Restaurant Trade Area Research

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.

And - Now - The Important Posts Of 2009

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Targeting The 18-24 Year Old Customer

November 13th, 2009

It seems that many fast food restaurants have too narrow a target demographic and don’t spread out their age targeting on television commercials as they should - including a direct targeting of the customer aged 18-24  (Krystal being an exception.) - especially considering how hard it is to get the 18-24 age group to actually USE a FF coupon. Indeed, I’ve done research where less than 2% of the age group used coupons while upwards of 30% in other older age brackets was the case. So, the question is how to motivate usage within the young 18-24 year old cell.

Answer. VISUALLY target them with `frequency club’ bounceback card/coupon - make sure the dated card only involves a reasonable frequency level like I’ve described in my recent posts. (For example, 2 visits in 2 months - with a discount for each of those purchases.) So, if the young person KNOWS that the next two times they use your restaurant they get 20% off (or similar) the total bill - anytime in the next two months — that will be much more likely to influence a spontaneous purchase with the brand — versus a 1% chance of usage of a coupon in the paper or mailbox mailing.

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Building A Restaurant `Audience’

October 21st, 2009

As I’ve mentioned in the last few posts - the customer frequency of your customer base is the number one attribute of concern to your fast food restaurant. And, if you want your customer base to `listen’ to your promotions - perhaps it is time to treat them like a `listener’ to your channel/brand. One that they can be `loyal’ to (as I mentioned in the last post) - one they are connected with - involved with.

Indeed, it might be time in this new era of the Great Recession - to use one of the old standards of giveaways that radio used for decades to `maintain’ and grow listenership - and that is — give away LOCAL MONEY. Literally at the store level. To `listeners’ (customers) who followed the `promotion’ for entry.

So, for `drink-only, drive-thru’ customers - that meant using `their’ Drink Only `clubcard’ (which had a discount for drinks two and three) twice more for a chance at entry in the `monthly customer loyalty drawing’. Other folks would be turning in their `nite-owl’ cards with a similar idea to forming a (sub) brand loyalty - or a breakfast club.

Likewise, operators need to reach out to other - mainstream frequency programs - and use them in the same manner; (such as combo club, sandwich club, dessert club, or all milkshake purchases today get entry, etc.) - all for a chance to enter the LOCAL `money giveaway’. Indeed, the chance to `win’ 100 or 200 bucks - EVERY month - will stay in the customers mind.

Winners will be `announced’ on the outside reader board (giving customers a reason to read it at other times too) and inside too. The drawing will be LIVE in the store - creating an event. The winner will be posted on a winners board for all to see. JOE SMITH - 200 DOLLAR WINNER - COMBO CLUB CUSTOMER.

In the meantime, the `entries’ (the club cards with E-Mail addresses or phone numbers/addresses) will provide you with a usable custom marketing base for your selected marketing efforts. For your new loyal `audience’.

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Building Restaurant `Loyalty’

October 13th, 2009

My research at fast food restaurants has shown that it takes a `certain’ level - generally - for customers to say `I use this restaurant/brand the MOST’. And, even in the new normal of the Great Recession, that level is around once a week usage. Only about 1 in 5 customers don’t offer a FF restaurant they use most often when asked. A loyalty - often felt with justification and pride almost. “they are the friendliest here” “they know me here” “this is super convenient for me”.

Sometimes, operators need to literally `look’ for ways to develop that special relationship with their customer base. And, once again, ways exist around the margin to create that `special user’ - to develop a loyalty. And, here’s just one example (I have more) - let’s say your restaurant is one of those that likes to advertise or position later summer hours - how about a special `bounceback loyalty card’ that is ONLY given to customers AFTER 10 and for use ONLY after 10? The night-owl club. 20% all summer for those `special folks’ who visit after ten.

Occupying that special place for customers - generating loyalty - almost a must in today’s competitive environment.

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Real Customer Frequency ProgramOctober 8th, 2009

Recently, my daughter related to me how a national FF restaurant was doing a `bounceback’ (stuffed without mention into a drive-thru bag) `free combo’ promotion. It was either buy 4 more and the fifth one was free or buy 5 more and the 6th was free. You had until the end of the year (so about twice a month to get the freebee).

