If you’re in the chain restaurant business, you may feel like new competitors, not customers, have been eating your lunch. Restaurant traffic is down, and delivery is up, driven, literally, by the disruptive likes of Uber Eats and Grub Hub. Convenience is the killer app, served up by everyone from supermarkets with healthy meal kits to the neighborhood food truck with the fun and funky menu. Even independent restaurants, which have seen their own business dip slightly in recent years, are starting to drive new growth.
So how is a chain restaurant supposed to get its share of the 60.5 billion annual foodservice visits, given today’s hyper-competitive, constantly-changing marketplace? Here are five suggestions, culled from the insights and experience of industry veterans and financial analysts:
One: Forget about being a chain – be an experience
Chain restaurants first boomed along with the Baby Boomers, providing the reassurance of consistency, quality and, often, low cost – a reliable product, wherever you went. But reliability eventually came to be seen as conformity, at least among the Gen Xers and Millennials who followed. These new consumers don’t just want to buy a reliable meal – they want to have an enjoyable, interesting and easy dining experience.
Take the young Sweetgreens chain. The industry analysts at Morningstar have called it out as the “epitome of what customers seek in fast casual.” That includes menus that are easy-to-read, fast service, and a restaurant design that is clean, stylish and “self-explanatory,” adding to the sense of simplicity and convenience. In other words, a good experience, with good food attached.
Two: Develop a value proposition that’s more than just price
Sweetgreens isn’t, however, the cheapest fast-casual chain you’ll find. Instead, it focuses on value – the fresh, farm-to-table trend delivered affordably at scale. But financial value is only part of the proposition chain restaurants need to master today – a unique product, a pleasing experience and a well-designed place that people want to be in all need to be part of the equation.
Three: Get truly healthy
The outdated notion of a “foodservice” meal at a chain restaurant – one of over-processed ingredients delivered via large trucks emblazoned with corporate logos – hardly suits the demands of an increasingly health-conscious society enamored of artisanal offerings and local options. To counter that image, and deliver a different reality, some chain restaurants are getting creative with their supply chains, networking local distributors and resources. And traditional foodservice distribution giants have reworked their own offerings over the past few years to accommodate the demand for more varied and healthier foods, along with more transparent sourcing.
However, “getting healthy” doesn’t necessarily mean you have to go all kale and quinoa crazy. It can mean simple additions to an existing menu, such as a turkey or veggie option at a burger chain. And healthy can also mean having a healthy respect for informing your customers about ingredients, allergens, calories – all the elements of empowering them to make healthier decisions, as you demonstrate that you truly are on their side.
Four: Fight digital with digital
Digitally-driven innovations have disrupted all business categories, and restaurants are no exception. What chain restauranteurs need to remember, however, is that they can play the digital card, too. Apps are particularly powerful tools. They can use everything from games to rewards programs to drive loyalty and engagement off-site, while enhancing the diner’s experience on-site, to make it simpler and faster.
It’s no coincidence, then, that some of the most successful chain restaurants have the most popular apps. The Chick-fil-A app was downloaded two million times in the first three days of its release. And the Starbucks app – which enables mobile payments, a loyalty program, mobile ordering that lets you skip the line, and gifting, to name just a few benefits – now accounts for fully 25% of the chain’s revenue.
Five: Go old school (it’s still cool)
Finally, chain restaurants can take a cue from independents and work hard to deliver the one thing that customers love, but is never listed on the menu: “old-fashioned” personal attention. This gets down to the basics of good hiring, great training – and investing in a company culture that genuinely values and rewards the best service. As a financial analyst from Morningstar said, the secret to competing as a chain is to “think like an independent,” delivering that personal attention as you serve up authentic food and a unique experience.
Despite all the dire warnings of chain restaurants being in terminal decline, there’s really no excuse for allowing competitors to “eat your lunch.” You, as a leader, simply need to connect those missing links in your chain.
Cleveland Research report
Nation’s Restaurant News: Three Restaurant Brands That Will Survive
Washington Post: At Least on Yelp, Diners Prefer Independent Restaurants
NBC News: Why Millennials Are Hooked on Chain Restaurants