Important Posts In 2008
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.
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I once pulled into a fast food restaurant in Tennessee off I-75, and, was going thru the drive-thru, when, after the speaker, I encountered a smiling young lady doing `surveys’. Being a marketing researcher who has conducted thousands of similar surveys and also who has trained hundreds to do the same - this was the big moment - a validation of what I did. But, after my answer to the first question (the coming from question) I was asked to move ahead to the window (my answer was that I had traveled from KY on a vacation). Knowing that they would want more info than that - I asked what the survey was about - she indicated it was about a new store that would be north of this one, also on a I-75 exit (I would have passed this first). I said, don’t you want to ask me more questions - “no, I can fill it out myself”.
Unfortunately, it’s very unlikely this interviewer was doing her job and certainly there were more questions about an attrition situation — which is of vital importance to the operator of the exisiting unit in question. And, while this level of `research’ is not usual, and also is WORTH NOTHING, it often represents a fair portion of the data (using interviewers not trained or supervised upon beginning real interviewing). As you know, as an owner of a restaurant — millions may ride on the outcome of `cannibalization’ surveys - if done at multiple units in a market.
Having the highest level of data collection is of utmost importance to expansion within a trade market - a service I provide - read more about trade area surveys at www.squidoo.com/tradeareasurveys .
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Cannibalization of Customers
July 17th, 2008
Of course, one of the main reasons to do on-site research at your restaurant is when you decide to build a new unit in your same market. Obviously, you don’t want to build a new location in a likely spot that is within your existing stores main trade area. This is when you need to conduct a Trade Area Survey at your restaurant that includes a `cannibalization question’ for your customer base.
The exact wording of the cannibalization question is of vital importance to the accuracy of the data your interviewer will gather (or is this going to be YOU speaking with your customers). Since I have written questionnaires that were used in 100’s of cannibalization studies - I know that answer for you. You can find more at www.squidoo.com/tradeareasurveys .
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Importance Of Being `Friendly’July 21st, 2008
Having done scores and scores of projects in fast food restaurants over decades - I’ve often advised clients to do `operation ratings’ on our questionnaires. This might involve asking respondents (your customers) to rate things like speed of service, cleanliness of the unit, value for the money and so forth. But, the one attribute that when `crossed’ with frequency of usage that stands out is `friendliness of the employees’.
It seems that in this day and age - despite being told by the media we are off in our own world and don’t want to be bothered - that customers react to friendliness MOST. Since the person who interacts with the customer is the main person to project this image — it is imperative to make sure that person has a friendly engaging voice (at the drive thru speaker) and in-person on the cash register - that the person is one of your BEST employees for eye contact and smiling. (Again, a good clear voice is needed).
In future posts, I’ll tell you specific figures for how often a customer uses a restaurant when they rate friendliness an 8 rather than a 10 — once you know, you will act quickly. Don’t wait - do it today.
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Developement - Franchisee vs FranchiseeJuly 23rd, 2008
In my decades of doing Trade Area Research, specializing in `attrition estimates’, — I’ve often done projects that involved market expansion considering new store locations that involved one franchisee vs another. Usually, these project originated with companies in which I was the National Supplier of this service (two national fast food chains) but occasionally not (being known by different franchisee’s in the same market who hired me as an arbitrator/fact finder).
Most national fast food brands have a policy concerning `trade area infringment’ - with the establishment of `what level of attrition’ is `acceptable’ with new store development (those `acceptable’ dollars leaving YOUR pocket and bottom line). And, most fast food brands have a policy of `who pays’ for such research too. Want to find out that type of info? — Then send me an e-mail at southernsurveys@aol.com - describe your situation and I will tell you more specifics (please include a contact phone number.)
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Here Comes The Government
July 27th, 2008
This blog is saddened to report the continuation of government restrictions into how you run your business and where you run your business. In this instance, the `how’ would be the government demand to use or not use a particular cooking oil (regardless as to the outcome of the final product - including taste - one of the most important attributes to your customer base) and the `where’ is the new restrictions on where fast food restaurants CAN’T be developed. Can fast food brands eventually be expected to fund the `alternative’ restaurants too? After-all, what’s to prevent a city council on deciding that FF restaurants would be `better’ for the community if they weren’t open 7 days a week?
