Lane Cardwell

Sea Change

You have heard the term. Now the restaurant industry is experiencing it with our customers. A sea change is a major transformation or a fundamental shift. If you assessed where your concept stands relative to its price-value relationship at the close of 2007, or early in 2008, there has been a dramatic change in customer attitudes in the past 3-4 months. Your plan may already be obsolete.
 
I just returned from the semi-annual meeting of the Marketing Executives Group of the NRA in Chicago. This study group is comprised of restaurant marketers, presidents, and CEO’s who gather to stay up to date on the latest in marketing, advertising, research, consumer and industry trends. This gathering of over 250 was the largest attendance yet of the 25+ years that this group has been meeting. Many commented that the business climate was too tough to not try and gain an edge through the insights that these meetings offer.
 
The president of the Yankelovich Monitor, J. Walker Smith, made a presentation on their latest lifestyle value research of key consumer groups. This research showed major changes from January 2008 to the April/May 2008 time period in consumer attitudes. Since restaurant marketers were the primary audience, Dr. Smith focused his presentation on the attitudes most affecting restaurants.
 
There were significant changes in people's attitudes toward restaurant spending, both in terms of frequency and dollars spent per visit. There are many reasons for such a profound change in such a short period of time, but looming large is the weekly trip to the gas station. With no relief in sight for high gas prices there is no relief in sight for consumers believing that the worst may still be ahead. There is a “hunkering down” mindset that is affecting many industries.
 
I went to pick up some dry cleaning a few days ago.  The manager had posted a dry cleaner industry briefing on sales trends across the country. Nationally, sales in April were down over 12% vs. prior year. Sales in the western states were down over 20%. The briefing commented that most customers were only bringing in items that absolutely had to be cleaned, and were stretching the time out on others.
 
If your plan for battling this period of customer softness is already a few months old, it is time to revisit it and challenge whether it is aggressive enough to resonate with a customer who feels that they are under siege financially. The key to survival when customers are questioning every purchase for value is to change with them.
 
Foot traffic becomes more important than keeping 100% of your guest check in times like these. Don’t let your customers wander over to a competitor who was more adept at translating their needs and fears into short term promotions and value offerings. They may not wander back.

Posted by Lane Cardwell on May 19, 2008 | Comments (10)