Driving Traffic to Restaurant Chains
Chain Leader's primary research asks restaurant-chain operators which methods they use to keep customers coming and which methods really work.
By Mary Boltz Chapman, Editor-in-Chief -- Chain Leader, 11/1/2009 12:00:00 AM
If there is one lesson from Chain Leader's Driving Traffic research, it is that restaurant chains are willing to try any number of ways to increase customer counts in their restaurants, because there is no one-size-fits-all solution.
When operators were asked to name their most successful traffic driver, only one, TV advertising, rose to the top—if you can consider 24 percent of respondents the top. Effective methods range from national campaigns to welcoming a classful of students into a restaurant.
To find common themes, Chain Leader surveyed 72 restaurant executives with four or more units. Most of the respondents hold a director, vice president or senior executive title in marketing or operations. Of those giving a specific location count of their U.S. restaurants, 27.9 percent have four to 10; 39.3 percent, 11 to 100; and 32.8 percent, more than 100 locations. Forty percent represent full-service concepts; 35 percent, quick-service; and 25 percent, fast-casual.
How's Business
As a starting point to gauge how chains are faring compared to last year, Chain Leader asked about customer counts and other measures. Almost three in five, or 57 percent, report that their traffic counts are down from the prior year, but 22 percent say traffic is up.
While 43 percent of respondents say their per-person check average is down, 31 percent report a higher ticket. This is despite the fact that 42 percent have raised menu prices. Of those who did, the median increase was 3 percent. Forty-six percent of respondents' menu prices stayed the same.
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Asked to name their three biggest concerns for this year, 64 percent pointed to increasing food costs, and 58 percent said increasing labor costs. Reduced customer traffic was the third most often cited (by 54 percent of respondents), followed by menu pricing (35 percent) and understanding consumer menu trends (35 percent).
Advertising Age
Almost all of the respondents (94 percent) use some form of advertising to drive traffic. In fact, when asked which of all the methods they use is most successful, 55 percent name some sort of advertising (the top methods were TV advertisements, named by 24 percent, and Internet or e-mail advertising, cited by 15 percent as their most effective traffic-driver).
Sixty-two percent of respondents use signs in or on the restaurant to try to build guest counts; 51 percent use TV; 45 percent, radio; and 45 percent, newspapers.
But fully 69 percent of survey respondents use Internet or e-mail marketing. Though an apples-to-apples comparison is not accurate due to changes in methodology, it's worth noting that in the 2008 Driving Traffic research, 26.5 percent said they used Internet or e-mail advertising and 17.9 percent reported beginning to use it or using it more than they had in the prior year. This year, 56 percent of respondents said they started using it or had increased its use.
While 24 percent of respondents said they had increased or started use of radio advertising, almost the same percentage, 22 percent, said they had reduced or ceased use of radio. Fifty-one percent said they decreased or stopped using newspaper advertising.
When asked what their primary advertising method was, 35 percent said TV and 24 percent said Internet/e-mail.
Food First
The traffic-driving category with the highest usage rate is menu changes, with 97 percent using at least one menu method. About 85 percent of respondents update or add to the menu to keep customer counts up. Sixty-three percent feature menu promotions, and 43 percent have added more-healthful items.
Half of those who use the menu to drive traffic say their primary method is through adding new items. Seventy percent report updating the menu more often than in the past, and 40 percent have begun or increased use of special menu promotions. And 38 percent say they have increased use of healthful menu items as a traffic driver.
Playing on Price
About 93 percent of operators use price promotions to drive traffic. Sixty-one percent report using special discounts for buying bundled or upsized meals; 58 percent say they use direct-mail fliers/coupons; and 34 percent use newspaper inserts (though 37 percent say they are using inserts less or have stopped using them).
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Asked their primary method of price promotion, 27 percent said direct mail and 27 percent said discounts for bundling or upsizing. In addition, 52 percent said they have begun or increased use of bundled meals, and 38 percent have started or increased use of direct mail.
Only about 27 percent of operators say they use frequent-diner programs, but 21 percent say they have started using one or are using it more.
Community Relations
Most operators (93 percent) use community involvement to drive traffic: 73 percent support charitable organizations (and 44 percent say they are doing more of that); 56 percent participate in or sponsor local events or sports teams (and 31 have increased participation); and 48 percent support or sponsor school or student activities like field trips or reading programs (39 percent say they are doing this more often than in the past).
While 22 percent of respondents say they are having more special events such as cooking classes or parties in their restaurants, 23 percent say they are hosting such events less often.
Service Sells
Eighty-five percent of operators say they use service to improve traffic. For example, 68 percent report efforts to increase speed of service, and 44 percent say that is their primary service method. Forty-eight percent of respondents are working to improve accuracy of orders.
Keyboard Marketing
Seventy-seven percent use some form of electronic customer communication: 58 percent use promotions via their Web site; 46 percent use e-mail messages or newsletters; and 44 percent use social networking sites like Facebook, Twitter and MySpace. Fully 52 percent of respondents have started using or increased their use of social networking.
What's Working
The survey asked chain operators if their most effective method of driving traffic did indeed increase customer visits, and 77.5 percent said it had; 15.5 percent said it had not.
Operators have different goals when trying to drive traffic. For example, 37.5 percent said they were trying to increase visits by frequent diners. Meanwhile, 31.9 percent wanted to attract more of their current demographic; 30.6 percent were trying to increase traffic during a specific daypart; and 19.4 percent were aiming to attract a new demographic.
Different goals lead to different methods used. Of those who said that Internet/e-mail advertising was their most effective method of driving traffic, 63.6 percent were trying to increase visits by frequent diners. And of those who named TV advertising as their most effective method, only 17.6 percent were targeting their own frequent diners.
Supply Side
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Restaurant chains' suppliers often try to help their customers grow business. Asked which methods their supplier-partners had offered them, 35 percent said menu development; 32 percent, in-store point-of-sale materials; 31 percent, promotions, prizes or sweepstakes for restaurant customers; 28 percent, special promotions for the operator; and 24 percent, recipes.
Respondents were then asked how effective those methods have been. While 35 percent of operators have been offered menu development, only 21 percent felt it was effective for helping them to drive traffic, and 42 percent said it was somewhat effective.
On the other hand, 90 percent of those who had been offered coupons or promotions in conjunction with a supplier's retail brand found it at least somewhat effective, but only 14 percent of operators had been offered this method.
Thirty-one percent of respondents had been offered none of these supplier helps, nor could they answer if there were other methods offered by suppliers. Margin-strapped suppliers may be focusing their efforts on their best or highest-potential chain customers.
Finally, the survey asked operators to consider those suppliers who were supporting their efforts to drive traffic and note what they were doing better than other suppliers. Common answers included working with the chain operator on ideas, promotions and pricing; and simply consistently delivering what they say they will.
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