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Everyone’s Eating Out

Chain restaurants need a five-step plan to challenge competitors and stay relevant in today’s evolving market

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The numbers are impressive: 10,000 new restaurants open annually, and this year’s total annual sales are expected to hit $709 billion, marking the sixth consecutive year of growth.

Driving this momentum is the post-recession consumer, who spends more on dining out than on groceries, for the first time ever, according to the U.S. Department of Commerce. That’s an enormous opportunity for restaurant chains to expand. 

But growth presents new challenges and doesn’t come automatically for every restaurateur. Independent restaurants are proving themselves fierce competitors with the flexibility to respond quickly to widely recognized trends, such as local sourcing. Similarly, grocery stores are rushing to add in-store dining as a complement to their businesses, bringing new competition to an already-crowded  marketplace.

How can national chain restaurants ensure they’re capturing their share of consumer spending? Chute Gerdeman (Columbus, Ohio) has identified five areas they must address in order to revive their relevance.

1. Scale individuality.

For many years, grocery stores like Whole Foods Market (Austin, Texas) have thrived by imparting authentic experiences that embrace communities. The core of the brand exists within each location, but since each site’s local community influences the design aesthetic, no two stores are alike.

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Another brand that knows a thing or two about being unique is Atlanta-based pizzeria, Mellow Mushroom. With 170 locations across the U.S., Mellow Mushroom showcases a locally inspired, eclectic design with art as its focus. Patrons in Coralville, Iowa, will find a large spaceship suspended mid-air, next to an abstract interpretation of a crop circle. Conversely, the Wellington, Fla., store displays an equestrian theme with life-sized horses, polo murals and hurdle-inspired booths for seating.

Authenticity is the key here – consumers can smell a disingenuous attempt from a mile away. Bottom line: Do your market research to understand the community you’re serving.

2. Craft an experience.

Dining out isn’t just about the meal– it’s about the experience. Consumers are looking for more contextually rich experiences that include education, and today’s successful restaurants create places where diners are not only engaged with the meal, but also with the brand. They’re learning about the chef’s unique point of view and picking up a bit of culinary education while they’re at it.

One example is Cooper’s Hawk Winery & Restaurant, founded in Chicago’s Oakland Park suburb in 2005. Tasting rooms and a retail store allow guests to learn about and shop for wines, as well as other products, while many loyal patrons have even joined the Cooper’s Hawk wine club, giving them access to exclusive tastings and special events.

On a larger scale, Eataly’s 63,000-square-foot Italian food market in Chicago stocks more than 5000 high-quality Italian products. All items are hand-selected and vetted by a team of Italian culinary experts who are knowledgeable about each item’s origin, how it was grown and when it was harvested. Eataly’s mission isn’t only for customers to discover great artisanal foods, but also to learn about the products, with the belief that the more they know, the better they’ll enjoy.

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3. Cater to convenience.

Today’s on-the-go consumer looks for added convenience in everyday dining excursions. Whether it’s through their own handheld technology or restaurant-provided, guests are looking for convenient ways to order, see nutritional information, make reservations or pay for meals. The challenging part is integrating the technology so it enhances, rather than detracts from, the overall experience. Remember, convenience isn’t just about technology: Brands that extend the experience by providing curated products or take-home offers are supplying additional value and giving guests another reason to come back.

4. Cultivate focus.

Over the years, some restaurant chains have lost focus with concepts and designs. From location to menu development and environment design, focus means understanding the unique brand offering and not trying to be everything to everyone.

A great example is Shake Shack, which began as a food cart in New York’s Madison Square Park. Today, it’s one of the country’s most admirable fast-casual concepts, serving up all-American classics such as burgers, dogs, shakes and fries, with premium ingredients.

The brand’s vision, “Stand for Something Good,” is built into all aspects of the business, from the ingredients that make up its menu to the design of the “shacks” to community engagement. Its average store performance is also notable: At $4 million annually, it’s making twice the McDonald’s U.S. average. And while growth can present challenges in staying true to a brand’s foundation, Shake Shack embraces the mantra of “The Bigger We Get, The Smaller We Need to Act,” meaning that it needs to stay true to its principles and never veer too far from its original vision.

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5. Embrace innovation.

Too often, innovation only happens on a five-year cycle when brands decide that a new prototype is in order. It’s a “project” that goes like this: Develop a new restaurant design that checks all the boxes (consumer needs, competitive differentiation, operationally sound, aesthetically attractive). Check. Build prototype. Check. Roll it out across the chain. Check. Move on.

So when does true innovation happen? How can a restaurant chain find that “Eureka!” moment that will extend the brand into the future of foodservice?

How about a test store (call it “test kitchen 2.0”) where every dining detail from seating options, table heights, kitchen placement, hostess stands, and lighting and material selections, can be assessed in a real-world environment? Such an exploratory approach to dining can push you to continually innovate and reimagine the future.

After years in the business, it’s not uncommon for large companies to stray from the driving principles of the brand after facing competitive and economic pressures. Those that can reconnect and use their space to communicate their values will find that customers and employees will reward their efforts. Today’s evolving restaurant landscape requires planning for the future. Chains that wait for customers, the market and, eventually, declining sales to demand change will find that it’s too late. 

Gary Yoko is Chute Gerdeman’s executive vp, developemnt and expert on restaurant and airport retail design. He has helped create numerous restaurant and retail brands, including Wall Street Journal Newsstands, PGA Tour Restaurant, Anaheim Ducks Bar and Grill, KC Royals Restaurant, award-winning Ice Bar and Wicker Park Sushi Bar.

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