Earning traffic during the retail decline

Retail business is being crushed – no surprise to anyone studying their local markets, watching the news or even driving in their neighborhood. Stores are closing and brands are going bankrupt. Strong brands like Macy’s, Lululemon and Ralph Lauren are suffering. Weaker brands like Sports Authority and Payless are suffering even worse.

There are some theories about why. Amazon. Experiences. Did we mention Amazon? But the fact is that people are spending less time going to stores. The build out of restaurants across the US was aligned with the buildout of retail. Creating destinations that would attract people (shoppers) called for restaurants that allowed them to refuel and extend their shopping trip. Now, traditional anchor tenants are shutting down making malls empty husks. Developers are scrambling to rethink the space they’ve got so much invested in.

What will be the memorable touch that your staff provides that will earn five stars on Yelp and a repeat visit?

Multi-unit restaurant brands have lost the natural traffic from their retail neighbors. Considering the extreme die-off in retail, restaurant sales are remaining fairly strong.

Experiences built for sharing.

One theory for the drop in retail is that people are spending more on experiences. Specifically the kind of experiences that make them look good on social media. Experience has become a buzzword, generating cottage industries of specialists and consultants. It doesn’t have to be that complicated. What in your restaurant is worth posting to Instagram? What’s on the menu that will break through the Facebook feed and go viral. What will be the memorable touch that your staff provides that will earn five stars on Yelp and a repeat visit?

We are seeing strong, established retail players really ask themselves if they are offering something worth visiting. Is the experience worth the trip? Would you invite someone to come along? Would you share it to social media in a non-snarky way? Brands need to look in the mirror and accept what they provide and its value. The brands that do will have a chance to create experiences that people will travel for.

Delivery as an extension not a replacement.

If people won’t be coming to you, you can go to them. But one flaw with the current trend of delivery services is the lifeless exchange with the brand itself. Hospitality provided by the restaurant is gone. The experience is provided by a proxy. Staff and servers are critical to earning repeat customers, so what happens when they’re eliminated from the transaction? And a transaction is all it becomes.

Another reason that retail has fallen off is that online retailers have found ways to mimic the service and personal touch of live staff. They’ve eliminated barriers. Restaurant brands must find ways to extend the experience in a delivery environment. What touches can be added to make delivery from your brand memorable and differentiated? While people are keen to share images of their meal at the table in your restaurant, they’re very rarely interested in sharing an image of food that’s been delivered, unless something’s gone terribly wrong. Give them a reason to get excited about the brand from their own home.

One interesting thing about people is that we always think we’re watching the third act. What is happening to malls today isn’t necessarily the final state of American retail. Building malls as a center for commerce was one phase. The web was a second. Mobile is still impacting things today. Technology like self-driving vehicles will change shopping in ways we haven’t yet considered.

The brands that are positioned for growth aren’t the ones going all in on what we know today. They are the ones who are creating plans that will be adaptable going forward.

3 ways to maximize LTOs using scarcity bias

Limited time offers (LTOs) are effective because people believe they won’t be able to have that meal after a certain period. This activates a mental state called scarcity bias. Airline websites are the best at activating scarcity bias to sell a reservation. You’ve no doubt noticed the call out reading “Only 2 seats left at this price,” which creates an urgency for you to book before the person logged on across town does so first.

scarcity, traffic, demand, brand
Only 3 left at this price!

McDonald’s has an annual goldmine in the McRib. By offering it each year as an LTO, they create excitement and demand that wouldn’t likely be sustained for a permanent menu item. Consumers have told us they don’t plan much for most of their dining occasions. The LTO has to earn a date on the calendar for your brand.

Most restaurant brands intend LTOs to drive traffic in a contained window. Either explicitly or in small type, they’ll identify that is is available for a limited time only. But the assumption is made that consumers register the expiration date on the offer. Without that information, it is unclear that the offer is scarce.

1. How long is limited?

As consumers continue to be buried in ad messages, it gets harder and harder to retain information. When preparing ad communications for an LTO, marketers tend to look at the pieces in a vacuum. Consider all the noise around the piece. There are several key facts that the viewer must take away to be drawn in. First and foremost, how long is limited?
Most brands hide the end date. Test making an end date visible. Consumers will have a timeline to fit the offer into their schedule.

