Can Casual Dining Recover?

Americans love to eat.  Food is as big a part of the American day as any other aspect for most people.  In fact, nearly one third of all Americans have been diagnosed as clinically obese.  While Americans themselves may not be on a diet, their wallets are.  Restaurant sales at casual establishments fell by 5.4% in February following a trend of declining sales that started back in December.  Many believe that the economy is the primary factor in this drop in casual restaurant sales.  The rise in the cost of living, combined with rising gas prices and increasing payroll taxes has helped to spiral the industry on its first three month losing streak since 2010.

Some of these trends may not be entirely attributable to the economy, however.  2012 featured unseasonably favorable weather throughout the winter months.  2013 has not been so kind.  While the changing seasons cannot take all of the blame for the decline of restaurant sales, it can serve to ease some of the pain of the situation.  If restaurants want to pull themselves out of the cycle of declining sales, they need to do something.  We've talked about some of those issues in previous posts.  We recommend that you take a look back at those posts for in depth information, but the highlights include:

• Promotional offers
• Social Media Campaigns
• Guerrilla Marketing
• Customer loyalty programs

Restaurant Sales Down in February

The National Restaurant Association's index that measures restaurant industry health through same store sales dropped 0.8% to 99.9 in February, signaling that the industry is softening.  February was the fourth time in five months that the index saw a decline.  What does this mean for those in the food service industry? It means that you are going to have to work harder than ever to maintain your bottom line.  Analysts believe that the decrease in sales can be linked to the increase in gas prices and the payroll tax.  These two factors have families eating in on a more regular basis.

This presents a problem when restaurant owners are busy trying to attract new customers.  They cannot rely on their regulars to drive all of the business.  If they are going to continue to be successful, they need new faces seated at their tables.  To do this, we recommend that they engage in some new forms of guerilla marketing.  Take samples of your new menu items to the streets.  Give them to hungry unsuspecting people and encourage them to come to your establishment to try the rest of the menu.  If your food is as good as you are telling people it is, then they will come.  This is a new and creative way to get new customers through your doors.  It will also help you to strike up conversations with potential customers to gauge their tastes and preferences moving forward.

Beer Sales Down on St. Paddy's Day

Is Saint Patrick's Day weekend one of your biggest food and beverage sales weekends of the early year?  If you are like most restaurant owners, you were prepared to take advantage of the spike in demand for food and drink that was supposed to happen last weekend.  However, like most restaurant owners, you were probably surprised to find that the customers just did not flow in like usual.  According to a recent report, beer sales on Saint Patrick's Day weekend dropped by 4% from last year.  This drop in sales could prove detrimental to your restaurant during this holiday season as you gear up for the busy summer months that are coming.

More highlights from the report:

• Beer sales down 4%
• Wine and Cocktail sales up 2%

This information could serve as a leading indicator for restaurant owners preparing for what are usually very busy months.  If sales and discretionary spending are down now, it is likely that the trend will continue into the coming summer months.

Dealing with a Dip in Sales

Has your restaurant been empty lately?  Are you struggling to fill seats for multiple rounds of servings, even on nights that you're usually busiest?  Rest assured, you're not alone.  Well maybe in  your restaurant right now you are, but you're not alone in the industry.  As quarter four numbers start to roll in from many of the major restaurant corporations across the world, numbers across the board are down for the most part.  Why is this happening you ask?  Are more people cooking at home?  Has the restaurant industry lost its appeal?  Yes and no.  Yes more people are cooking at home now, but the restaurant industry has not lost its appeal to the general public.  Discretionary spending is still down across the board.  Customers are unable to spend their hard earned income on fancy meals dining out.  Experts believe this lack in disposable income, despite the recent start of economic recovery, has been a result of recent hikes in payroll taxes and gas prices.  With these new expenses causing consumers to rethink their discretionary spending, it is important for restaurants to come up with exciting new promotions to get their customers excited to dine out again.

For example try these new ideas:

• Social Media Campaign
• Discount Couples Evening (make it a date night)
• Family Style meals night

What A Minimum Wage Hike Could Cost You

In his State of the Union Address, President Obama called for the federal minimum wage to raise from $7.25 to $9.00 per hour.  The wage for tipped workers, which has been $2.13 per hour since 1991 is also expected to rise.  So far, major restaurant groups have been silent on the issue since the president's announcement.  Analysts however, have not been so silent.
Projections show that the hike in wages could result in higher prices for meals at your favorite restaurants.  In fact, they project that inflation in relation to labor costs could rise as much as 18%.
What does this mean for the restaurant industry?  A projected 50 cent increase in wages for tipped labor would result in a 4% cost increase in prices for meals at sit down type establishments.  In an economic period where discretionary spending is still low this could cause a significant problem for the restaurant industry.
Currently, the proposal is not in the legislation phase.  Until that happens, major restaurant industry leaders will refrain from lobbying for any change regarding the issue.

What do you think?  How will the restaurant industry be affected by the proposed change in minimum wage in the United States?

Fast Casual Restaurants - The New Trend

So, you want a meal but you're in a hurry.  You're past the point in your life where going through the drive through and getting something quick and incredibly  unhealthy is an option.  Sure those Big Macs have been great to you through the years, but you're sticking to your health pledge.  Seems like you've got quite the dilemma doesn't it?
Lucky for you, the fast casual trend has taken hold in the United States.  The idea itself is not new.  Fast casual was introduced in the 1990s.  The idea is really quite simple.  Restaurants offer a limited form of service while providing a higher quality meal.  Restaurants like Five Guys have used this model to become leaders in the industry.  Five Guys does not offer table service.  Customers order at the counter and are then called when their food is ready.  The process takes more time than a drive through, but significantly less time than a sit down restaurant.  The food is also much more nutritious than a traditional fast food restaurant because the food is cooked to order and is not sitting around waiting for someone to purchase it.
This operational model can be beneficial to new redcurrants looking to break into the business.  Without table service, the business can save money in labor by not having to hire servers.  This saved money can be used to invest in the most important aspect of any restaurant operation: the food!  

We'd love to hear your thoughts about fast casual dining options.  Please join us in this conversation!

Adapting Menus for Different Seasons

All restaurants do it.  We make different menus based on what season of the year it is.  Most of the time we do this because ingredients change from season to season and some things just taste better in the winter than they do in the summer.  When was the last time you ate a summer salad in the middle of January? Probably never because those summer greens are so much more crisp in the summer.  But what about times of year that aren't exactly "seasonal" seasons.  Last Wednesday marked the beginning of Lent. The 40 day period in which Catholics refrain from eating meat on Fridays.  No, everyone who eats at a restaurant is not going to be a practicing Catholic, but we've found that adapting to this request presents an array of unique opportunities for restaurateurs across the country.  Typically, no meat on Fridays meant fish of some sort for Catholics (our favorite always used to be fish sticks).  Fish doesn't have to be the only solution, however.  Chefs across the country are incorporating new menu items for the season of Lent to keep their menus fresh. Instead of just fish, try incorporating a new type of salad that is both tasty and healthy.  We recommend the beet salad at Harvest Restaurant in Cambridge.

If adding new items to the menu isn't your style, try re-marketing some of your classic fish dishes.  This is exactly what chains like McDonalds and Carl's Junior have done recently.  This new, fresh spin on fish allows the chains to keep selling their classic items while attracting new customers with the fresh look and new advertising.

All in all, Lent is a short season when looking at the scope of an entire year for a restaurant.  However, it poses an interesting challenge and opportunity for chefs.  Creating new dishes will enhance their menus and keep customers happy all in one fell swoop.