Economic experts have warned of a coming recession for some time—and the restaurant industry is likely to be one of the hardest hit. The industry has been experiencing record growth since 2007. However, a number of factors will likely contribute to the conclusion of that growth:
An oversaturated market. U.S. consumers enjoy nearly endless choices when it comes to popular concepts like pizza and burgers. Fast casual has also experienced a massive surge, jumping from 100 brands in 2007 to 850 emerging brands in 2019.
Rising labor costs. Labor cost is likely to increase, with predictions for the federal minimum wage to rise to $15.
Rising food costs. Products, suppliers, and vendors are likely to cost more, especially with recent pushes toward sustainability and accountability.
Weak sales. Based on average unit volume and growth, only a fraction of operators and brands are currently making a profit.
Consumer tastes and preferences are also changing. Mall traffic has largely declined, and more and more customers are gravitating toward on-demand delivery. Kevin Alexander, food journalist and winner of a James Beard award, has written at length about the topic in his 2019 Burn the Ice: An American Culinary Revolution at its End—you can check out his interview with Paul Barron here.
In this episode of Breakthrough, Barron explores how operators can go on the defense and put their brand on the fast-track to success—despite these challenges—through what he has coined the three-step “Market Share Kung Fu.”
1. Cross competitive analysis.
Barron advises operators to use your competitors as a guide. Identify who their customers are and find the best way to access them.
“Go after social lists in conquest,” says Barron. He suggests building a digital CRM platform to help in building these lists. Email acquisition is also useful, but should not be your primary resource.
Bounce back cards are also ideal. Drop a bounce back card into the delivery bag to encourage your customer to visit your webpage and enter their information—that way, you can gather data on where they are eating when they are not at your restaurant.
This step is all about targeting: target by lookalike, by influence, by location, and by competitors.
“Serve ads based on behavior,” says Barron. “You want to know about their lifestyle… don’t just think about food.” Identify the places your customers—and where your competitors’ customers—visit. That way, you can determine what intrinsic qualities in an establishment attract and interest them.
3. Win the game of story.
More than anything else, your brand needs to have a story—and it needs to be better than your competitors.
“Your story has got to be something that connects to the local community—something that people can gravitate to,” says Barron. “Anything that can get you in behind a movement that connects you to a story.”
And you need to have a highly trained staff that can share and support that story every day. Ideal employees are able to quickly recognize and rectify a problem in an engaging, helpful way that keeps customers coming back to your restaurant.
Check out the episode above to learn more about data acquisition, geo-targeting, and training a SEAL team!