Restaurant Trade Area Research

Looking for revenue anywhere they can get it in this new normal - politicians in Omaha put a 2.5% tax on restaurant diners - forcing them to drive to other communities to avoid the tax.  http://www.ketv.com/r/25247993/detail.html

New Chicken Taco at Church’s Chickent - http://www.restaurantnews.com/churchs-chicken-on-the-go-with-the-new-crispy-chicken-taco/ - nice brand extension here for `on-the-go’ targeting too (did I see a burrito now offered at Hardee’s in Woodstock Ga?).

Wingstop Reaches 29 Consecutive Quarters of Positive Comp Store Sales  - http://www.restaurantnews.com/wingstop-reaches-29-consecutive-quarters-of-positive-comp-store-sales/

Will Arby’s and Wendy’s increase prices? - http://www.walletpop.com/blog/2010/10/01/are-wendys-and-arbys-going-to-beef-up-menu-prices/ – kinda a strange article to me as any beef price increases would certainly hit everyone.

Speaking of beef - Regional Chains Feed Hunger For Burgers - http://www.msnbc.msn.com/id/38420989/ns/business-local_business/

From the in-case you missed it file - McDonald’s sss up 4.9% in August - http://www.restaurantnews.com/mcdonalds-posts-strong-global-comparable-sales-august-up-4-9/

More about my services at www.squidoo.com/tradeareasurveys

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

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.

I remember when Coors Beer was a legend before national distribution and the loyalty levels and desire to `score’ some when available — For some, the In-N-Out move will draw the same response. - Texas seems the next move - http://www.dailyfinance.com/story/company-news/in-n-out-burger-dallas-texas/19491184/

O’Charlies continues the new normal advertising - price points - O’Charley’s Launches New Ultimate Choices Menu - grabbing three points with below 10.00 to identify with - http://www.restaurantnews.com/ocharleys-launches-new-ultimate-choices-menu/ 

Here’s some older news - California County Bans Toys With Fast-Food Meals - here comes the government again - http://www.aolnews.com/nation/article/santa-clara-county-bans-toys-with-fattening-meals/19456492

Thanks for your visit - make sure to look around for much more about restaurants and research about restaurants.

No question about this trend to having the choice of smaller portioned food items at restaurants - including FF examples of: “Boston Market’s Market Sliders sandwiches, McDonald’s Snack Wraps, Burger King’s experiment with BK Burger Shots and Jack in the Box’s Mini Sirloin Burgers” - the point is also well made in the article about price point sensitivity in the new normal. http://www.palmbeachpost.com/money/malled-restaurants-offering-small-sized-items-with-big-728206.html - more too at the article.

I love this article - Subway to Change Cheese Distribution Strategy After Web Campaign? - talk about the customer being right - again. http://www.urlesque.com/2010/06/02/subway-to-change-cheese-distribution-strategy/

‘Social Media’ Are Top Buzz Words of NRA Show - don’t forget that `social contact/media’ when greeting your customer in the restaurant or at the drive-thru window. `Friendliness’ is one of the true drivers of increased sales and increased frequency of usage. http://www.qsrmagazine.com/articles/news/story.phtml?id=10970

http://www.reuters.com/article/idUSTRE64Q42Q20100527 - Hunger for burgers overcomes economic fears - an article whose focus is the Five Guys chain and its success despite the economic landscape.

http://www.restaurantnews.com/firehouse-subs-announces-23-new-restaurants-in-salt-lake-city/ - Firehouse Subs goes wild with development in Salt Lake City.

From a bit back - Quiznos launches Operating Partner Program - http://www.fastcasual.com/article.php?id=17949&na=1&s=2 - if I am reading this right - 5,000 and you can be in the restaurant business.

Don’t leave yet - explore my sidebar for more about restaurants.

America’s number 3 Fast Food Chain changing hands is big news indeed - http://www.businessweek.com/news/2010-06-11/wendy-s-arby-s-investor-peltz-approached-on-takeover-update2-.html.

Taco Bell’s Two Dollar price point promotion is being well received in the new normal - “Taco Bell’s two dollar value meal is potentially game changing,” says Gary Stibel, Founder and CEO…..One dollar meals drastically limit the quantity a restaurant can offer and often leave consumers wanting.  This is strategic to Taco Bell because the bullseye of their target audience is the young male who doesn’t eat restaurant food, he ‘hoovers’ it. ….the original Chief Marketing Officer of Taco Bell, points out that “one of the bases for PepsiCo’s acquisition of Taco Bell was the ability to deliver good tasting, filling foods to young men at prices that were attractive to the guest and profitable to the owner.  It is one of the strengths of Mexican food in a crowded QSR marketplace.” - More here - http://www.restaurantnews.com/the-2-value-meal-could-be-a-game-changer-for-taco-bell/ 

Taco Bell recently used this Fun Idea to promote the 2 dollar price point - Taco Bell Asks Federal Reserve to Circulate More $2 Bills - http://www.restaurantnews.com/taco-bell-asks-federal-reserve-to-circulate-more-2-bills/

In other price point positioning news - Boston Market Debuts New Market Sliders For $2.99 - http://www.restaurantnews.com/boston-market-debuts-new-market-sliders-for-2-99/ - and combos for 4.99 - very aggressive.