Now, while I applaud the effort - since the frequency of your CURRENT customer base is most important customer attribute in the `new normal’ of the Great Recession - it falls WAY short of real motivation or of doing what it seeks to do - which is to increase frequency or market share.

Why not?

Because it simply isn’t motivating. To the VAST majority of the customer base as it has too high a threshold for compliance. Additionally, it gives away food for free to those who probably don’t even need a motivation to use your restaurant - your weekly or more often user.

Indeed, the next level of usage - those that use your restaurant once every two to three weeks (which can be a large movable segment) - are generally those who do NOT use your brand most often - for whatever reason (perception of high cost, not as convenient, service issues) and are indeed - UNLIKELY to increase their usage pattern over 2 - 3 months - a long time - for the special deal. We don’t even need to mention the once a month user or less often user — which is the vast majority of the customers of your customer base.

So, what should have been done?

Well, first, if the FF chain really wanted to bring a discount on their combo’s to certain folks over the next 5 visits within a certain time frame — give it to them EACH VISIT. Meaning, the next 5 visits before the new year when you buy a combo it’s 20% off. Saving money EACH time - can address high cost perception problems - and be motivating EACH time.

But, even that is NOT what I would recommend - as the timeframe is too long and the purchase requirement too big. So, obviously, I’m suggesting fewer purchases in a smaller timeframe - at a targeted customer (which you determine by asking your customer ONE question at the time of purchase).

To find out which question - to which type of customer - you need my services. 678-467-8650; ask for Rick.

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My Perception Of The Woodstock Georgia (Fast Food) Restaurant Market

October 6th, 2009

First, let it be said that my usage of nearly ALL of the restaurants has already assumed the `new normal’ of the Great Recession. Regardless of what cheerleading the media may be doing about the economy - most folks are now cautious on discretionary spending - of which, restaurant visits - even to a degree Fast Food restaurant visits - has been impacted. 

 In alphabetical order:

Arby’s - I `responded’ to the ads for the `Roast Burger’ earlier in the year and was not impressed. I refused to respond to the Marry a Goat `humor’  ad campaign and somewhat like the recent 5.01 combo or pricing (the one cent being for Quality).  That said, generally, I perceive that Arby’s as expensive without having coupons from the coupon mail drop a few times a year. Additionally, they  `streamlined’ their `fries’ - dropping my favorite the Homestyle. How can they NOT promote the Jamoca Shake?

Atlanta Bread Company (ABC) - Remodeled nicely. Upgraded to real plates and silverware. Messy to clean up. Can be crowded and slow service. Female favorite. Good soups and combo prices. Mellow atmosphere.

Burger Inn - Local  legend - all fresh cooked. Great breakfast customer base. Friendly people; newspapers available often. Excellent onion rings. Beefy hamburgers. Male favorite.

Burger King - I like the current billboard promotion about the Double Cheeseburger for a buck, real value - but - haven’t gotten it.  I have ordered the Mini burgers more than once however and view that as an excellent addition. Amazingly, the Woodstock BK got rid of Real Sweet Tea years ago (my assumption is that is still the case) and thereby nearly ended my usage — I can’t stand the fake sweet tea out of a machine. Operations should be aware that changing ICONic drinks can have a big effect. — Finally, where is the KING?

Capt. D’s - Perhaps my favorite FF in Woodstock. Quality, Quick, and Quantity with good value pricing. Covers all reasonable price points including lunch specials and on-going `specialities’ that have all prices. Excellent choice of sides. Funny ads earlier in the year comparing to Red Lobster pricing. Friendly greeting and thanking when exiting. Good inside music.

Checkers - Still a viable concept (double drive thru) - chicken wings were a good addition earlier in year - somehow it fits. Catchy phrase “you gotta eat” recognizable for smaller chain levels of advertising. Covers all price points well with a good mix of products. The Woodstock store does Sunday Pricing - good idea - hasn’t ever motivated me for their `down sized’ versions. Could probably `play-up’ the FUN theme a little bit more.

Chick-Fil-A - Woodstock’s Chick-Fil-A is amazingly busy. Overwhelmingly busy whenever they do a promotion like 2-1 for a chicken sandwich or free food giveaway. Excellent quick service regardless of how long the lines are - especially at the drive-thru. (However, I’ve detected a time or two a usage of `workers in India’ taking my orders — I’m not kidding - and, in this time of underemployment in America - that is NOT right to save a few cents that way.) Real Milk Shakes were genius. Consistent quality. Friendly employees. Clean. ————— All that said, the Woodstock inside service in the sit-down area can be horrid and when is Chick-Fil-A gonna get some normal fries? Also, one takes a chance when getting the baked potato.

