Changing Demographics and Brand Appeal Put Pressure on Casual Dining

 

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These figures are borne out by the National Restaurant Association, which states that alcoholic beverages account for a median of 9.1 percent of total sales at restaurants that have per-person checks under $15; 22 percent at those with average checks of $15 to $24; and $28 percent where checks are $25 and above.

“Some restaurants may have higher percentages, especially if they highlight signature drinks,” says Annika Stennson, spokeswoman for the NRA.

Shifting a brand that once marketed a happy-hour atmosphere to a more family-oriented one can create marketing problems, said Tony Bombacino, president and chief operating officer for Geomentum, a $2 billion-a-year advertising agency serving retail and restaurant clients.

The things that appeal to families—food, quality, and value—may not resonate with a younger crowd.

“So,” he added, “if a customer wants to go out and relax with friends, but the restaurant is talking to them in a different way, there’s a disconnect there that can lead the customer to chose a different [restaurant] concept.”

And Jones, the marketing professor, cautions that attracting younger customers and families to casual restaurants depends on more than simply cutting the price.

“Price in that segment is not as sensitive as people think,” he points out. “It’s more of a price/quality dynamic. If you’re putting out good food at $12 a plate, you’ll do better than if you charge $9 a plate for mediocre food.”

Demographic and geographic factors drive site selection

Given all these changes, along with the economic and marketing challenges facing the casual dining segment, location planning has become paramount.

W. Kent Taylor, chairman and founder of Texas Roadhouse, which operates 345 restaurants in 46 states, found that the first step to choosing an ideal location was knowing your customer.

When three of the first five Texas Roadhouse restaurants he opened began to under-perform (and were eventually closed), Taylor used customer surveys to find out what was wrong.

“At the two successful restaurants, we found that our primary guest was in the 35 to 55 age bracket,” Taylor says. “At the failed restaurants, the clientele did not visit as often and was in the 65 to 85 age group.”

As a result, Taylor says the chain revamped its menu to appeal to younger customers and chose new restaurant sites located closer to residential areas with younger demographics and families. The menu changes included adding salads and more reasonably priced items.

Texas Roadhouse now gives its franchisees guidelines for developing locations that will succeed. According to the company’s annual report, site selection takes into account demographics, household income, and population statistics, with the approval process taking at least three to six months.

“We like to be near high-traffic areas, which tend to be in a retail zone,” Taylor says.

T.G.I. Friday’s also puts a lot of work into site location.

Lee Sanders, president, U.S. franchising for the chain, says it selects locations based on input from real estate brokers, franchisees and an analytical model developed by Buxton Co., a Fort Worth-based demographics firm.

“A great T.G.I. Friday’s is convenient, accessible, and visible to our guests,” Sanders says. “We provide a great dining and bar experience during lunch, dinner and late nights, so it is important to be in an area that has high traffic and usage during these three dayparts.”

Despite the current state of the economy, good locations are still available for casual chains.

“Small towns often make good locations,” Jones adds. “Applebee’s and some other chains are pushing to expand there because they could be the only restaurant in a particular town.”

By Robert Hadley

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