It’s something restaurant operators have had to prioritize in recent months: making the overall experience they offer feel worthwhile for guests. In a recent episode of the Restaurant Business podcast “A Deeper Dive,” the consumer strategist Lisa Miller covered how consumers perceive the value of restaurants right now – and her research shows that operators may need to keep working to make their experience feel like a good value to guests. In her monthly surveys of consumers, Miller has found that a growing number of consumers feel their restaurant visits are not worthwhile. What’s more, over half of consumers get sticker shock when they visit quick-service restaurants, where prices have jumped 30 percent since the pandemic. She says operators need to make employee training a priority to help deliver experiences to guests that feel worth the price they’re paying. Still, the math may not work out for some restaurant businesses – or it may simply look better if the business model is somehow reimagined. For example, it may not be a coincidence that more restaurant hybrid business models are emerging right now. In recent weeks, the Chicago-based retailers Foxtrot Market and Dom's Kitchen & Market, which offer both fresh meals and groceries, announced they would be merging to form Outfox Hospitality. It’s among the latest examples of foodservice businesses that are trying to continue to offer what restaurants do best while providing options that can elevate home cooking. As more grocery and convenience stores offer higher-quality foods, restaurants that step into this space may be able to showcase the value they offer while minimizing the overhead of conventional restaurant models. We’ve been hearing it a lot this year: To generate traffic when consumers are hesitant to spend on restaurant meals, operators have to provide value – or at least the perception of it. But that doesn’t necessarily mean offering discounts. According to Kinetic12, a consulting firm that works with emerging brands and identifies trends, there are many ways in which an operator can provide “value”: You can offer premium ingredients – guests will be more willing to pay top dollar if you’re offering high-quality food and it feels that way. You can offer a couple of portion sizes, so guests can trade up or down (this can be more palatable to guests who might otherwise notice that their usual-size dish is suddenly costing them more). Price is still part of the equation and you may well have guests who are looking for more budget-friendly options right now, so consider lunch deals, value meals and other promotions to draw traffic and allow people to mind their budgets. The service and overall experience you provide will continue to mean a lot, so prioritize your staff’s interactions with guests and ensure your website and app are easy to navigate and communicate accurately about timing. Your consistent execution is important – guests need to feel like they know what to expect in terms of their overall experience with you. Even if you’re cutting corners right now – whether it be with ingredients, serving sizes, staffing or something else – that shouldn’t come through in the overall experience you provide. If guests feel they are suddenly getting much less value for their money, they won’t return. Finding even incremental ways to elevate your brand’s value can make your guests feel like your meals are a worthwhile purchase, regardless of what you’re having to charge. The past few years have tested the will of many restaurant owners who managed to make it through the pandemic but have struggled with economic headwinds ever since. If you’re looking to sell your restaurant business, you’ll need to organize many of the same items mentioned above that can help you secure financing. But it’s also important to review the expenses you have accrued in the business and translate them into benefits that have value to a new owner. Robin Gagnon, cofounder and CEO of We Sell Restaurants, explained in a recent episode of the Restaurant Rockstars podcast that her role as a broker is basically the inverse of what a CPA does. Instead of looking for expenses to legally deduct, she’s identifying expenses that bring value to a restaurant business and can be added back in to boost the value of the operation to a buyer. While you might review your your tax returns and be disheartened if you see negative earnings, working with a broker can help you view that information through a different lens. By aggregating the seller’s discretionary earnings, or the amount of actual value you receive as an owner from such expenses as insurance, mobile phones, and employee bonuses and incentives, you can uncover the value that a buyer is gaining through the sale — value they might use themselves to free up cash and restructure the business. Enticing guests to splurge or treat themselves can be a tough sell when consumers are pinching pennies. But people still have to eat, so reinforcing the value you provide — not necessarily the low prices but the quality of the overall experience — can make coming to your restaurant a justifiable expense for guests. A recent report from Modern Restaurant Management shared how a range of different brands have been promoting value to guests, including a $5 off dine-in offer for a limited time this summer in an effort to help guests pay for gas, and an “inflation relief” menu that slashed prices by as much as 75 percent for a limited time. Offering discounts can only happen for so long at a time when restaurants themselves are also straining to eke out profits, so whether you’re cutting prices for a limited time or not, it’s just as important to think beyond the monetary value you provide. As you plan your promotions in the months ahead, think of the value you’re providing from different angles. Maybe you can help your guests solve a problem, like the offer above that helps guests pay for gas. Perhaps you can offer social value by bringing people together at a happy hour or other event. Maybe your brand is one that can offer psychological value because of the care you take in offering healthy options or your commitment to sourcing from sustainable suppliers. Weaving several kinds of value into what you offer can strengthen the offers you provide. Your efforts don’t have to be elaborate: Even a simple thank-you message to guests on your website and social media can help boost the good will that brings people back. |
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