Dairy Queen -  The standard in Ice Cream desserts from the drive-thru. Haven’t used but really like the new pricing structure in ads 2/3 3/4 4/5.00 - interesting approach. Unfortunately, for me, the food hasn’t broke thru.

Dunkin Donuts - Right on the Strip - I’ve never used location. Certainly they can advertise donuts and donut prices more.  (IF I knew a quick Donut sweet was 99 cents for example - it would come to mind for `dessert’ or breakfast purchase more often. Never seen a place less concerned with establishing a price point understanding. Just how much does a dozen donuts cost?)

Firehouse Subs - Expensive but Excellent. Can be slow. Friendly employees. TV’s to watch. Good real sweet tea. Small, can be crowded.

Five Guys Hamburgers - Tangential to Woodstock in Sandy Plains area — good operation - waiting for a Woodstock Location (several good places available perhaps too).

IHOP - Expensive, right? What specials?

KFC - Closed but not forgotten. Also was one, like BK, to drop sweet tea for a time.

Krystal’s - Krystal `fix’ a must a few times a year. (Canton Road.) Ad’s featuring Crispy Onions on burger looks very compelling. Wi-Fi add - good idea.

McDonald’s - Woodstocks unit re-designs and updates the interiour often - which is nice. Clean. Service can range from excellent to very poor (weekends). Can often find an AJC or USA today in newspaper bin. Separate kids area - thumbs up. Fries can vary in quality. Best FF fish sandwich.

New China Buffet - Lunch value leader. Good quality food. Friendly employees. Priced by the pound to go. Widest variety of food.

O’Charlies - Stopped going shortly after changed menu restricting Prime Rib to Sundays only.

Panda Express - Have never used. Pass by back of lot 3 times a week on way to Walmart.

Po Folks - AKA Folks —> Expesive for what you get.

Ruby Tuesday’s — How could they get rid of German Potato Salad? (pet peeve). Good miniburgers and platter pricing. Easy to split orders. Great salad bar still.

Sonic - I really like their ad’s inside the car with the main guy and his friend and the main guy and his wife. Classic. Best onion rings in Woodstock at FF. To me, tasteless burgers. Fun to use. Daypart pricing on drinks in the afternoon. Fun music playing.

Steak And Shake -  Best Milkshake in Woodstock. Can be very expensive without coupons and very reasonable with coupons. Great variety of sides. Great music inside.

Subway - Good with pricing with coupons. Good quality. Can be SLOW service. GOOD real sweet tea. Fresh. Daily specials a good way to address pricing. Excellent variety of sandwiches.

Taco Bell - Good cheap price positioning. Good Chalupa’s. Good real sweet tea. Good service speed. Good quality overall.

Wendy’s - Huge variety in quality - excellent one time - poorish the next. What the heck happened to the fries - almost tasteless compared to yesteryear. I’m told good salads. Expensiveish compared to McD’s. Baked potato good price/quality.

Thanks for reading - feel free to comment.

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Wake Up - Restaurant Customer Base Frequency is MOST Important

September 16th, 2009

This is a subject I’ve covered before http://restauranttradearearesearch.com/2008/08/10/customer-base-size-it-can-be-calculated/ but, it is well worth revisiting in the economics of The Great Recession and the `new normal’ that many restaurateurs are facing. Indeed, many are waking up to the idea that it will be necessary to `woo’ the existing customer base if one is to survive - as `new customers’ are not likely to be a significant factor. Indeed, in branded fast food restaurants - it’s likely that up to 1/2 of ALL new customers to a store in a given year - are likely `main’ customers of one of the other locations of a particular brand. Meaning - that visit is generated from prior usage in a more convenient location to this user. These are customers that you are likely to get over a year whether you advertise or not - and - other `new customers’ will likely be new `work’ customers - again, to which - little `extra’ marketing is needed. (Many workers are new to a given area each year.)

Now, in the link above - you can calculate that upwards of 40% of all transactions at a unit - were made by about 13% of the customers. Those, of course, are the built in creme for any restaurant - and - really - should be marketed differently than the REMAINING 87% who come less frequently.

