Restaurant defense against a bear market and competition

We’ve written and spoken a lot about the change in the market and the potential for a recession. In our recent podcast, we talked a bit about plans restaurants can make now to fend off the bear market. In fact, there are lots of ways brands should be protecting themselves now for tomorrow.

Four main facets will help build relevance, manage costs and separate brands from competitors.

1. Healthy Habits

Better-for-you is on trend. Local ingredients are on trend. Novel menu items and updated options? On trend. Brands that are built on true health of their menu will have an advantage. A brand like MAD Greens that offers robust salads with protein and tons of flavor can outlast the recession. If operators are able to keep prices reasonable. Flexibility to welcome multiple dietary needs or restrictions also helps stop vetoes.

There are lots of restaurants with similar nutritional profiles to MAD Greens. Top healthy brands should strive to get credit for all that is good about ingredients, suppliers and prep. Brands that best communicate or partner with those who can are rewarded with credibility. And store traffic.

Concepts that aren’t quite as healthy as Sweetgreen can still find ways to add items or options to reach health-conscious customers now. Small changes to recipes or suppliers can add up to noticeable changes in nutritional content, especially for those trying to cut out gluten, sugar or sodium.

2. Scale Your Suppliers

Scale usually means handling growth. But smaller brands don’t necessarily need the huge national footprint of larger suppliers. Especially when pulling back on inventory. Focus on partners that can get you what you need, can go small and can grow as needed, too.

In the past 12 months we have seen the let down when suppliers are pushed. Chipotle outgrew its favored sources and some believe that caused the meltdown they are facing now. Smart brands are finding ways to partner with suppliers to better shift when needed.

This might mean developing seasonal menus that adapt to changes in supply chain. Traditionally, brands like QSR have long leads on their menu that makes it hard for suppliers who might fall short or withhold inventory. Look at this fall’s avocado shortage for examples of brands shifting strategy at the last minute and finding ways to accommodate guests.

Changing items to maximize supply can also act as market news. New items or featured ingredients can drive traffic as menu innovations or LTOs.

3. It’s Not a Restaurant, It’s a Base of Operations

Sure the brand is a physical space. The digital space has been pretty good to restaurant brands too. Don’t neglect social media, and mobile technologies that allow you to reach out from the restaurant. Guests have an expectation for communication with the brands they love. Use these platforms to let them be heard.

When thinking about a bear market, it’s time to consider offers. Digital is also a great way to test offers, to follow which items drive the most clicks all the way through traffic and redemption. That is just the beginning. Using mobile to unlock new experiences for frequent guests and people near by can be powerful. Look at what Starbucks has done using their app.

Digital services can also power new revenue through delivery and catering. Use each restaurant as a base for outgoing meals or added dayparts, and promote along with the brand or even separately. Thinking about the brand beyond the place itself leads to big picture opportunities.

4. Value Proposition, Not Just Value

The trend during tough economic times is to slash costs and show consumers lower costs items. Guests understand that value goes beyond cost. By communicating the value proposition of your brand today, you can hedge against tougher times to come.

This value proposition will come from choices you make now to emphasize the items above. Can your brand stand for convenient delivery? Standard menu items that are just a bit better for you? Unique seasonal or local items?

If the bear market comes, it’s true that consumers will be paying attention to price. But they will rationalize that price if brands have done their job and explaining why they’re worth it. This is the time to create those explanations.

Veggie Grill and the plant protein revolution

Veggie Grill recently announced an expansion of the chain. They’ve got an investment based on encouraging performance of their stores. The market is showing an appetite for non-traditional offerings, moving away from burgers and chicken sandwiches. People are looking for new flavors and ingredients.

Looking at restaurants like Veggie Grill and Zoe’s Kitchen, we see success with this formula. Other veggie concepts like Sweet Tomatoes have faltered but relaunched with a revised strategy and are focused on leveraging the trend.

According to the Harris Poll: With U.S. adults 18 and over numbering about 245 million, we can estimate the number of vegetarians (including vegans) in the U.S. adult population, based on this poll, to be approximately eight million adults. About half of vegetarians were also vegan. Approximately 3.7 million U.S. adults are vegan; 4.3 million are vegetarian but not vegan.

3% is still small. But the acceptance of non-meat protein is catching on, if you watch current products. In grocery and CPG, there are hundreds of products (especially in the snack space) that offer higher protein from plant sources. Calbee’s Harvest Snaps offer pea and legume proteins with punch flavors. Kale chips are available in many Starbucks locations. Sabra brand hummus is gaining share against traditional dips and spreads.

Veggie Grill’s ‘Chicken’ line has products with protein counts in the 30+ grams, lower levels of sugar and sodium.

Plant-based products are on the rise, and the number of those more open to vegetable focused foods is too. The above referenced Harris Poll found that 37% of Americans eat a vegetarian or vegan meal once per week. That was an increase of 1% from a similar poll in 2015. These numbers set the stage for increased traction for concepts like Veggie Grill. This is interesting when compared to other growing trends.

<h5>Protein content.</h5> According to a 2016 poll covered in Food Processing, “42 percent of consumers said high protein was “especially important” in choosing foods to eat… [and] 43.2 percent of U.S. consumers said they somewhat or strongly agreed that they sought out vegetarian sources of proteins.”

Consumers have awareness of the nutritional content of everything they eat, and make choices to maximize, minimize or trade-off certain ingredients to suit their diet. Veggie Grill’s “Quinoa + Veg Sandwich” packs 17 grams of protein and 19 grams of fat into 580 calories. This compares to Chic-Fil-A’s classic chicken sandwich with 28 grams of protein, 18 grams of fat and 440 calories. But the Veggie Grill product has 9 more grams of sugar and 160 more mg of sodium.

Veggie Grill’s ‘Chicken’ line has products with protein counts in the 30+ grams, lower levels of sugar and sodium. These produces are made with soybeans, wheat, peas and ancient grains.

<h5>Bold flavors</h5>

Every restaurant has been looking to add bold flavors to their menu going back to 2014. See: the amount of Sriracha menu items being added across the country. Veggie Grill has done a fantastic job of bringing bold and exciting flavors forward. Along with ‘buffalo’ flavors, they borrow from mexican, thai and indian cuisine.

Many items on their menu are modeled after familiar flavors which may be helping those resistant to vegetarian foods find something to try. This is a smart way to stop vetos from meat eaters.

Veggie Grill has made sure that they’re offering meals with sufficient protein lots of flavor. Vegetable focused brands like Sweet Tomatoes could learn from this playbook if they hope to survive long-term. Of course, the expansion of Veggie Grill likely means traditional restaurants will add vegetarian options and fight for share.