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Blog
Customer Behavior Heads South
February 10, 2009
Technomic Inc.'s Bob Goldin writes that 75 percent of consumers the firm surveyed recently said the recession has caused a great deal of financial pain. So much, in fact, that they were significantly trimming restaurant visits. Granted, that's hardly stop-the-presses news. But later Goldin makes a point worth considering: Consumers will now look to re-build economic security one dollar at a time, weighing non-essential purchases more carefully. The good news is that, based on our research, consumers still want to eat out, even if they do plan to make some fundamental changes. They are prioritizing their foodservice purchases, making trade-offs for things that are less central to their quality of life while striving to maintain activities that are important to them. Cindy Starcher, 35, and Lorraine Norrod, 50, are among the small group of Manchester [Ohio] workers who decided to seek retraining in a new field. Their rationale is easy to understand: in Ohio, more than 280,000 manufacturing jobs have been shed since 2000. The women carpool now to classes Monday through Thursday at Northcoast Medical Training Academy, studying to become medical assistants. Those jobs typically pay about $20,000 to $30,000 a year, they said, much less than what they used to make.
Of course, people still desire to sit down to something other than a home-cooked (or assembled) meal, particularly at dinner. But just because someone tells a researcher that he or she intends to dine out doesn't mean they are going to do it any time soon. Or with any regularity, as Goldin suggests in the last sentence above.
After reading that passage, I began to wonder: Which trade-offs are they making? What's more central than a restaurant meal? What "activities" will the increasingly elusive consumer "strive to maintain"? Can a restaurant compete with whatever those activities are?
It won't be for a lack of trying as recently witnessed by $9.99 steak dinners and all-you-can-eat promotions and the plethora of two-for-one deals flooding the market.
I think diners know value when they see it and think, well, that might be a good steak but it's not going to fill me up like a real steak dinner. On the other hand, pancakes -- the current all-you-can eat promo at IHOP -- will fill me up, fast. I'll never get my money's worth. (Back of mind: Are the restaurants also using cheaper ingredients?)
I think the fundamental changes Goldin refers to are just just that: Changes in purchase behavior the likes of which no chain executive has seen and which few if any chains can dent.
That paragraph is from a New York Times article about people losing good-paying jobs in a small Ohio town, and not recovering. Restaurants aren't mentioned and these folks may not have been your customers in the first place. But they were someone's.
The piece, in any case, drives home the point that Goldin makes at the end of his essay: "This [recession]will require all industry participants to make major modifications to their business model. It will be hard work and taxing times as we all adapt."
With all due respect, Bob, it's looking more like the end of that last sentence should read: "... as some of us merely survive."
Posted by David Farkas on February 10, 2009 | Comments (2)
Reader Comments
at 2/11/2009 5:52:58 AM, chefmel commented:
Great article, and oh so true!
at 5/13/2009 3:11:51 AM, Arianadirl commented:
Good work! Thank you very much! I always wanted to write in my blog something like that. Can I take part of your post to my blog? Of course, I will add backlink?