Can you afford to ignore 87% of your customer base - without making any special effort to improve their frequency of usage of your store?

Now, in all honesty - part of that 87% may be virtually unmarketable as far as increasing their frequency - but, that said, many ARE marketable in a manner that addresses their frequency. The problem has been that UP TILL NOW - all `frequency programs’ have largely fallen flat on their face . And, there is a good reason for this — they address frequency in a fantasylike manner with this 87%. IE-Customer Frequency Cards.

Indeed, of the 87% who are `infrequent users’ - a full 2/3’s of the customerbase fall into the once a month or less frequency - do you really believe that a `loyalty card’ that has 6 punch-outs is going to be handy, used, or motivating if it results in ONE meal savings a year or at most two? The answer is a clear NO.

In fact, the only ones you are giving free meals to are your customer base that would have visited you anyway. Not much logic to that. (That isn’t to say that the frequent customer base can’t be marketed to - as I will expand on in future posts.)

So, what CAN be done about frequency for infrequent customers - what could be really motivating? Well, bookmark my site and return again for the upcoming answer.

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Zipcode Marketing - Part 4

September 10th, 2009

Hello, welcome back to Restaurant Trade Area Research (RTAR) - thanks for visiting today. And, today, I answer the ultimate question often in the minds of folks who develop markets for Fast Food brands - and that - is - how many folks can I really count on to become users of this restaurant?

First, the basics - obviously, it depends on the number of competitors and the number of restaurants that you have serving a particular zipcode - the fewer the competitors and the more restaurants you have - the higher the penetration. That said, very few FF brands can have more than one store per zipcode or perhaps two stores at the most serving a particular zip. ————- So ——- what is that number?

Generally, it’s between 15-25% for most brands — with more than one restaurant serving a zipcode - up to 40%+.

Zipcode Marketing Your Real Customer Base- Part 3

August 27th, 2009

Various `reasons’ can produce a research result for a unit that shows `low home zipcodes’ locally - compared to the full data. As I indicated in Part 1 - some stores can have figures as low as having only 23% or so of their customer base coming from their main two home zipcodes - other stores can be as high as over 50%.  One reason for a low figure might be the stores proximity to an interstate or along a very busy business corridor. Indeed, by have REAL customer data via the MarketView - an owner can establish a particular level as a goal - focusing efforts in the market to establish a minimum home market for all units. 

In Part 2 - I showed that these different levels of `home zipcodes’ in a customer base could mean the difference of having 10,000 available customers to market to versus under 5,000 (meaning available customers in the top two zipcodes to a store - often the one the store is in and the next nearest - most primary areas for homes to the unit). Once again, with the customer data - owners can decide best how to allocate marketing funds.

So, what else can be done with MarketView Customer Base data?

How about taking the known number of customers in a given zipcode and compare that to the census figures for how many live in a zipcode - and - voila - you suddenly have the Penetration Percentage of Customers within a zipcode for a FF unit. And, real research can show differences in these top two zipcodes of units to vary from 6% to over 20%. (The final penetration figure is the number of users as opposed to customers - and yes - the MarketView gives you that by knowing the nunber of customers per order.)

Finally, knowing this real data - via the MarketView - allows for the allocation of funds to achieve an objective; be it - boosting the poorest of penetration stores or targeting the best penetrated stores.

Zipcode Marketing Your Real Customer Base - Part 2

August 26th, 2009

When you use the MarketView design - part of the findings via our customer base formula - tells the owner, literally, an estimate on `how many’ customers do I have at this unit. Then, when that is combined with the knowledge of what percentage of transactions are with customers in the top two zipcodes for a store — the operator ends up knowing the number of customers that live in a certain zipcode(s).

In the same market I spoke of yesterday - one store had over 11,000 customers who lived in the top two zipcodes to that store; whereas, other stores had less than 5,000 customers in the top two zipcodes. So, once again, in this time of limited marketing dollars - targeting the most customers is good business and smart money.

Zipcode Marketing Your Real Customer Base

August 25th, 2009

Part of the data the MarketView I offer asks the customer for their zipcode - pretty basic. Yet, the outcome of the data - can paint a very revealing picture of a stores customer base. Indeed, let me paint that picture with REAL data from a MarketView project.

