Restaurant Trade Area Research

Welcome to Restaurant Trade Area Research - the restaurant blog written by a 30+ year restaurant researcher who has personally  interviewed thousands and thousands of fast food customers. (How’s that for a mouthful?) - Today’s topic, what seems to be the new need - `shooting the works’ to maintain or grow market share in the `new normal’.

Examples include:

Expanded Dayparting Focus - Subway going into the breakfast market is the first to come to mind - Daypart pricing is also notable with `2-4 pm’ reduced beverage costs (Steak & Shake — Sonic) — Weekpart Combo Specials , such as Moe’s Thursday Two for One’s - Subway’s after 5 footlong pricing, etc.

Seasonal dayparting — summers `late night positioning’ has been going on for years (open til 2Am on weekends type of stuff), and, it’s been noted recently that in the casual niche, 12AM or later, was recently claimed in the Atlanta media market by Applebee’s. At Fast Foods, `summer late nights’ is almost a requirement for some (Wendy’s, Taco Bell) but is an opportunity for others too (such as a Krystal’s potential muchie crowd,  or even sandwich niche restaurant).

Outrageous Product - The incredible focus on low price points within advertising (which has muddied the field) has made new product introductions even more important to appeal to the `trier-rejecters’/aware non-users of any fast food brand. One method to get attention is the outrageous product - such as KFC’s Double Chicken Sandwich. And, most recently Burger King’s move into Bone-In Ribs - would be an `unexpected’ example of a `new product’ that should `create new trial’ - especially with good word of mouth - especially during summer. (Perfect `season’ new product introduction.)

Expand Competition Into Other Niches - Recent examples of this include McDonald’s continued focus on beverages such as premium coffee and other choices. Burger Kings new Ribs carves out part of the sit-down market (and the `upscale’ `trade down’) as does it’s Brunch positioning in some markets. The new `upscale’ Milkshakes by Chic-Fil-A, Hardee’s and Zaxby’s –> reach into the `Dairy Queen’/Baskin Robbins niche.

The `Health’ Market - Long heralded as the next sure thing (only problem was that in the 80’s-90’s market was still non-existent) , the `Healthy Fast Food’ market may finally be available - due in large to the already established `Bakery’ niche being taken ALREADY by the female demographic that has turned FROM fast food choices in the last 8 years or so, - to places like Panera Bread or Atlanta Bread Company or others. To me, it seems the natural ones to attack this would be sandwich chains like Quizno’s - Blimpie’s - Subway.

Upgraded Products/Serving Quality - Angus Beef now is an example of offering the `upgraded product at a premium price’ niche. Obviously it also attacks the `fast casual’ growing segment (the stepdown from casual tipping establishments). I’ve already mentioned BK’s Ribs. KFC roasted chicken could be seen by some as an upgrade in health perception.

Selling Branded Products — To me, it is a little self-defeating - BUT - White Castle has frozen product as do many other restaurant chains. To me, I’ve never found these pre-packaged foods to be as appetizing. How about you? Then again, Dunkin Donuts coffee seems logical - and I know that I’d buy a Big Mac Sauce if it was ever offered.

Fancy, Social, E-Mail Marketing Database Building - To me,  working with a stores known customer bases information - and the customer base itself - is VERY attractive too - and is needed to not lose an edge to the competition. That said, some areas seem to have the potential to eventually become overdone and self-defeating (the free food promotion costs - or extreme motivational discounts) and eventually will have it’s `day-come’ due to overuse.

For example, lets say you sign up with a store chain that will provide you a coupon code every time you go to their restaurant trade area — if you signed up with multiple chains you eventually would not wade thru the offerings and IF you did act on one - it would be the one `giving the most savings’. Coupon people are indeed driven by costs - which will drive down your profits and establish a two-tier payment pricing - and confuse the customer base about the real price/value of your products. GPS `coupons’ will not replace friendly smiles, eye contact and good operations. (Within this blog I’ve talked about specific marketing that can be done with your EXISTING customer base via ONE question frequency targeting - or - NO question `menu’- total purchase targeting.)