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Limited Marketing Dollars and What To Do With Them
August 5th, 2008
Nearly all of the clients I have are owners of franchised restaurants - and = one thing they nearly always have in common is that they have limited `marketing dollars’ above and beyond the % they already pay to corporate to market the brand-name. That said, they do have SOME dollars and the decisions as to whether to sponsor a youth team, local charity golf tournament, do limited in-store marketing via bouncebacks, or buy billboards - are important image and marketing decisions.
When choosing to spend those limited dollars, it’s probably best to `do both’ - local image building and REAL marketing such as billboards. One of the `advantages’ that comes from using my services - doing what I call the MarketView — is that the owner knows the CUSTOMER BASE SIZE and type of user - of every individual unit in a market. And, based on that information - the owner knows which units are best and worst in converting their total customer base into `heavy’ users (some chains define this as the once a week customer, others, the once a month customer). Accordingly, the owner then has some direction from the research on how to spend those precious and limited local marketing dollars.
Much more on Customer Base Estimates in future posts - or - find out more at my squidoo website www.squidoo.com/tradeareasurveys.
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Sales Dollars By Customer Frequency Level
August 7th, 2008
Hello restaurant owners, and welcome back to Restaurant Trade Area Research - where I share over 30 years of insights from doing restaurant research - and, link to the latest of interest in the restaurant universe. Today I want to share with you the actual findings in a 3 store market about a decade ago.
While I won’t go into the extreme measures that need to be employed to have a VALID sample to begin with at a fast food restaurant (but you can find out more at my other information site www.squidoo.com/tradeareasurveys) - here are the results I want you to consider.
3 stores - $2,670,000 Sales (rounded)
customers that come 4+ times wk - 3% of trans - 80,000 in sales
2 or 3 times a week - 13% of trans - 348,000 sales
Once a week - 24% of trans - 642,000 in sales
Once every 2-3 weeks - 24% of trans - 642,000 in sales
Once a month - 12% of trans - 321,000 in sales
Once every 2or3 months - 9% of trans - 241,000 in sales
Once every 4to6 months - 1% of trans - 26,000 in sales
Less than every 6 months - 7% of trans - 187,000 in sales
First time users - 7% of trans - 187,000 in sales
You would be surprised how many owners DON’T think of their real customer base in this manner - what levels ACTUALLY provide the real dollars to a store. This weekend in this blog - I will expand on the data above. But, now, to today’s restaurant links - feel free to comment too.
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Customer Base Size - It CAN Be Calculated
August 10th, 2008
Despite what you as a restaurant owner may have been told - the number of transactions your restaurant does, compared to another time frame (say a year ago) - does NOT mean your customer base size has a direct correlation. THE ONLY WAY TO KNOW YOUR CUSTOMER BASE SIZE IS WITH REAL MARKETING RESEARCH.
Why? Because your customer base size isn’t dependent on the number of transactions - it is dependent on WHICH CATEGORY of user makes the transaction. For example, if 24% of your customer transactions are with once a week users and 24% of your customer transactions are with customers who come every two or three weeks (see last post below as an example) — THEN OBVIOUSLY, THE NUMBER OF CUSTOMERS WITHIN THE EVERY 2-3 WEEKS CUSTOMER BASE IS OVER TWICE THE NUMBER OF CUSTOMERS (who come about half as often).