For example, in a recent MarketView with over 10 units - the range of customers who came from the stores main two zipcodes - varied from 23% to 58%. And, as I have mentioned many times already in this blog - stores with similar sales figures often have totally different individual marketing needs. Indeed, since the above figures are real - lets say in a fairly large market that you buy a full zipcode distribution for your Fast Food Brands restaurant coupons into the homes of your market.

Not too hard to figure out which ones will do the best - does it?

What if you decided to save some cash and only target the stores that have their data show that over 50% of the stores customer base comes from the top two zipcodes? Pretty smart - don’t you think? And, is a real targeting of your marketing dollars.

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Top Of Mind Awareness For Fast Food Brands - Atlanta, Georgia - July 4th, 2009

July 25th, 2009

This is a copy and paste from my blog at http://streetlevelviews.blogspot.com — Check it out.

Wednesday, July 22, 2009

Restaurant Top Of Mind Fast Food Awareness - Atlanta July 4th, 2009

Hello, and welcome back to Street Level Views. As you may be aware, on July 4th I spoke with a number of random people in Piedmont Park in Atlanta. Each of them were asked to name restaurants off the top of their heads and ultimately were also asked to name Fast Food Brands in a top of mind fashion. And, the seven folks in the demonstration taping were a mix of races, ages, and represented both sexes about equally.

Which makes the results even more interesting as they were anything but random. Indeed, 4 of 7 respondents named Chick-fil-A FIRST when mentioning Fast Food brands - with 5 out of seven naming them unaidedly. The other FIRST mentions were Moe’s, Subway and Burger King.

Only four FF restaurants had more than one mention unaidedly McDonald’s (3), Wendy’s (2), Subway (2), and Burger King (2). Other FF brands mentioned unaidedly included 5 Guys Burgers, Taco Bell, Jayson’s Deli, Moe’s, Quizno’s, Checkers, KFC, and Publix Subs.

Commenting on the top of mind mentions —— It is striking that Chick-fil-A `won’ in such a hands down manner (even with such a small sampling). Even more striking is the best `top of mind stories’ told by the respondents involved Chick-fil-A too. One story was told by a under 35 year old woman of she and her friends talking about how they would love to be on the `ad account’ - and - another woman, the heaviest fast food user of the seven - went into GREAT lengths to `show what she appreciates’ about Chick-fil-A. Obviously, the cows, humor and service seem to set Chick-fil-A apart from the everyday FF crowd.

The question is - will that awareness hold up in the first (beta) sample to be gathered citywide over the next month or so - bookmark and return for more information.

And, see the sample interview here http://streetlevelviews.blogspot.com/2009/07/street-level-views-about-restaurants.html and links to the other six interviews on YouTube.

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Marketing To The `Light’ Customer

July 4th, 2009

Hello, welcome to Restaurant Trade Area Research (RTAR) - today’s topic is the `light’ user. NO, I’m not talking about the infrequent user this time - I’m talking about the customer who purchases `just’ one item. This typically will be the `sandwich and water’ purchaser, the `drink only’ purchaser or the `dessert only’ purchaser. And, in this economic environment - many are forced to `price down’ to even go to FF restaurants.

So, what are you to do as a FF operator to `bump up’ these folks? Actually, this is a real easy group to directly market. After all, you already know their order - so, let’s say that you have your typical inside customer who is a `sandwich and water’ person: to that person goes a bounceback 49 cent drink offer with sandwich purchase. And, for the drink only purchaser - yep - 1.50 off their next combo or similar offer (1.00 off order over 4.00). The dessert purchaser - a buy one dessert get one at half off. You get the idea.

So, simple marketing 101 - directly work with your actual customer base - and - directly target segments to produce higher ticket totals. Also, having that coupon burning in their pocket may even make that next visit sooner.

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New Price For Customers - Free Food (Part Two)

June 4th, 2009

The new price of `free’ continues within the fast food category - this week - I’m aware of a dayparted Sonic free Root Beer Float and a free donut at Dunkin Donuts (with purchase) and I’m pretty sure I saw a coupon for an Arby’s `weekparted’ free Kids meal (on weekends with purchase). To be honest, I think there was at least one more.

Well, at least the new FREE involves some targeting. Targeting families to get into a weekend Arby’s visit - good idea. Targeting the sweet tooth by Sonic in the evening (this promo was after 8PM) - creating that `float, at night, in the summer idea - and also making this FREE promotion FREE - good idea. Dunkin Donuts getting some free trial by coffee users - good idea.

