Battle of Restaurant Concepts

The restaurant landscape is changing, with some concepts making gains and others falling behind. Small neighborhood restaurants and fast food places are hurting from declining sales, increasing wages and higher health insurance expenses. Burger and pizza restaurants are also suffering from healthier eating habits. Urban restaurants also face strong competition from food trucks that serve gourmet specialties with lower overhead costs and enough flexibility to intercept customers from nearby offices.

Meanwhile, fast casual and fine dining restaurants are growing consistently. More than 95 percent of these fast casual restaurants are actually major chains like Chipotle, Smashburger, Panera Bread, Applebee’s and Chili’s. Essentially, independent neighborhood restaurants are hurting while the fast casual chains are leveraging consumer attitudes and dining trends for growth and sales opportunities. It’s common for business associates to meet at Panera Bread or one of the other chains for business meetings and employment interviews.

Digital technology and social media marketing favor the fast casual concept and fine dining establishments. Upscale restaurants are more likely to take part in social causes, post pictures and biographies of their chefs and hire celebrity chefs to jumpstart business. Upscale restaurants and fast casual chains adopt new technologies faster than the smaller restaurants, and they usually have staff members available to work on publicity campaigns and connecting with customers through social media networks.

The Numbers

The fast casual market has expanded to capture the public’s attention and generated between $21 and $22 billion in annual sales. The most successful specialties within the broad fast casual concept are Mexican restaurants and bakery caf├ęs. Of course, explosive growth is unsustainable, and even Chipotle is feeling pressure at some of its older stores to upgrade the facilities with newer technology and restaurant makeovers. Key statistics in the food industry include the following facts:

  • Fast casual restaurant sales grew by 11 percent in 2013, according to the NRA.
  • McDonald’s, Subway and other fast food chains are losing business to the fast casual market.
  • Upscale restaurants, which took a big hit during the economic downturn, are bouncing back on the strength of new technologies and better marketing.
  • Growth in the number of higher income families is spurring these trends.
  • Restaurants with average checks higher than $40 experienced 11 percent growth in 2014, according to the NPD Research Group.

How to Defy the Odds

You can buck the trends and run a successful neighborhood, casual or fast food restaurant by following some of the practices that make upscale and fast casual restaurants so appealing to today’s consumer. Cut the fat and calories from your menus, and use local farms and suppliers for more sustainable sourcing. Introduce customer-facing and management technologies like advanced POS systems, tableside ordering, digital signs and other equipment to reduce operating costs and improve service. And, perhaps most important of all, engage your customers through Internet marketing. The triple-whammy of these three operating strategies will boost your restaurant’s sales and reputation.

Healthy Concessions

Regardless of how fast your restaurant serves food or whether you customize orders for customers on special diets, you can still take a page from the fast casual operational manual. Reduce the fat and calorie content of your foods, and don’t be shy about publicizing the changes. Use your technology and social media presence to publicize the changes, engage your audience and attract the new generation of socially conscious, healthy-eating and media-savvy consumers. Tips for creating healthier menus include:

  • Adding fruits and healthy vegetables as side dishes
  • Substituting healthier ingredients for calorie-heavy foods use in traditional recipes.
  • Reducing sugars and fats in foods
  • Offering more nutritious children’s menus
  • Allowing substitutions for greasy fried foods
  • Providing smaller portions
  • Diversifying beverage choices
  • Replacing sugar used at the bar with low-calorie sweeteners

Getting Wired for Communications

Technology allows customers to place orders from their mobile phones or tableside tablets, order foods from carryout kiosks and study wine lists on iPads. Small restaurants can match the success of fast casual and fine dining restaurants by embracing technology to save money on labor and operational costs and deliver better experiences to each customer. Drive-through menus can change constantly to show more detailed information about food choices, and technology allows your customers to order and pay from their cars, phones or tablets.

Technology offers dozens of practical ways to reduce costs by increasing efficiency. Neighborhood restaurants that deliver great food, service and technological convenience are successful; companies that are slow to adapt lower the average sales figures sales nationally for fast food and casual restaurants.

Spreading the Word

One of the biggest reasons that restaurants lose customers or fail to attract new business is that the owners haven’t updated their marketing strategies. Successful restaurants cultivate their customers over the Internet through social media, food blogs, mobile marketing and local SEO. The first steps are getting a website, posting your menu online and building a database of your customers for marketing purposes.

People look for restaurants, read reviews and place orders from their phones, so an Internet presence is essential for attracting new customers. Other marketing tips to defy the numbers and make your restaurant successful include:

  • Optimizing your website for local searches
  • Taking orders and reservations online
  • Listing daily specials on your website
  • Cross-promoting through the social media
  • Enlisting local food bloggers and customers to review your restaurant
  • Monitoring your digital reputation
  • Marketing directly to customers from your email database
  • Sharing human interest stories and behind-the-scenes information

Upscale restaurants advertise their chefs and pose them for pictures, and you can post biographical details and personal stories about your own cooks even if they seem less impressive than a celebrity chef’s story. Use humor, creativity and honesty to engage your customers, and they’ll respond.

Fast casual and fine dining restaurants will likely continue gaining ground because they supply what American consumers want to buy. In fact, they often shape public opinion by providing healthier eating alternatives and new services that leverage trends and technology. Neighborhood restaurants and independent fast food operations can mirror these strategies by using technology, communications and menu management to attract consumers in the same way.