The `New Marketing’ for the `New Normal’ goes way beyond buying the 25-54 demo slightly focused on one sex - and expecting success. No, the new normal demands running on all cylinders in multiple directions - and catering to a stores unique customer base.

Thanks for reading today - if you check out my sidebar - you may find a category of interest to you. You can also read more about my MarketView research at www.squidoo.com/tradeareasurveys .

Putting promotion and advertising dollars behind various price points is nothing new in the restaurant category - but - in 2010 - it would seem to be of huge importance based on the current crop of ad positionings positioning prices. For example - check out this list of price points promoted in the past year in the Atlanta ADI at least:

79 cents - Taco Bell (occasionally).

99cents - Wendy’s Value Menu - Capt. D’s sides

1.00 - McDonald’s Dollar Menu; Burger King, Arby’s, Checkers

1.50 (2/3.00) - Checkers, Dairy Queen (occasionally)

1.99 - Snack meals - Mrs. Winners, Church’s, KFC (occasionally), Dunkin Donuts, 

2.00 Denny’s

2.50 Subway Breakfast Combo

Meals For One

2.99 Combo’s - McDonald’s, Wendy’s, Krystal, Boston Market

3.99 Long John Silvers, KFC, (4.00)Firehouse Subs >4Pm (4.00) Steak & Shake, (4.00) Quizno’s, 3.99 Hardee’s, (4.00) Denny’s

5.00 - Subway Footlong, Boston Market 5.oo + sides, (5.01) Arby’s, (4.99) Waffle House, (4.99) CiCi’s Pizza, (5.00) Little Ceasar Pizza, (4.99) Denny’s, 5.00 - Capt. D’s lunch, (4.99) - Zaxby’s,

5.99 Domino’s Pizza, 6.00-Denny’s

8.00 Denny’s

6.99-9.99 - Friday’s, Ruby Tuesday’s, Ryan’s, Golden Corral, (10.00) Pizza Hut, Folks Restaurant, Red Lobster, Olive Garden, Applebees,

And now, with smaller portions becoming more accepted at a reduced price (often with more profit however) - the under 10.00 to eat AT a restaurant perception continues to grow.

First, let it be said that my usage of nearly ALL of the restaurants has already assumed the `new normal’ of the Great Recession. Regardless of what cheerleading the media may be doing about the economy - most folks are now cautious on discretionary spending - of which, restaurant visits - even to a degree Fast Food restaurant visits - has been impacted. 

 In alphabetical order:

Arby’s - I `responded’ to the ads for the `Roast Burger’ earlier in the year and was not impressed. I refused to respond to the Marry a Goat `humor’  ad campaign and somewhat like the recent 5.01 combo or pricing (the one cent being for Quality).  That said, generally, I perceive that Arby’s as expensive without having coupons from the coupon mail drop a few times a year. Additionally, they  `streamlined’ their `fries’ - dropping my favorite the Homestyle. How can they NOT promote the Jamoca Shake?

Atlanta Bread Company (ABC) - Remodeled nicely. Upgraded to real plates and silverware. Messy to clean up. Can be crowded and slow service. Female favorite. Good soups and combo prices. Mellow atmosphere.

Burger Inn - Local  legend - all fresh cooked. Great breakfast customer base. Friendly people; newspapers available often. Excellent onion rings. Beefy hamburgers. Male favorite.

Burger King - I like the current billboard promotion about the Double Cheeseburger for a buck, real value - but - haven’t gotten it.  I have ordered the Mini burgers more than once however and view that as an excellent addition. Amazingly, the Woodstock BK got rid of Real Sweet Tea years ago (my assumption is that is still the case) and thereby nearly ended my usage — I can’t stand the fake sweet tea out of a machine. Operations should be aware that changing ICONic drinks can have a big effect. — Finally, where is the KING?