Also newsworthy on the `re-pricing’ of fast food restaurant visits is McDonald’s (at least locally) going 1.00 for all sizes of any soft drink (a la carte) (until Sept.30th) - NOT just the sweet tea. Smart - something I suggested all chains should consider in prior posts about how to deal with the `new’ normal in restaurant usage.

New Price For Customers - Free Food

May 26th, 2009

Forget having a good brand image. Forget about having a good product at a fair value. Forget having excellent store operations or effective advertising. No, the apparent way to customers is giving the food away for free (of which the promotion itself usually results in long service delays and perceptions of poor operations) sometimes without even the need to purchase a drink or side.

Is this the best strategy the chains can come up with? Even in these down times - scrapping along with consumers adjusting their frequency of fast food and overall restaurant usage? And, if one chain every 10 days or so is offering - free - how about a price offer that doesn’t give away the house and all profits?

How about a different tack - say - 79 cent ice cold soft drinks all summer long. Such a tactic would make the reduction `not permanent’; yet would offer real value - even allowing the customer to pay full price for a sandwich without feeling ripped off. Or, do the 79 cent drinks only on weekends to target the more `local’ home customers (and making your business base continue to give some profits during the week).

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Effective Billboard Advertising

May 15th, 2009

Hello, welcome back to Restaurant Trade Area Research - and today - that is just what will be discussed.

Markets which use my MarketView marketing research design find out the information needed to have truly effective billboard advertising. And, no, I’m NOT talking about `what’ is even on the billboard - I’m talking about placement.

Yes, placement - one of those  P’s of marketing. How you ask?

Well, the MarketView maps your trade area for each of your stores in an ADI and more importantly for this `effectiveness’ - finds out important customer information which determines the actual customer base size of an individual store in a market.

While it may seem counter-intuitive, your store with the largest volume may NOT be the store with the largest customer base - indeed, some of your lowest volume stores may fit that characteristic. How you ask?

Well, any store, and often lower sales volume stores - have LARGE customer bases with INFREQUENT users - indeed, some Fast Food Units may have 10-15,000 or more infrequent users compared to other units. And that is a lot of extra users being exposed to a particular billboard ad.

Additionally, because a unit (and market) has had its customer base Trade Area mapped as part of the research of the MarketView, even the side of the street for most exposure to the most customers can easily be selected for better billboard effectiveness.

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Does New Restaurant Research Point To Real Surge In Confidence And More Restaurant Spending? Or Not?

April 19th, 2009

The other day RBC Capital Markets released the results of a monthly tracking survey of interest to the restaurant industry - here’s the link - http://www.nrn.com/breakingNews.aspx?id=365256. As a market researcher, perhaps most interesting - to me - was the headline “Restaurants May See Diners Spending More”. This statement was, of course, seemingly backed up by the results of the survey - but, really folks, it’s time to be a little more realistic and accurate about `survey results’. (That said, the title doesn’t over promise - just spins non convincing data.)

The `facts’ to support the headline were gathered from the survey with a sample of over 2,700 respondents - and the survey showed an `increase’ - from 5% to 6% -  in the percentage of people who said they were planning to spend more at restaurants over the next three months. The key fact in support of the headline.

So, you mean that as we come into summer, and vacations, that the sliver of folks who take these surveys to heart and wording at its true meaning - might realize - that because of `vacation’ and not being home as much (or substitute the end of being cooped up because of winter weather) - that they `plan’ on `more’ restaurant purchases in the next three months? And, THAT, is what we are to be encouraged by?

Oh, please.

(And, what if last months survey results were 5.4% rounded to 5% and this months was 5.6% rounded to 6%. Even with a sample of 2,700 it’s hard to point to hard evidence with a 1% point move.)

Also, the survey indicates just how `the down’ sentiment and usage of restaurants has been - via the poll. And, supposedly, this also has `glimmers of hope’(?) - in that data - compared to the previous month - this months survey showed that the % of people who say that they are planning on eating less at restaurants in the next three months `dropped’ from 50% to 44% - and, indeed, that looks like good news - until you think deeper about it.

The obvious first — 44%, nearly half of your customers are still trying to cut back on their restaurant usage - a nearly record high number probably.