So, it is THE MIX of customers - that determines the number of actual customers in your customer base. Your year to year transactions could be UP and yet your customer base may be DOWN in size - AND VICE VERSA. I will literally tell you more about `the formula’ soon - in future posts. Or, find out more by visiting my Trade Area site at www.squidoo.com/tradeareasurveys
But as promised, more from the figures of last post:
3 stores - $2,670,000 Sales (rounded)
customers that come
4+ times wk - 3% of trans - 80,000 in sales - 49 customers - 1,630.00 yr
2 or 3 times a week - 13% of trans - 348,000 sales - 398 customers - 874yr
Once a week - 24% of trans - 642,000 in sales - 1,796 cust - 357.00 yr
Once every 2-3 weeks - 24% of trans - 642,000 in sales - 3,628cust - 177yr
Once a month - 12% of trans - 321,000 in sales - 3,704 - 86.00 yr
Once every 2or3 months - 9% of trans - 241,000 in sales - 5,454 - 44yr
Once every 4to6 months - 1% of trans - 26,000 in sales - 2,145 - 12yr
Less than every 6 months - 7% of trans - 187,000 in sales - 21,758 - 8yr
First time users - 7% of trans - 187,000 in sales - 25,376yr
As you can see from the figures above, for this 3 store contiguous FF market - 9 years ago - 14% of transactions (bottom two frequency levels) contained 46,000 people while the top 16% of the transactions contained less than 500 people. YEAH, how you market MATTERS.
But, understanding your REAL customer base is essential to not wasting dollars. —————— Hey, feel free to leave a comment - and please, bookmark and return for slices of restaurant research and restaurant links. Also, forward my/this link to others who own a restaurant. Thanks.
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Spending Per Year - Per Customer - By Frequency of Usage
August 13th, 2008
Hello, welcome back. This blog is one of the few on the internet about restaurants by a real market researcher of fast food restaurants. I’ve been sharing some insights and I hope you bookmark my blog and return on a regular basis.
Today’s post is dependent on the previous two posts - so, you may need to dig down for a fuller understanding. Essentially, I’ve been outlining some specific REAL information from about a decade ago for a 3 store FF brand that had sales of @2,670,000.00 combined. And, in the last post I revealed the actual size of the combined customer base - based on my Customer Base Formula. Today, I’d like to show what that MEANS in terms of spending by any individual customer within a specific frequency of usage scale. For example:
49 - 4x’s a week users - spend 80,000.00 per yr - @1.6k yr-130mo-31 week
400-2-3x’s week users - 348,000.00 per yr - @870.00 yr - 72mo-16 week
1,800 - Once a wk users- 642,000 yr - @357.00 yr - 30mo - 7 week
3,600 - Once every 2-3 wks - 642,000 yr - @177.00 yr - 15mo - 3.40 week
3,700 - Once a month users - 321,000yr - @86.00 yr - 7mo - 1.66 week
5,400-Once every 2-3 mtn - 241,000yr - @ 44.00 yr - 3.68mo - 85cents/wk
2,100-Once every 4-6 months- 26,000yr - @12.00yr - 1.00mo -24cents/wk
21,700-Less than every 6 mo - 187,000yr - @8.61yr - 72cents a month and 18 cents a week
These stores had 7% first time users spending about 187,000 a year — 2,100 new customers a month or about 25,000 new customers in a year.
Now, just to ask you as a restaurant owner — if you knew that @21,000 of your 38,000 customer base spent less than 9 dollars a year at your store - would you be willing to try a method to change it? IF SO, give me a call on my cell ——– you can find that information by going to my site about Trade Area Surveys — www.squidoo.com/tradeareasurveys
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McDonald’s Perception Change
August 17th, 2008
Last year, I personally interviewed several thousand fast food customers (in-store and drive-thru) in a variety of fast food brands for Trade Area Research purposes. (Do you need trade research before expanding your market?) This was normal for me as I have personally interviewed thousands of fast food customers for dozens of years. And, as you might know, certain questions are nearly standard on questionnaires trying to understand customer behaviour - such as the fast food restaurant that the customer uses `most often’.
In the 1980’s and even into the late 1990’s - when adults answered that question for me — when the answer was McDonald’s - they would immediately offer a `reason’, in an apologetic tone, which invariably was `the kids’. That is not to say that I didn’t hear `they are everywhere’ and `they are cheap’ on occasion. Nevertheless, the interesting thing was that `other brands’ such as Wendy’s or Arby’s or Chick-Fil-A or others (such as sandwich chains Subway) - most often users ALMOST NEVER offered up `embarrassing’ reasons for their usage of a particular brand most. Only McDonald’s. It was almost a case of doing `marketing’ too well.