Capt. D’s - Perhaps my favorite FF in Woodstock. Quality, Quick, and Quantity with good value pricing. Covers all reasonable price points including lunch specials and on-going `specialities’ that have all prices. Excellent choice of sides. Funny ads earlier in the year comparing to Red Lobster pricing. Friendly greeting and thanking when exiting. Good inside music.

Checkers - Still a viable concept (double drive thru) - chicken wings were a good addition earlier in year - somehow it fits. Catchy phrase “you gotta eat” recognizable for smaller chain levels of advertising. Covers all price points well with a good mix of products. The Woodstock store does Sunday Pricing - good idea - hasn’t ever motivated me for their `down sized’ versions. Could probably `play-up’ the FUN theme a little bit more.

Chick-Fil-A - Woodstock’s Chick-Fil-A is amazingly busy. Overwhelmingly busy whenever they do a promotion like 2-1 for a chicken sandwich or free food giveaway. Excellent quick service regardless of how long the lines are - especially at the drive-thru. (However, I’ve detected a time or two a usage of `workers in India’ taking my orders — I’m not kidding - and, in this time of underemployment in America - that is NOT right to save a few cents that way.) Real Milk Shakes were genius. Consistent quality. Friendly employees. Clean. ————— All that said, the Woodstock inside service in the sit-down area can be horrid and when is Chick-Fil-A gonna get some normal fries? Also, one takes a chance when getting the baked potato.

Dairy Queen -  The standard in Ice Cream desserts from the drive-thru. Haven’t used but really like the new pricing structure in ads 2/3 3/4 4/5.00 - interesting approach. Unfortunately, for me, the food hasn’t broke thru.

Dunkin Donuts - Right on the Strip - I’ve never used location. Certainly they can advertise donuts and donut prices more.  (IF I knew a quick Donut sweet was 99 cents for example - it would come to mind for `dessert’ or breakfast purchase more often. Never seen a place less concerned with establishing a price point understanding. Just how much does a dozen donuts cost?)

Firehouse Subs - Expensive but Excellent. Can be slow. Friendly employees. TV’s to watch. Good real sweet tea. Small, can be crowded.

Five Guys Hamburgers - Tangential to Woodstock in Sandy Plains area — good operation - waiting for a Woodstock Location (several good places available perhaps too).

IHOP - Expensive, right? What specials?

KFC - Closed but not forgotten. Also was one, like BK, to drop sweet tea for a time.

Krystal’s - Krystal `fix’ a must a few times a year. (Canton Road.) Ad’s featuring Crispy Onions on burger looks very compelling. Wi-Fi add - good idea.

McDonald’s - Woodstocks unit re-designs and updates the interiour often - which is nice. Clean. Service can range from excellent to very poor (weekends). Can often find an AJC or USA today in newspaper bin. Separate kids area - thumbs up. Fries can vary in quality. Best FF fish sandwich.

New China Buffet - Lunch value leader. Good quality food. Friendly employees. Priced by the pound to go. Widest variety of food.

O’Charlies - Stopped going shortly after changed menu restricting Prime Rib to Sundays only.

Panda Express - Have never used. Pass by back of lot 3 times a week on way to Walmart.

Po Folks - AKA Folks —> Expesive for what you get.

Ruby Tuesday’s — How could they get rid of German Potato Salad? (pet peeve). Good miniburgers and platter pricing. Easy to split orders. Great salad bar still.

Sonic - I really like their ad’s inside the car with the main guy and his friend and the main guy and his wife. Classic. Best onion rings in Woodstock at FF. To me, tasteless burgers. Fun to use. Daypart pricing on drinks in the afternoon. Fun music playing.

Steak And Shake -  Best Milkshake in Woodstock. Can be very expensive without coupons and very reasonable with coupons. Great variety of sides. Great music inside.

Subway - Good with pricing with coupons. Good quality. Can be SLOW service. GOOD real sweet tea. Fresh. Daily specials a good way to address pricing. Excellent variety of sandwiches.

Taco Bell - Good cheap price positioning. Good Chalupa’s. Good real sweet tea. Good service speed. Good quality overall.

