Consumer expectations have changed. Foodservice has begun to experience a new pain that is requiring current and detailed analytics, and then a team approach to solutions. For many operators, sales continue to be above previous years, but profitability is down. Much of this has come from declining consumer traffic. This article expands on why traffic is down, what consumers are looking for, and how operators can make the necessary adjustments to eliminate this pressure.
The thought that a consumer would trade down stems from the fact they are not getting the value for the price. People look at value in many different ways, but in order for them to remain loyal to a brand, operators must be able to meet or exceed their customers’ expectations. It is not necessarily about the price itself. Below we look at how consumers define value and how operators can satisfy consumer demands.
Seven ways consumers are looking at value and how operators are approaching this dilemma:
- Food Quality
- Portion Size
- Cutting Corners
- Consistent Execution
1. Food Quality
The No. 1 reason a consumer frequents a restaurant is the quality and taste of the food. They love the food and are therefore loyal to the brand. Unfortunately, many restaurants have had trouble maintaining the quality that consumers have been used to. In conjunction with that, pricing for those items has increased due to inflation. Consumers are not willing to frequent their “former favorite restaurants” if their favorite menu items are not consistently great. They would prefer to trade down and get the same product with every visit.
It also should be noted that great food quality can be almost priceless. A great steak that costs a consumer $50–$100 can be a great value. If it meets or exceeds expectations, price, in many cases, does not come into play. Consistent quality, at any level, is a major key to loyalty.
2. Portion Size
Many consumers judge the size of a portion as the key factor in getting great value. Quality is not usually a factor in their decision. Their objective is usually to have leftovers and potentially a second meal. Keeping the price, the same and decreasing the portion is a major factor in a customer never coming back to that restaurant. In order to deal with inflation and keeping larger portion centric customers happy is providing two sized portion options at two different prices. It gives the loyal customer the opportunity to maintain their large portion, but pay more, or go with a lower price for a smaller portion.
When you think of value, price is usually what comes to mind. There has been a steady increase in pricing over the last few years which the consumer has been willing to pay as a follow up to the pandemic, but as of late, consumers have been trading down from many of their favorite restaurants as price increases have been more than they can afford. Many consumers still look for the least costly option, but operators are again providing discount days such as Taco Tuesdays as well as bundles to entice consumers back in.
Operators have begun to offer basic options for their customers to build on which allow for a lower price and it is entirely up to the customer to customize their menu item and pay accordingly. In addition, dynamic pricing has been introduced and it makes a lot of sense for the restaurant industry. Hotels, airlines, and other industries have been doing it for years. Restaurants can charge more during peak periods and less in non-peak times and it is something that consumers can adjust to.
Great service has always been an important factor in attaining excellent value, but great service is much more complicated than it was in the past. The explosion of off premises has added elements as to what the expectations are for service. Easy to use Apps, websites, and kiosks are now crucial. It must be easy to order, customize, and pay. Pickup and delivery must be flawless with clear expectations on timing.
Labor shortages and lack of quality staff is no longer an excuse for poor service. Consumers are paying more than they had in the past and their expectations of quality service will continue to escalate. AI, robots, and table-top ordering and payment options can help, but the foodservice industry remains about hospitality and most customers want to be able to communicate with a friendly staff.
The value of experience remains important to many consumers. Whether it is an environment that is different and provides customers with a “place to be” feel or simply walking into a restaurant and knowing from the beginning that the staff is happy you are there and will be sure that you leave feeling great about your time there. This also holds true with the off-premises experience. Operators now must provide multiple options for ordering, payment and pick-up and if they execute properly, the experience will drive customers back on a regular basis.
6. Cutting Corners
The biggest mistake an operator can make is to cut corners. When inflation takes place and there is pricing pressure, the inclination is to cut portions, decrease the amount of chips in a cookie, charge for bread when you never did before, decrease the quality of coffee at a breakfast restaurant, and much more. I have experienced all of these personally over the last couple months and those are the restaurants that I won’t go back to. Operators must remain true to who they are and communicate with their customers face to face and through social media. A customer who is blindsided by cost savings tactics can lose loyalty quickly.
7. Consistent Execution
All consumers want is consistency when they eat in a restaurant or takeout. This is clearly easier said than done. Achieving more consistent execution was the number one response to the question of what the biggest opportunities for revenue growth are, which was posed to 140 growth chains of 20–500 units in Kinetic12’s Emergence Group. There is a huge message here! Menus have to remain smaller, with less moving parts for the staff and at the same time, it must be easy for the customer to order, pay, and get their orders. Without consistency, the value proposition changes. Great cannot be sometimes. Whatever it is that consumers look for in value requires it to be consistent.
Consumer expectations continue to change, and value is defined very differently from person to person. Internally, operators must also look at the products that they purchase and assess whether they are the right products for the job. For instance, a No. 2 avocado, a pre-trimmed chicken breast, or eliminating hi-waste ingredients may have an impact on improving execution and ultimately building consumer loyalty.