If this survey is `rolling’ - theoretically - each month - 1/3 of the sample is `doing’ the effect of the `answer’ from the previous month (meaning the folks of three months ago who said `eating less’ - will have - three months later - adopted a lower frequency level) - and when - `re-interviewed’ (theoritically three months later) would be at that `new level’.

Let me explain more. ———- If three months ago 50% anticipated (planned) on eating `less’ at restaurants — one would expect that they indeed cut back to a new level — which the restaurant owner — hopes they DON’T decrease again — hoping that they are now going to answer to such a hypothetical question “about the same (reduced) level” — one certainly - doesn’t hope for those folks - who already reduced their level of restaurant usage to be saying “I’m going to be reducing it more”.

Further, if 6% fewer people are saying they will be reducing their restaurant usage - why did only 1%  (1/6th of that sample) move into `increasing’? Could it be that those 6% are doing exactly as I say above — finding a new `minimal’ leveling off of their own restaurant usage - while others are STILL reducing?

Honestly, one would have to be `creative’ to say the new poll is good news. To me, IMO, as a research analyst, it seems to reflect the `New Normal’ - which is establishing a reduced level of restaurant usage into the future - more and more.

Not only that,  the poll goes on to talk about other economic numbers they crunch that also seem to reflect a `bottoming’ if not an outright `surge’ in consumer optimism. Yes, a surge.

All I can say is - Really? In a worsening job market? In which, the worst on the employment side of our Great Recession  is yet to come? Is that a believable number or is something going on in even the asking of the question and the nations dynamics.

Or, is this consumer number reflective of something else - like new loyalty to a new very different president - more of a hope than anything else. And, indeed, the 38% confidence number (it’s not really called a confidence number but is a roll up of similar characteristics) - up from an 8% reading the month before (do things economically seem 4 times better to you in the last 30 days?) — and, this percentage (38) is strikingly similar to the true hard core percentage of Democrat loyalties and percentages.

And, the poll, in March, after Obama was dissed in the press for being `negative’ and `too realistic’ about our economy in February (when the poll bottomed) - found Obama, in March - being `positive’ with his rhetoric (responding to the critics in Feb.) - indeed, much more-so - (do you remember the change in tone).

And, I bet, the result seen in this survey, was this supposed `huge surge’ in confidence. (The market was also in a bear bounce in March.) Indeed, if such confidence had really returned - the `more often’ number on the planning to eat out more in the next three months - would have spiked too. And, it didn’t.

Finally, I encourage you to look at this incredible visual map of the job losses that have hit each of the 3,000 counties in America - again, this map - which shows the change from job gain to job loss from Jan. 2007 to Feb. 2009 — will leave your head spinning - and in dis-belief — that a surge in confidence is already underway. http://slate.com/id/2216238/

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Are We - Nearing The Bottom - Or - At The New Normal?

April 12th, 2009

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.

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Fast Food and Dine-In Restaurants Slash Prices To Maintain Customer Bases

February 23rd, 2009

Hello, welcome back to the Restaurant Trade Area Research (RTAR) blog - thanks for stopping for a read. And, as you can see by the title of this post — once again in our depressed economy - where the discretionary dollar is scarce - where one restaurant unit after another closes - price points remain criteria number one for most restaurant chains.

Locally in northern Georgia - Mcdonald’s and Steak and Shake have met the Sonic reduced drink prices in the afternoon - Checkers has finally positioned a dollar menu — and as mentioned before Quizno’s `reduced prices’. And, two more restaurants have bitten the dust in the Woodstock Ga. market - Sonny’s BBQ (unbelievably) and the Woodstock Restaurant (daily buffet) - bringing nearly half a dozen closed up restaurants to Woodstock HWY 92 in the last few years.

But, it doesn’t end there - as the casual sit-downs are firing back on the price front with TGIF’s offering a buy one get one — with that being matched by other competitors like O’Charlies. And:

1-Wendy’s —- 3conmics (99cent choices) 2. Free Pancakes at IHOP tomorrow 3. Denny’s recent free grand slam breakfast 4. Steak and Shake’s recent `free combo’s for a year’ giveaway at local Atlanta locations 5. Fazoli’s - BOGO (buy one - get one) 6. Dunkin Donuts 1.99 breakfast combo 7. Starbucks - Breakfast value meal 3.95 — 8. McDonald’s Specials (like 3.33 for a Big Mac Combo) 9. Ruby Tuesday’s combo’s at 5.99 — Likewise Hooters 5.99

Makes one wonder when some chain will be bold enough in the south to make sweet tea a different price 24 hours a day - like 59 cents with any other purchase.