Wendy’s - Huge variety in quality - excellent one time - poorish the next. What the heck happened to the fries - almost tasteless compared to yesteryear. I’m told good salads. Expensiveish compared to McD’s. Baked potato good price/quality.

Thanks for reading - feel free to comment.

Here’s some links also:

KFC Closes Its Doors to Fight Hunger - http://www.slashfood.com/2009/09/30/kfc-closes-its-doors-to-fight-hunger/?icid=main|htmlws-main|dl5|link6|http%3A%2F%2Fwww.slashfood.com%2F2009%2F09%2F30%2Fkfc-closes-its-doors-to-fight-hunger%2F Community involvemet matters - look at the results of the survey on this page too.

A Real Whopper? NASCAR’s Stewart to take live polygraph test in ad  - http://www.walletpop.com/blog/2009/09/30/a-real-whopper-nascars-stewart-to-take-live-polygraph-test-in//?icid=main|htmlws-main|dl1|link5|http%3A%2F%2Fwww.walletpop.com%2Fblog%2F2009%2F09%2F30%2Fa-real-whopper-nascars-stewart-to-take-live-polygraph-test-in%2F%2F BK, attention grabber again.

Eat, drink, and spend money: Restaurants ply diners with cheap booze - http://www.dailyfinance.com/2009/09/29/eat-drink-and-spend-money-restaurants-ply-diners-with-cheap-b/#continued?icid=main|htmlws-main|dl3|link3|http%3A%2F%2Fwww.dailyfinance.com%2F2009%2F09%2F29%2Feat-drink-and-spend-money-restaurants-ply-diners-with-cheap-b%2F%23continued

Hello, welcome back to the Restaurant Trade Area Research (RTAR) blog - thanks for stopping for a read. And, as you can see by the title of this post — once again in our depressed economy - where the discretionary dollar is scarce - where one restaurant unit after another closes - price points remain criteria number one for most restaurant chains.

Locally in northern Georgia - Mcdonald’s and Steak and Shake have met the Sonic reduced drink prices in the afternoon - Checkers has finally positioned a dollar menu — and as mentioned before Quizno’s `reduced prices’. And, two more restaurants have bitten the dust in the Woodstock Ga. market - Sonny’s BBQ (unbelievably) and the Woodstock Restaurant (daily buffet) - bringing nearly half a dozen closed up restaurants to Woodstock HWY 92 in the last few years.

But, it doesn’t end there - as the casual sit-downs are firing back on the price front with TGIF’s offering a buy one get one — with that being matched by other competitors like O’Charlies. And:

1-Wendy’s —- 3conmics (99cent choices) 2. Free Pancakes at IHOP tomorrow 3. Denny’s recent free grand slam breakfast 4. Steak and Shake’s recent `free combo’s for a year’ giveaway at local Atlanta locations 5. Fazoli’s - BOGO (buy one - get one) 6. Dunkin Donuts 1.99 breakfast combo 7. Starbucks - Breakfast value meal 3.95 — 8. McDonald’s Specials (like 3.33 for a Big Mac Combo) 9. Ruby Tuesday’s combo’s at 5.99 — Likewise Hooters 5.99

Makes one wonder when some chain will be bold enough in the south to make sweet tea a different price 24 hours a day - like 59 cents with any other purchase.

Finally, seems the burger front may be heating up - first Burger King’s mini’s will put pressure on Krystal’s and Roast Burgers at Arby’s - should compel trial. 

Just last month in this post http://restauranttradearearesearch.com/2008/08/02/perfect-demographics-perfect-traffic-counts-closed-restaurant/ I talked about the closing of a Backyard Burgers location at the intersection of Sandy Plains Rd and Hwy 92; and now, sadly - more fast food locations have bitten the dust nearby further `up’ (west) on Hwy 92 nearer to Woodstock.