And, score another one for McDonald’s - McDonald’s Ads to Showcase Undiscovered Artists and Bands - as this is an incredibly great idea to target the under 25 segment. - McDonald’s Ads to Showcase Undiscovered Artists and Bands - brilliant, again - http://www.restaurantnews.com/mcdonalds-ads-to-showcase-undiscovered-artists-and-bands/

I appreciate your visit today. Have a look around www.restauranttradearearesearch.com .

Putting promotion and advertising dollars behind various price points is nothing new in the restaurant category - but - in 2010 - it would seem to be of huge importance based on the current crop of ad positionings positioning prices. For example - check out this list of price points promoted in the past year in the Atlanta ADI at least:

79 cents - Taco Bell (occasionally).

99cents - Wendy’s Value Menu - Capt. D’s sides

1.00 - McDonald’s Dollar Menu; Burger King, Arby’s, Checkers

1.50 (2/3.00) - Checkers, Dairy Queen (occasionally)

1.99 - Snack meals - Mrs. Winners, Church’s, KFC (occasionally), Dunkin Donuts, 

2.00 Denny’s

2.50 Subway Breakfast Combo

Meals For One

2.99 Combo’s - McDonald’s, Wendy’s, Krystal, Boston Market

3.99 Long John Silvers, KFC, (4.00)Firehouse Subs >4Pm (4.00) Steak & Shake, (4.00) Quizno’s, 3.99 Hardee’s, (4.00) Denny’s

5.00 - Subway Footlong, Boston Market 5.oo + sides, (5.01) Arby’s, (4.99) Waffle House, (4.99) CiCi’s Pizza, (5.00) Little Ceasar Pizza, (4.99) Denny’s, 5.00 - Capt. D’s lunch, (4.99) - Zaxby’s,

5.99 Domino’s Pizza, 6.00-Denny’s

8.00 Denny’s

6.99-9.99 - Friday’s, Ruby Tuesday’s, Ryan’s, Golden Corral, (10.00) Pizza Hut, Folks Restaurant, Red Lobster, Olive Garden, Applebees,

And now, with smaller portions becoming more accepted at a reduced price (often with more profit however) - the under 10.00 to eat AT a restaurant perception continues to grow.

And, this first review is not too positive with grades from C+ to F for each of the first standard sandwich offerings. Seems the reviewer had very salt sensitive buds (as it seems anyone ready to write a negative food impression has to have) and hated the mouth favorite, a `Steak-Um’s’ similar choice. Interestingly, the reviewer tried NONE of the sandwiches custom made - (strange as wouldn’t nearly all of those that walk in custom make these?). http://www.slashfood.com/2010/04/05/subway-breakfast-sandwiches-reviewed/?

Seems Burgerville is having strong success with various online strategies - worth a browse here - http://www.mediapost.com/publications/?fa=Articles.showArticle&art_aid=124407

Here’s a pretty deep thought and science experiment as to what happens when folks view a Fast Food Sign - Simply the logo. Seems it makes them read faster, seeks ways to save time and other effects. Really shows how deep our impressions can be and affect behaviour. http://www.parentcentral.ca/parent/healthzone/mindmood/article/786836–how-a-fast-food-sign-changes-your-day

In this era of the new normal - where your restaurant brand in staking out a price point or points — comes this NEW level of price positioning - Denny’s has gone to promoting FOUR price value points http://restaurantnews.com/dennys-redefines-the-value-menu/ - see the full offerings at 2,4,6,and 8 dollars here.

KFC is about to introduce a new SUPER sandwich sure to raise the eyebrows of many - great picture of this TWO patty sandwich with NO bun. http://www.cnbc.com/id/36191290 I wonder what the demos on this sandwich would be? (Who Eats What menu research is always very interesting - something that YOU can do at your restaurant too via my services as part of the MarketView.)

Find out more about the MarketView here - www.squidoo.com/tradeareasurveys — I also have some current restaurant links at that site too.

As far as the Woodstock Georgia fast food market is concerned  - restaurants continue to be under competitive pressures with strong discounting and `new and interesting’ promotions to offset the continued shrinking of customer bases. Indeed, just recently, ABC - the Atlanta Bread Company in Woodstock had a Sunday evening `Murder theater’ (with actors of course) near closing time for which tickets at 10.00 per head were sold. These `patrons’ would have an additional chance to purchase food and dessert from the unit too - for enjoyment when watching the play.