If the offer goes ends up exceeding the end date, it can always be messaged as a positive. Extended due to popular demand.

Be aggressive about reminding your audience that they might miss their chance to try this or have it one last time.

2. Make LTOs special

There are unlimited options. Every day, people can get whatever they crave. It’s important that your LTO has something unique in the market if you want to capture new customers. How unique? Unicorn Frappuccino different. Getting attention isn’t easy. If the brand is focused on scarcity as a strategy, create something hard to find.

If the offer is intended to earn extra visits from current customers, the offer can be something a little less out there. But it has to stand out enough to draw interest and make them put a date on the calendar.

3. The end is near

If every brand were buying network television, this would be terrible advice. But with digital and social channels, updating creative with reminders is affordable and effective. Now that the end date is clear, be bold. Add a count down to digital creative. Be aggressive about reminding your audience that they might miss their chance to try this or have it one last time.

Not ready to be so bold? Test count down messaging for your next offer exclusively with paid social. It can be targeted to a specific area – from a DMA to a single store. This test can inform future approaches and expanded based on results.

Another Challenging Year for Restaurants

If you thought 2016 was challenging you better hold on. 2017 is not poised to get better. Even with Republicans controlling both the Congress and White House and the opportunity for reduced regulatory burden on businesses, the outlook is tough for a host of competitive reasons and a continued over supply of eateries.

Chicago-based NPD expects restaurant industry traffic to remain stalled in 2017. Traffic to dine-in brands AKA casual dining, will continue to fall at a rate of 2%. They do however bode slightly better for quick serve brands with traffic projected to grow 1%, hardly a panacea in light of the expanded competition from grocery. And to further cloud the traffic picture, gas prices are projected to continue to rise again.

Innovation is critical to continued success and a way to stay competitive.

Consumers’ apetites for dining out continue to be stymied by the prepared foods industry. And the competition is not just coming from traditional grocery stores. Increased options and improved quality at C-Stores will continue to provide viable options for consumers. Take into consideration the attractive value proposition of better quality, more options, less expensive and convenience and you have a cadre of tough competitors for share of stomach.

So what’s a quick serve and any dine-in brand to do? First and foremost make sure to deliver on the basics. Create superior dining experiences. Immaculate restaurants and food quality are ways to win consumers for that next dining out occasion. Our research shows how important the customers the last visit plays into future decisions on a return visit to the same brand. Training or retraining staff to surprise and delight the customer is an inexpensive way to deliver that superior dining experience.

Innovation is critical to continued success and a way to stay competitive in a challenging environment. And I’m not talking about building an app. App downloads are down significantly as people are demanding apps that provide utility and it’s unlikely a restaurant brand can provide the kind of utility Uber provides, which is the standard by which most apps are judged. Instead, consider innovation on your menu with flavors from the season or capitalize on popular flavor profiles that consumers crave. Millennial customers are fond of bold interesting flavors you can’t find just anywhere.

Test different options in a few units before rolling out to the entire system. Our research show customers love the opportunity to weigh in on what their favorite brand is testing. Utilize a high performing store with a strong manager, this guarantees a meaningful test that can be replicated over and over. It also helps refine the preparation and presentation for a highly effective roll out.

We are also seeing technology playing a key role in innovation. Although probably the more expensive route it’s necessary to stay ahead of the curve on collecting critical data to analyze and leverage to better understand your customer’s habits and behavior. Once you know who your best customer is and what they like you can leverage that information to go get more of them.

Mobile ordering is growing exponentially and if having that feature makes sense for your brand make the investment. We are seeing many brands generating significant incremental sales and ROI on mobile ordering by leveraging intelligent upsell opportunities.

It’s not the apocalypse but these are challenging times for restaurant brands and prepared food in general. You’ve been in business a while now and you know it’s cyclical. Stay focused on the fundamentals of delivering great hospitality. Innovation is critical to staying competitive and technology will keep you ahead of the change curve.