Both went down about the same time last month - a 15 plus years open KFC; and a Zaxby’s which had been open several years. The KFC was in the midst of many fast food competitors - across the street from McDonald’s and Mrs Winners (Fried Chicken) with Capt’.D’s, Dairy Queen, Burger King and Chick Fil-A within eyesight; in addition to other restaurants within a mile such as Arby’s, Subway, Taco Bell, Wendy’s, Checkers and several sit downs such as Ruby Tuesday and O’Charley’s, Po Folks and several long time non brand restaurant choices. Yes, this was and is a developed area.

But, things change, - the Walmart across from KFC moved 2 miles up the road a few years ago replaced by a 4 day a week furniture wholesaler. The drugstore within the KFC retail pad went empty last month — the same retail pad saw a long standing BBQ location Slopes fold  about a year ago.

Our family used the KFC about once a month; usually for dinner - nearly always thru the drive-thru. Usually for the `dinners’ for 2.99-3.99 - buy three of those and you really felt like you got a sackful. Somehow, the drive-thru never backed up.

So, now, the nearest KFC is about 3.7 miles away, (this was about 2.1) and on our way back from Atlanta up Hwy 5. So, instead of using that one twice in last 5 years — I’ll probably bump into the once every six month category - and also eat at  Mrs Winners more often. Reverse attrition to the survivors.

I wonder if the KFC on Canton Rd will `market’ to the closed KFC’s trade area - I wonder if they have done any trade area surveys - to know that info?

The Zaxby’s closing was equally as surprising and it also was a place our family went to about once every 6 week or so. It was located about 3 miles from our home and we used it for evening eat-in meals (you only deal with Zaxby’s drive thru once) - it had good quality. It was NOT located in a highly concentrated fast food strip but did have local competitors. Indeed, a new chain Kayson’s, opened and shortly after the Zaxby’s was history.

The point of this posting is that the competitive environment is tough and getting tougher. Knowing your local trade area via real marketing research is not a luxury anymore. Indeed, if you do your whole market with a MarketView — you may know which `available’ fast food locations fit your market development plan without overlapping your own existing stores penetration. You will be able to do your own `attrition’ estimates based on trade areas.

Please visit www.squidoo.com/tradeareasurveys for more information about how I can help your marketing decisions.

Today’s Restaurant Links

Krystal’s Offers Up `Sonic-like’ Positioning

http://www.prweb.com/releases/2008/09/prweb1289284.htm  Is this `the idea’ that could make Krystal a player?

`Local Restaurant Dishes Out Manners’

http://www.kcsg.com/news/regional/28032164.html  `The Cell-Phone’ reminder. Quick read. Find out who is using `the reminder’.

`California Moves Closer To NYC-Like Menu Law’

http://www.desertdispatch.com/opinion/state_4250___article.html/mandate_menu.html 

`Fast Food Outlaws’

http://www.smh.com.au/news/world/fastfood-outlaws/2008/09/06/1220121599393.html  A less than flattering look at the USA from our friends down-under.

`Changing Lifestyles and Rising Incomes To Affect Restaurant Sales’

http://www.prweb.com/releases/restaurants_pizza/fast_foods_dining/prweb1302024.htm

The above story is about the GLOBAL MARKET and not the changing lifestyles here in America (less eating out, trading down). Nevertheless an in-depth viewpoint to read.

Hello to everyone in the restaurant industry, welcome to my new blog, my name is Rick Phillips. In this blog, I intend to draw on over 30 years of direct, in the field, restaurant research that I have conducted for numerous restaurant chains. Some of this research was qualitative - focus groups or one-on-one research; most of it was quantitative - done on-site with 10’s of thousands of restaurant customers over three decades.

