The Rush To Quality ?
A New Approach To Foodservice In 1998
by Gregory Thomas and Linda Wasche
By all accounts, 1997 was a remarkable year for the food service
industry. A record number of people dined out, feeding the incredible
growth of restaurant sales. A flurry of new restaurants were built,
which saturated existing markets and substantially increased the
diversity of dining choices. Customers sophistication rose as
did customer expectations of the dining experience. At the same
time, increased competition closed many restaurants, and increased
labor costs, combined with stagnate or declining sales, drained
once profitable operations. These trends will not reverse in 1998,
and will likely escalate to new levels. Surviving and succeeding
in 1998 will be challenging, but it can be done.
COMPETING IN 1998
What is the most effective manner in which to compete in 1998
and beyond? Changes in restaurant economics and customer behavior
are making it nearly impossible to adhere to the management techniques
of the past. The foodservice environment has fundamentally changed,
rendering traditional approaches to restaurant management ineffective.
New approaches are needed. An ideal approach for 1998 considers
the customer first. It puts quality of operations ahead of all
other pursuits; a "rush to quality,Ó defined as follows: Quality
of experience brings customers back. Quality of employment reduces
employee turnover and adds to quality of experience. Quality of
financial management provides confidence to financial markets
and improves vendor relationships, adding to the quality of experience.
As management succeeds in these three areas, a rush to quality
begins.
OBSERVATIONS DRIVING THE
QUALITY MODEL
- Traditional marketing methods produce fewer results than in the
past due to their old definition of value.
- Operators do not understand their customers as well as they think
they do.
- Target markets have changed. They need to be redefined and operations
need to be reacquainted.
- Traditional market segments are evolving, with new variations
emerging.
- Restaurant concepts are defined by operators, but should be differentiated
using the customerÕs eyes.
- Customer loyalty is waning as dining out has become "commoditized."
- Employees have become a critical link to the customer. More attention
should be paid to the role of employees in the service delivery
system.>
- Service standards are being redefined. Customers want more than
expected behaviors, they want an experience worth coming back
to.
- The competition should be understood through the eyes of customers,
rather than through management assumptions.
TOP TEN PREDICTIONS
There are many factors affecting the food service industry. Here
is our take on the most significant factors for foodservice in
1998.
- Food safety will grow beyond a consumer and media issue into the
number one political and regulatory issue in the food industry.
An example: the U.S. Government will try to eliminate rare burgers
from restaurant menus.
- The greatest number of restaurant closings in history will occur.
We will also see the greatest number of new restaurant openings.
Both will be fueled by Wall Street which will reward expansion
as well as shutdown of non-performers.
- Foodservice management will take its place as one of the hottest
career tracks. Salaries will skyrocket with manager compensation
of $100,000 or more, plus signing bonuses, the norm.
- Quick-service restaurants masquerading as Òhome meal replacementÓ
will be unmasked. HMR will be relegated back to a la carte items
provided by grocery stores.
- The hottest new restaurant development will take place in and
around mini entertainment centers. These centers will be anchored
by super-cinema and shopping complexes, incorporating ÒeatertainmentÓ
restaurants as an integral part of their themes.
- Casual dining consumers will win big. More restaurants will move
to discounting to increase competitiveness; menu prices will remain
stagnant.
- New and continuing trends will include bakery-cafes, Tuscan food,
juice bars, barbecue wraps, dual branding, fusion dining, chili-bars,
grocery store branding and "speed-scratch" cooking. Micro-breweries,
steak, bagels, coffee shops, cigars and martinis are on our watch
list for saturation in most markets.
- Consolidation of existing chains, and mergers with local independents,
could become the rage by year end. New niche concepts will be
particularly attractive to acquisition targets.
- Entrenched national restaurant chains will begin to change existing
concepts as they search for the right combination of food, service
and ambience. Restaurants that were household names will disappear
overnight, replaced with new concepts operated by the same companies.
- Initial public offerings of upstart restaurant chains will again
win favor on Wall Street. Many of these chains may come from the
Midwest.
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