The recent closing of 300 Bennigan's and Steak & Ale restaurants came as a shock to many, though it shouldn't have. The casual sector in which both concepts thrived has been on a collision course for years. Unit growth in the sector has far exceeded customer demand while, at the same time, brands have come to look more and more alike. Add to that a wounded economy that has more than one-third of consumers reporting that they are eating out less frequently than a year ago, according to Technomic. Clearly, it's rough out there.
Relief, at least in the casual sector, is not on the horizon. The National Restaurant Association, when it surveyed chain restaurant owners, found that nearly half believe business will slip even more in the next six months.
A few weeks back, The New York Times ran an interview with Julia Stewart, who runs the IHOP and Applebee's chains. Stewart concedes that Applebee's has not aged well and has become indistinguishable from other restaurants like Chili's and Friday's. She discussed making several menu changes that customers will notice.
At IHOP, for example, she replaced the chain's watery orange juice with a better quality product that is now served in smaller, better-looking glasses, but costs more. The lower grade coffee it once served in plastic carafes has been replaced with a better coffee served in pots with copper jackets. Customers notice, she said.
She's going to do the same at Applebee's. The key, she explained, is to look at current menu items and give them a twist to distinguish your menu from others. “Everybody has a quesadilla,” she told the Times, “but no one has a bruchetta quesadilla,” suggesting a possible menu improvement. Stewart said she sometimes gets menu ideas by reinterpreting things she sees at more upscale restaurants.
Based on what the folks at Technomic are saying, Stewart is on the right track. You'd do well to follow her lead. “Consumers want to feel that their dinner experience is a good value regardless of the price points,” said Darren Tristano, executive v.p. there. “Special offers, promotions, family-pack and combo meals promote that perception.”
Technomic has other suggestions, such as allowing customers to customize their meals (menu substitutions are a big thing). Adding more ethnically-inspired dishes and bigger, bolder flavors are attractive to customers, it says, as is the convenience factor, particularly when it comes to ordering and parking.
Here's another tip, this one from Cornell University. Researchers there found that diners will spend more money if you don't use a dollar symbol ($) on menus. That, friends, is what you call low-hanging fruit.
Here's one last thing to consider. A growing number of economists believe that consumers will continue their frugal ways even after the economy rebounds. Waiting won't help.
