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.

Is the Ziosk digital experience killing your experience?

Ziosk is in every casual dining restaurant in America. On every table. Or at least that’s how it feels. Omni present. It creates a digital experience layer on top of the dining experience guests came in to receive. Intended to create magic moments and ease friction, two things we preach, the devices are a bit divisive. Literally. Concepts love them because they ease the load on servers and streamline orders and payment. But how do guests feel?

Because it’s on the table, it’s a constant presence. More than once I’ve watched people who were unsure if the Ziosk was meant to replace the menu or even the server. They stare at it for a while before scrolling through the slides. They pick up the menu and compare the items. They break down and ask the server what exactly the device is. I’ve heard some servers say “That’s my replacement,” creating an awkward moment for the guest. Are they correct? For one generation it will create confusion of when to use it versus server.

Because Ziosk is everywhere it is therefore not unique. It is not ownable by any particular concept or brand. Yes, the screen images are customizable, but the restaurant next door has a Ziosk too with a visual of its own entree and logo on the screen. Anything guests can do on the Ziosk at your table they can do at the restaurant next door. This is great for Ziosk; building familiarity with the product and user experience conventions. But is it great for your brand?

Is it authentic to your concept? For a concept like Olive Garden that strives to be presented as updated authentic Italian, the Kiosk on the table takes guests out of that mode. This is exacerbated by the fact that the Ziosk is also on the table at the traditional American burger joint (Red Robin) and the tex mex fun stop (Chili’s). It’s hard to reconcile this component common to all three of these restaurants. For better or worse, the Ziosk creates an element of each experience that is a unified convention of casual dining: using the Ziosk.

What is a memorable experience you’ve had at a restaurant? Stop reading and think about it. It is likely a great meal, a shared laugh, or a pleasant conversation with family. Some of these specific memories could have only happened around a table. There is something about a group of people, sitting facing each other and sharing food that relaxes us and deepens relationships. Isn’t this why most of us got into hospitality? The human side?

Now think about your most memorable experience playing a game on a mobile device. Or better yet, your most memorable experience of watching your kids play a game on a mobile device. Do you think meals where that behavior is taking place will make the memory banks of your guests? Certainly not.

You’re reducing your experience to commodity, like fast food did. Ziosk and technology are certainly seductive to casual dining. Brands believe they need to create new gimmicks to lure in guests and differentiate from fast casual. You are actually isolating your true advantage, the interaction between guests and servers.

True, servers are fallible. More so than a Ziosk. But a great server can make the meal. More so than a Ziosk. With fast casual and QSR brands adding kiosk ordering, this is actually going to end up with a convention the three categories share. Which sounds appealing to casual dining brands until average check is considered. Tipping the server is an added expense, sure. But an experience with a great, personable server and staff outweighs a good series of button pushes. And I can’t get that just anywhere.