And, the discounting continues at all levels from Waffle Houses 4.99 meals, to 4.00 KFC meals, to 99 cent Dunkin Donut specials, to the buck level at Checkers, Wendy’s and — whatever special Arby’s has going at a various promotion period. In the nearby Sandy Plains/Shallowford area the Boston Market was doing bounce back coupons for buy one meal - get one meal —— that’s up to a 6.99 value — (and one our family took advantage of) and up to 50% off. And, within the past month, Arby’s was giving the `RoastBurger’ away with the purchase of a drink (& Quizno’s also gave away it’s small sandwich.)

Couple all this with promotions from the last posting - many of which are still going on in one form or another (including daypart pricing) - and you have a very sensitive price market the likes of which haven’t been seen in a long long time, if ever. Increasingly, `eating out’ is positioned by the media as the one way that Americans are cutting back and saving money. And, again increasingly, the eating out `habit’ is being broken at some level.

Indeed, the extreme multi times a week users (4+ times a week)  - while usually not  a huge element in most fast foods - is largely gone - as these hardest regulars have become part of the once a week users - generally. And, while most of the two times a week or once a week users have hung on in most circumstances - especially in white collar, lunch oriented restaurants - those users are probably most reduced in the evening timeframes.

Probably most affected frequency wise in customer bases are the occasional once a month type users - who have often fallen into the `never use anymore’ or seldom use category - as consumers tighten up into their most favorite choices. NEW customers, once a mainstay at 3-8% of all fast food customers is again - almost nil. (Why waste precious money on places without a proven track record?)

So, with all this - with restaurants of all kinds closing (which does help others who survive in degrees) - with frequency rates dropping - with price pressures at every turn - the question must be asked if this is the bottom to be endured - or - a new normal? (No one wants to think it could be worse - and indeed - as competition closes - the `replacement effect’ of the `new meal occasions’ to be filled in the local market - will modify - to a degree - further downturns.)

Indeed, if the downturn continues for much longer - say - another year (an overly negative view compared to consensus) - we could see some companies go to a more innovative way of pricing their food products. Perhaps combos will once again reflect a real `savings’ as opposed to an easy way to order in a few words. Perhaps we will see the drive thru priced in a different manner - compared to inside customers. Perhaps drinks will become cheaper at the drive-thru (as no re-fills occur).

Indeed, perhaps we will see `customer loyalty’ cards be set at effective levels - buy two combos get one free - for example —- as opposed to cards that required too many uses to motivate a customer base. Or, even `in-store’ contests to motivate the bigger instore spender - or - targeting the very largest purchasers (only) with a `discount’ on that next purchase (setting the level at transactions in the highest 5% total) - showing recognition of these remaining `special’ customers.

Because, as Dylan said, the times,  they are a changin - and, previous practices and marketing approaches - especially if they all sound the same - may have little useful effect. It may take new approaches and new ideas of consumerism to survive to the other side of the downturn - and - it’s not too early to begin to consider such ideas.

Often when I do fast food research we ask customers to give a rating about price or cost of the food. What I’ve found about ratings is that it all depends on what one wants to pay - 4.00 is too high for some and wonderful for others - as is 6.00 or even more (on occasion).

That said, currently, three main price points are the main focus of advertising – 1.00 or less — 2.99 `meals’ —– 5.00 price points. My suggestion to clients of FF stores has always been to `offer’ the various price points to not shut out part of their FF market (for at least part of the year if not always) - specifically those more money conscious  customers in these tough economic times and shrinking trade areas.

Makes one wonder if  `recession combos’  might be a good marketing idea - small fry, smaller main sandwich, small `value’ drink - small price.

BTW - Last months stats were the best yet for this blog - thanks for reading. I hope you continue down this page as there is lots of good info and links. Finally, have you visited my Squidoo site yet at www.squidoo.com/tradeareasurveys ?

Today’s Restaurant Links

`A&W’ Begins Revival In Wisconsin’

http://www.postcrescent.com/article/20081107/APC0701/811070568/1436/APC03

`Fastest Fast Food’

http://www.nbcaugusta.com/news/local/33604619.html Cool test done by TV station at Arby’s Wendy’s, BK, and McDonald’s — drive thru, order number one combo and set the stopwatch. Cool quick read - who do you think won?

`Fast Food Order Accuracy Rising’

http://www.freep.com/article/20081103/BUSINESS07/81102051 Fewer language problems and better qualified workers in economic downturn.

`Fast Food Warpath’

http://www.thisisscunthorpe.co.uk/showbiz/Jamie-Oliver-fast-food-warpath/article-456067-detail/article.html The continuing rise in fast food limitation laws.