS OVER TWICE THE NUMBER OF CUSTOMERS (who come about half as often).

So, it is THE MIX of customers - that determines the number of actual customers in your customer base. Your year to year transactions could be UP and yet your customer base may be DOWN in size - AND VICE VERSA. I will literally tell you more about `the formula’ soon - in future posts. Or, find out more by visiting my Trade Area site at www.squidoo.com/tradeareasurveys

But as promised, more from the figures of last post:

3 stores - $2,670,000 Sales (rounded)

customers that come

4+ times wk - 3% of trans - 80,000 in sales - 49 customers - 1,630.00 yr

2 or 3 times a week - 13% of trans - 348,000 sales - 398 customers - 874yr

Once a week - 24% of trans - 642,000 in sales - 1,796 cust - 357.00 yr

Once every 2-3 weeks - 24% of trans - 642,000 in sales - 3,628cust - 177yr

Once a month - 12% of trans - 321,000 in sales - 3,704 - 86.00 yr

Once every 2or3 months - 9% of trans - 241,000 in sales - 5,454 - 44yr

Once every 4to6 months - 1% of trans - 26,000 in sales - 2,145 - 12yr

Less than every 6 months - 7% of trans - 187,000 in sales - 21,758 - 8yr

First time users - 7% of trans - 187,000 in sales - 25,376yr

As you can see from the figures above, for this 3 store contiguous FF market - 9 years ago - 14% of transactions (bottom two frequency levels) contained 46,000 people while the top 16% of the transactions contained less than 500 people. YEAH, how you market MATTERS.

But, understanding your REAL customer base is essential to not wasting dollars. —————— Hey, feel free to leave a comment - and please, bookmark and return for slices of restaurant research and restaurant links. Also, forward my/this link to others who own a restaurant. Thanks.

Today’s Restaurant Links

McDonald’s Success Continues

http://www.allheadlinenews.com/articles/7011881489 Same store sales figures -, less than one minute read.

Chick-Fil-A; Much More Than Just Chicken

http://www.thecitizen.com/~citizen0/node/30742 Remember my previous post about Friendliness being the attribute with the most `customer’ power? Getting  the details right about customer serviceis an attribute of Chick-Fil-A. Re-juvenate that drink sir?

Cleveland’s Soul Food Festival

http://www.cleveland.com/entertainment/index.ssf/2008/08/tickets_going_fast_for_clevela.html

Quick read - being apart of the community is priceless.

Survey Yields Worrisome Restaurant Cutback By Customers

http://www.bizjournals.com/tampabay/stories/2008/08/04/daily44.html 3 minute read based on REAL research — is it true that only 15% of all customers are unaffected in this downturn in their usage of restaurants? Worrisome and applies to all markets.

Fast Food Is Bad

http://www.lavistasun.com/site/tab6.cfm?newsid=19896507&BRD=2712&PAG=461&dept_id=557008&rfi=6  The ragging continues in this two minute tirade about parents not setting good examples.

Finally, my blogroll on the right will tell you more about my marketing research services. Come back Tuesday for more - thanks for reading, again, please send this link to another restaurant owner like yourself.