Why does restaurant traffic die?

traffic, lines, demand, dining, trends

Regular reports have shown that multi-unit restaurant sales are at their worst performance levels in three years. Prices have risen for guests at most concepts due to increases in commodity and labor and sales are still down. Here’s what all restaurant brands have to face – increased traffic leads to higher sales. People in the door can buy from you, people at your competitor cannot.

Brands may look at their daily counts and see consistent traffic, year over year or period over period. For top performing brands like Panera Bread, Chick Fil-A and Shake Shack traffic doesn’t seem like much of a challenge. Today. Think about a brand like Roy Rogers that once had almost 650 busy locations and has now retrenched with about 50. Once strong traffic provided revenue for growth, now fighting to re-launch. Traffic patterns can change quickly. Here are some reasons why and how to address them.

New Competitors

The burger wars were waged between two or three major QSR players less than 10 years ago. Then fast casual burger concepts joined the fray with a new take on the menu and a more premium product approach. Compare that to what huge segments of the QSR were experiencing in the early 2000s: they wanted a burger and this was their only option. They didn’t love it but they were in the habit of settling. Smashburger presented a solution to these people. And they went. Once they were exposed to a more premium product, the habit was, er smashed. (Sincere apologies for the pun).

Now McDonald’s is negotiating with customers on their terms – finding ways to make their product appear more premium. They’re fighting against 60+ years of brand perception and experience. Brands have the opportunity to get ahead of this battle on their own. By getting out in the market and trying new concepts on their own and examining threats early. Because you are experts in knowing what your customer wants, you should be able to make reasonable leaps as to what bits of each concept will catch their attention.

The mistake brands make – especially huge brands – is feeling a need to steal a concept whole cloth by creating a clone concept or incorporating whole menu sections into their own. This is a major investment and distraction from what their best customers love about them. Just take the pieces that make sense for your menu, will increase occasions or sales and can be done well, operationally.

Changing Trends

Poke and other new menus made an impact in 2016. The number of locations for restaurants with a focus on poke grew dramatically. Assuming each has healthy traffic this year, the question has to be – where did diners stop going to visit their favorite poke place? Different than a shift in competitors, changing trends means a shift in the tastes of your core customers.

This presents two unique problems. First predicting these changing tastes. We’ve seen a rise in consumer interest in vegetarian or plant-based options. No one should be surprised by the growth of Veggie Grill at this point. Brands that have lost traffic in competition to a concept offering this must be asking why. They failed to accurately forecast consumer interest. This might be from a lack of research or perhaps a dismissal of the concept.

If predicted, how can restaurants capitalize on a trend? Casual dining or broad menu brands can simply add an item. Maybe test an LTO. This builds a moat against concepts solely focused on that trend. It also builds in defense those that might veto a visit to their place. A new focus on salads lets Domino’s win extra occasions from groups with members who want vegetables (or just don’t want pizza).

For an established brand with a tightly constructed menu, for example Jersey Mike’s, adding trendy items like poke is not easy. In this case, work to understand the underlying reasons behind the trend. It’s often more than the ingredient. In the case of poke, is it a seafood focus, an Asian flavor focus or simple novelty? Get to the root of the trend and find a way to reach your guests.

Shifts in Service and Experience Standards

Readers know immediately that shifts in service and experience are traffic killers. Casual dining brands has been dramatically eroded by the expectations created by fast casual. Similar quality meals offered in a quicker format at a lower price point. Now brands like Panera Bread and McDonald’s are offering kiosk based service that is changing the experience again.

Do not wait for the trades to report these innovations and shifts. Get out in the market and visit new concepts. See the menu presentation yourself, order yourself, try the food. Find the moments of delight and disappointment in each experience. Then compare against the experience your brand offers.

Keeping traffic steady (or growing it) means being vigilant. Brands need to work to stay on top of culinary, experience and fashion to see how consumers are changing. Understanding what consumers want means knowing how to keep them coming in.

Author: Adam Pierno

Adam Pierno has a one-of-a-kind perspective on restaurant and CPGs. He investigates the connections between strategy, media, digital and business goals employing social media listening, analysis and traditional consumer research to find meaningful insights for brands thinking about their futures.