Tough Economy, Who's Powering Through & Who's Cowering Through?

Tough Economy, Who's Powering Through & Who's Cowering Through?

Posted by Doug Bond on May 11, 2008 at 12:53pm in Economics

Alright, let’s see who is paying attention out there. This could be fun.

The tough economic headwinds pounding the restaurant industry right now coupled with the uncertainty of the upcoming presidential elections has forced restaurateurs to rethink their strategies.

Some companies are “hunkering down” or “cowering through”, hoping to ride out the storm with as little damage as possible. These companies are cutting labor, foregoing innovation, and reducing their marketing presence in order to survive.

Still other companies are "stepping it up" and “powering through” these tough times hoping to come out of the other side of the storm with strong positive momentum. These companies are investing in innovation, acquiring new talent, and maintaining or increasing their marketing presence in order to not only survive, but thrive in these difficult days.

The question of this discussion is. . .
Which restaurant companies out there are “cowering” and which ones are “powering through” these tough economic times? Please give details of specific behaviors the companies are displaying that support your observations.

Tags: presidential election, innovation, service, politics, loosers, operations, gas prices, economy, leaders

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Replies to This Discussion

Permalink Reply by Steve Paterson on May 13, 2008 at 6:00pm: Well, you have companies like Ruby Tuesdays that have upgraded their menus to include Prime Beef, Jumbo Lump crabcakes (as opposed to lump or special crabmeat), upgrading properties etc.
But they've also experienced double digit drops in traffic for consecutive quarters and appear to be in a financial pickle.
They may choose to stay the course and continue carrying the flag for quality, but if the economy doesn't turn around quick enough, they could concievably go out of business because of the expenses associated with this strategy.

I guess the point I'm trying to make is that there is no one single right or wrong answer.

If you don't have deep pockets and you're losing customers, I think you need to do whatever it takes to weather this storm. If that includes lowering quality to maintain price points and margin in order to stay in business, so be it.

On the other hand, if you do have enough reserve capital to ride it out, then you should absolutely stay the course, and hopefully your brand will emerge stronger once the dust clears.

Just my two cents; ▶ Reply to This

Permalink Reply by Brent DeMesquita on May 15, 2008 at 12:30pm: Almost on a daily basis one can read on RestaurantNews.com and Nations Restaurant News the many different approaches companies are taking trying to deal with this recession. We see Taco Bell going to an even deeper value menu and the majority of fast food also pushing their value menus. The market annalist's are continuing to predict doom and gloom for the casual dining segment. So, many in casual dining are revamping their menus and repositioning themselves, like O'Charley's or of course the ever popular couponing many in casual dining are doing. My experience having gone through two prior recessions is that those who are in casual dining are best served by increasing their commitment to management and hourly crew training and continuing to offer the guests that come in our doors a "wow" experience. True Bandana's is a relatively small regional chain, we only have 21 corporate restaurants at this time. However we have invested in training and delivering the best guest experience possible. We don't coupon or discount although compared to most casual dining our pricing would seem closer to value orientated. The basics for casual dining have always been great food, great service and a very clean environment. By emphasising continuous ongoing training of our management and staff in these areas, hitting food quality and service excellence with the procedures and systems for management controllables our returns are running counter to the trends experienced by others in the casual segment. Our comp sales and profitability for restaurants open one year are up. Survival in our industry, at any time, has been the quality of the guest experience in our restaurant's delivered by our management and crews. Those who will pull through will give the guest a reason to return and control the cash flow through to maximize profitability.; ▶ Reply to This

Permalink Reply by Doug Bond on May 16, 2008 at 8:43pm: Brent,
I really like where you are going here. I believe that the concepts that truly adopt a guest centric mind set during these tough times will come out on the other side of the storm in a better place.

So many restaurant brands claim to be guest centered, yet they are not giving their guests a reason to come to their establishments.

Even though we are in the restaurant business, at the end of the day we are truly in the people business. Food is a basic need and is the price of entry for every restaurant. The true differentiators are how we not only "feed" people, but how we "nourish" them (physically - with the food / mentally - with the ambiance and ease of service / and emotionally - with the personal connections we make with them). The restaurateurs that not only feed but also nourish their guests are the ones that will ultimately succeed in tough financial times.

Thank you for your contribution to this discussion.; ▶ Reply to This