If you kept a dining journal you might be surprised at the varied names that appeared. People don’t have a loyalty to most restaurant brands. Never mind a single dining format. Know anyone that goes exclusively to fast casuals and never sits down at a casual dining establishment? Know anyone that truly avoids every type of QSR?
People have a wide array of options and a larger pool of comparison.
No, if you looked back at the location data stored in your phone, you would find something surprising. People choose restaurants of all shapes and sizes depending on a variety of factors. F & RM has examined this in our study. Beyond restaurants, people eat or purchase meals at convenience stores, gas stations, food courts, kiosks, family entertainment centers and theaters. How does your brand stand up to the comparison?
If you launch a restaurant brand today and hope to identify a tight group of competitors, think again. A concept like Studio Movie Grill is offering something no other casual dining place can; first run films. C-stores have upgraded their food offering. It’s on par with many QSRs and some even survive comparison to Fast Casual. Brands like Pizza Hut have softened the entry point on the pizza category through their entry in to QSR and drive-thru formats. Brands like Hunt Brothers and Quick Trip have a solid quick serve pizza offering. The middle ground is shrinking.
Each restaurant brand is used for a different range of purpose. It solves a different problem for the customer. We add more potential solutions for each situation or day part. The comparison between the solutions for each day part is natural. How does my quick morning pick up will go? Starbucks, Quick Trip, Dunkin’ Donuts, Panera Bread, the local deli. Which best meets the need?
But it doesn’t stop there. Food is sensory. Service is emotional. Both of these elements create lasting memories for customers. Those memories aren’t constrained by rationality. People do compare the pizza they got from a drive-thru to the great pizza they got at a family restaurant. They absolutely do. How do you suppose that comparison ends for Pizza Hut?
How about customers of places like Jimmy John’s or Capriotti’s? They like the brand, they understand the experience. They know how the prices of each align and how long each takes. Then they go to a convenience store and pick up a surprisingly good ready-to-eat sub on a road trip. That experience is marked in their mind the next time they go into one of those sub shops. The value and food quality are now subject to a new comparison. Is it better than the c-store sub? Is it two dollars better?
In this context, think about casual dining customers. Even a loyalist of Applebee’s will run a similar comparison to food quality when they have a good prepared meal from their grocery store. Again, they do the math on the cost and ask, “Is the service and a soda worth that?”
When we price in service on top of COGS we price against similar concepts. We look at the other brands that look just like us. So often, brands limit their competitive set to only ‘like’ concepts. It’s time to expand on that. Because that’s what customers are doing.