For our Foodie Friday Fun this week let’s think about dining out.
In tough economic times, that’s not an easy decision for many people and the restaurant industry has felt that over the last few years. More on that in a minute. Where to eat? In many places there really aren’t many alternatives to the big national chains. As with booksellers, coffee shops, and clothing stores, many of the little guys have been undercut by the chains, at least when it comes to price and in many cases quality. So you’d think that the national chains, particularly the casual dining chains, would be doing well. You’d be wrong.
The casual-dining industry has largely worn out its welcome. Customer traffic to these restaurants has declined in nine of the past 13 years, according to retail-research firm Black Box Intelligence. Even as the U.S. economy began healing and consumer spending recovered, beginning in 2010, same-store sales were stagnant, based on Black Box estimates. In December, industry-wide sales at restaurants open at least a year slid by 2%, even as the unemployment rate hit a five-year low and the stock market hit all-time highs. For sure, harsh weather didn’t help, but that can’t account for tepid nationwide results.
This raises a few instructive questions in my mind. Turns out that in the process of upscaling fast-food and undercutting fancier local places on price these chains – Applebees, TGIFridays, Red Lobster and others – left a niche that’s suddenly being filled by Chipotle and others. They’re getting beaten not just on price (a relatively easy thing to fix) but also on quality of ingredients and food served. As we’ve seen many times here on the screed, if price is the only thing you have going for you, you’re in trouble.
The reality is that casual dining out is not a casual decision these days. Cooking at home can be an attractive alternative when one figures in time and cost but who wants to clean up? Even those of us who are dedicated cooks like a night off. Most folks prefer to spend that night in a welcoming environment with interesting food. The chains seem to be duplicating what a decent home cook could do (and generally in a less-healthy manner but that’s another rant). Consumers also see that they raise prices by offering smaller portions or offering cheaper, lower-quality meals. Charging for every drink refill may help margin but angers customers (especially if you don’t tell them you’re charging until the bill comes).
Any business needs to give customers a reason to buy. That means a great product that meets customers’ desires that’s priced fairly and supported by great service. That’s how I see it. You?