Restaurant Revenues are Down, But Here's What You Can Do About It

By: Gina Lee De Freitas

We all know that restaurant revenues, on the whole, have been down the last couple years with only some recent small spikes. It's important to first, know why it's happening and second, know how to turn this downward trend into an upward one for your restaurant.

We don't have to tell you that the past two years haven’t been great for the restaurant business. TDn2K™, a leading source of restaurant industry analytical data and insights, reported that, in the first three quarters of last year, restaurants saw a decline of 3% in customer traffic. TDn2K also found that only 34% of restaurant operators they surveyed had a positive outlook about their business.

The Variety of Factors that are Influencing this Decline

Some industry analysts attribute the decrease in chain restaurant sales to the changing tastes of GenY & and Z. They tend to favor local restaurant concepts with dishes that have more sophisticated taste profiles. Combine that with the rise of mobile apps allowing people to access the hottest deals from their favorite independent restaurants or have the food delivered to their doorsteps, and you can see why the competition is increasing for chain restaurants. The casual dining sector is suffering as a result of these trends. In fact, independent restaurants are about to beat chain restaurants in sales growth projections for the first time in several decades.

Others blame the decline in restaurant sales, especially QSR sales, on increasing competition from related categories. They believe that convenience stores, food curation services, and smartphone app delivery services are also contributing to lowering sales at casual dining restaurants.

Still, others point to the negative political climate as a cause of the drop in sales. In a recent interview, McDonald's CEO Steve Easterbrook observed that when customers sense uncertainty in the world around them, they start taking precautions and stay home more.

What Can Be Done About It

To compete in today's changing world, you need to start by catering to Gen Y and Z, both of which eat out a lot, but have higher expectations for the concepts they frequent.

There are a few key ways to attract these two demographics; first, redesign your menu to appeal to their more sophisticated taste palettes. Second, find ways to differentiate the dining experience at your restaurants to deliver a fresh and frictionless experience. Third, develop your own mobile app that offers customers the opportunity to locate the nearest restaurant, look at your menu, order online and find exclusive offers to build their loyalty.

It is not enough today to market foods as "delicious." In fact, for some Gen Y and Z customers, it is more important to offer dishes that your patrons will view as "healthy," "safe" or "hygienic.” For instance, you might offer more vegetarian, vegan and gluten-free foods.

Social media is another area that chain restaurants will want to target. The size and effectiveness of your social media footprint can increase or decrease your restaurant sales. Take the example of Taco Bell when they sent handwritten notes and wedding rings to their most loyal social media followers—it got them a lot of  attention and also increased their following. Or, despite its controversial ending, Starbucks also received a lot of mentions on social media with its “They Way I See It” campaign.

Last but not least, the use of technology can be a game changer. Touchscreen food ordering, used recently by Coca Cola and Moo Bella, tablet restaurant management and LED alert systems for kitchens are examples of technologies that can help restaurants step into the future. In fact, curbside pickup is became quite a trend for restaurants in 2017. This means the new POS systems for restaurants have to take their curbside pickup orders and management into account too.

Helpful Resources

About Butts in Seats!

When it comes to restaurant marketing, we know what we are talking about. Gina Lee, President, respectively, of IMM has 25+ years of experience in the vertical. So, when they talk about the tools, tips and resources your restaurant needs to succeed in the Butts in Seats blog and newsletter, rest assured they’ve got it covered.

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