Ideally, this blog will speak to the restaurant owner who wants to read frequently about store operations, marketing issues and promoting ones business. It will often feature links to daily stories in the restaurant field - spiked  with  my commentary and analysis. I hope you enjoy the daily links - such as these three today July 10th 2008:

Denny’s Responds To America’s Demand For Breakfast

Link - http://www.marketwatch.com/news/story/dennys-responds-americas-demand-breakfast/story.aspx?guid=%7B0911022C-AD79-4B44-8B1C-7376F7D1A870%7D&dist=hppr  Denny’s introduces  the `Denny’s Dome’ to facilitate To Go business. The `Denny’s Dome’ is an innovative, multi-level and task, carrying device that seems to handle any type of full sized breakfast - and keeps it fresh and hot up to a half-hour.You have to see the picture of this multi-leveled  see-thru container - which even has a method for keeping foods crispy (read to find out the science).  >>>>>>>>>>>> RATR Rating - 9 - Interestingly, in the 1980’s I conducted one-on-one research for several package good companies; even in the 80’s `tupperware’ type of containers could store foods at the same temperture they were first stored at  for HOURS. The funny part was research respondents were worried about `bacteria’ forming if the food was kept hot for an extended period — but - at 1/2 hour - that should not be a perception problem. Indeed, this is a great idea and seems like the top of the line product/device that `to-go’ food customers may have been waiting for. It also could increase the size of the stores trade area since the product would remain warm to take home to nearly any local area. For example, it could permit the `drive thru the area’  customer traffic to `stop in and pick up’ a breakfast before driving home 8 miles away - such as having a store by a Home Depot or other big box store. Additionally, in these cash strapped times, it allows for the customer to avoid the tip, possibly increasing customer frequency (viewed as a surcharge these days?) - that said, many tip at the counter on the pick-up orders.

Lack of Advertising May Have Doomed Fast Food Restaurant

Link - http://www.beaumontenterprise.com/business/local/lack_of_advertising_may_have_shut_down_fast-food_restaurant_07-08-2008_18_17_04.html Article indicates that having a poor location, and difficult obstructions to your restaurant - along with having an unfamiliar product (being the only franchisee in a market) AND a lack of advertising and community invovlement - MIGHT have been reasons for a Krystal’s demise.  >>>>>>>>>>>> RATR Rating - 7 - One of the things this blog will do is feature stories about the success or lack of success of various fast food restaurants - chains or individual stores. Indeed, my experience in seeing first hand hundreds of fast food outlets - both high and low sales units - provides me an overview of characteristics important to customers. This article, which could be written about many thousands of restaurants nationwide, is an example. One finding I’ve had for example is the near absolute neccessity of making flow of customers onto the restaurant property mindless - hurdles should NEVER have to be jumped - especially if you value your female customer base. The article implies that perhaps the demograhics weren’t the exact fit either - while demographic `fits’ might be nice - the size of home and worker bases within specific milage is more important to success. Often your demos for a restaurant won’t fit the area - but - your restaurant does fine by dominating within your subgrouping (besting your competitive environment). Finally, of course, being NEW or ALONE in a market (brandwise) does usually require some outreach or education of your market about your restaurant - and probably does require even some advertising. But, what RTAR suggests is that when one’s unit is in sales trouble (as opposed to a unit that never has good sales, after initial opening month) is to look first at the competitive environment (new restaurants) and then at operations (frequently some daypart - ie: employee group - is the problem; this will first show up slowly as only the Heaviest store user is aware of the operation problem - they are forgiving as they love the product or the location - but they will reduce frequency. If the problem, daypart related, continues - a unit can be in for a big decline suddenly after 6 weeks or so.) Finally, it’s unlikely your store will go out of business do to a lack of `community involvement’ - but - obviously, a banner at the local softball field - can be worth it’s weight in G.

Fast Food Veggie and Fruit Carts

Link - http://www.redorbit.com/news/business/1468962/call_for_fastfood_fruit_and_veg_carts/ >>>>>>>

RATR  Rating - 6 - Story is about a call in England to favor push carts that feature fruits and veggies so that folks get their needed five servings daily. —– Could the `States’ be next? Could real food be the next `brand extension’ for FF restaurants?

Thanks so much for reading this first blog post - To find out more about my services - please use my blogroll to my other `restaurant sites’. Please bookmark this site, I will try to post 3 or 4 times a week the type of stories owners of restaurants want to read.