Finally, seems the burger front may be heating up - first Burger King’s mini’s will put pressure on Krystal’s and Roast Burgers at Arby’s - should compel trial. 

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At The Beginning Of 2009 - It’s All About Price Price Price

February 1st, 2009

Hello, thanks for returning to my Restaurant Trade Area Research (RTAR) website - I’m back and ready to comment on the utterly new marketing situation all businesses are facing during this economic downturn. This blog decided to `wait’ during the last 10 weeks - rather than comment `daily’ on the possibility of financial meltdown and market disruptions. Knowing that you, a franchisee - knew the real business situation better than the commentators on Tv or in-print.

But, seeing now that 10 weeks after the end of the first cash crisis, that we seem to be facing, again, the solvency of the very banking system — it at least seems prudent to update the on-going strategies being employed with marketing and ad dollars - by various fast food, casual, and sit-down restaurants in 2009 – and that strategy - not surprisingly — has one focus — PRICE. (Ad language for `cost’ — the perception of the consumer.)

As you may know, when we left off in Nov. it was about price too - various price points - and now - we have the same only ratcheted up a degree. I can only comment about the local Atlanta media marketing and local store market close to Woodstock, Ga. That said, I’m pretty sure that each is generally reflective of the nation as a whole.

Perhaps most noteworthy and of immediate concern to the competitive marketplace is Quiznos advertising campaign about `reducing prices’ on food. Period. Not, come in for a reduced price combo or similar deal or bounceback coupon value — no - the actual phrase positioning `reducing prices’. Their local couponing has a 2.00 off any regular sub and buy any sub and get a chips and regular drink FREE. Combine the everyday reduced prices with an additional 2.00 coupon — and the price for loyalty and new trial customers - has just been increased.

And, as you know, - for years - Sonic - has offered reduced drink prices during the afternoon. And, as you know, since Chick-Fil-A  (and Hardee’s) started selling quality milkshakes - those that previously sold shakes (especially Dairy Queen and Steak and Shake) - have probably been under some pressure on a signature item. The response - an aggressive coupon campaign by Steak and Shake and not only that, locally, in Woodstock, Ga at least — reduced price shakes from 2-4 in the afternoon. A very good aggressive response and making true dayparting of pricing a strategy that deserves a second look. (Such as reduced coffee pricing after 4 PM.) Not only that, recently, Steak and Shake had a special of those small burgers that are now favorites of Casual Restaurants too - attack on all fronts.

Fortunately, the above examples are the only ones talking about reducing prices (although - O’Charlies has pushed the casual market with the 7.99 price point advertising - instead of the usual 9.99) and, ultimately,  your customer ticket total. But, all the others are doing the same in their own manner. Here’s just a re-cap:

McDonalds - To soften the price INCREASE for the double cheeseburger from the old price of 99cents to 1.19 - the `old’ price of the double cheeseburger Combo for 2.99 is retained. (Only those cheapies will face that 20 cent increase.)

Wendy’s - Pure price positioning - 3conomics — with the focus on 99 cent choices of only Wendy’s quality and variety. (McDonald’s has countered with ads supporting their  3 - 2.99 combos too.)

Arby’s - From 1.99 Chicken Sandwich choices to 3.99 specific combo choices — low price positionings for Arby’s.

Taco Bell — Ads geared to products BELOW 99 cents each.

Checkers - New `99cent’ offerings.

IHOP - All you can eat pancakes.

Zaxby’s - 5.25 (or about) Combo’s.

About the only ones holding to a non price strategy at the moment are the potentially `low  priced’ Krystal (hard to reduce the price on a burger of that size) and `high quality’ brands - such as Chick-Fil-A. And, Burger King - continues to do what the King does best - be edgy.

The RTAR will get back to regular postings, with weekly links, with more opinions, and more updating  of the sidebar (and more) for this webpage - hope you like the changes to come in 2009. I want to suggest looking at the full 2008 postings of merit by  hitting the link in my sidebar review of 2008.

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