Then, McDonald’s focused less on kids and more on product and product quality. I began to hear folks say that they liked a `particular new product’ at McDonald’s that they went for `most often’. Kids, as a reason, was definitely fading quickly (I informed my clients who at first seemed surprised in the early 2000’s — it was the kind of information that only came from literally being on the ground for multiple brands for decades) - the return of McDonald’s was approaching.
The moral - If the biggest can change a negative perception — other brands, most of which have neutral images, can also build a positive one - like McDonald’s has done.
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Customer Party Size
August 25th, 2008
When I do my `MarketView’ within markets, at multiple units simultaneously, one of the more interesting `facts’ that emerges from the research is the `party size of the transaction’. Frequently at one restaurant you might find a `low’ figure such as 1.61 customers per transaction and for others you might find that the figure might be 1.9 or even 2.1 customers per transaction.
Obviously, this shows the potential for `focused marketing’ at the unit with fewer customers. THOSE are the restaurants that the special `two sandwich coupons’ (two sandwiches/two fries for a bargain price) should be distributed to the customer base — preferably ONLY to folks that are coming by themselves. This is the idea of targeted marketing dollars.
Those are the customers we want to have bringing in their co-worker next time — or buying for them at the drive-thru. And, it is this type of information that becomes available when one does total full market research at every unit. It is also one of the easiest ways to increase store sales - and NOT to waste marketing efforts at stores with less potential to increase party size.
Want to know more about my MarketView? — then please go to my Trade Area Website at www.squidoo.com/tradeareasurveys.
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The MarketView - Research For Your Restaurant
September 2nd, 2008
Hello, welcome back - I hope your Labor Day holiday was relaxing - that said, my thoughts go out to previous restaurant clients in Louisiana. Today, I want to spend this paragraph encouraging restaurant owners to `get the big view’ of their real market situation. To understand that NEXT year - with proper information - you can do real local marketing that impacts your units.
How you ask?
By doing my MarketView research for which you can find more info about at www.squidoo.com/tradeareasurveys — or go to the site for contact information for my services. If you call, make sure to ask me about the project I did for a fast food chain last year that involved doing over 10 stores and testing over 12 new site locations within the market - for under 30,000.00.
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Spend Less Here (Trade Down) - The `New’ Fast Food Mantra
September 16th, 2008
This weekend I was watching some sports on TV when the `new’ Burger King ad with the King came on the screen. Anything with the KING gets my attention. This one began with a `consumer’ holding a BK sandwich, who evidently `finds’ money in his pocket (that shouldn’t be there) and he is complaining about this to a policeman. The policeman says `reverse pickpocket’ and asks for a description - which, while being given by the `consumer’ results in the classic `THERE HE IS’ - cops and `robbers’ chase.
Off to the races goes The King crossing over a busy street while evading the law. Only to be SMASHED by a yellow cab. (With an impact that could easily kill a real person and you the observer literally feel it.) Yes, the first viewing had my full attention and brought amusement in addition to the message of BK itself — you can save money by eating with us. Expect to see more of the reverse pickpocket.
The BK ad ran within minutes of another FF comparison ad - this one for Capt D’s (seafood). In this one, in a parking lot aside of a Red Lobster, — customers of the RL are approached and asked how much money their meal cost. I saw two different ads on this and one said 80 dollars and the other 100 dollars - at which moment the Capt D’s renegade interviewer brings the RL party over to a makeshift area with a long folding table where Capt D’s employees crank out one meal after another and tell the RL group they could have had `all this’ and spent 40.00 less. The mantra, again; you can save money eating with us.
Which brings me to the two `fake restaurant’ ads currently in the Atlanta market being run by FF brands. The first is the *obnoxious Pizza Hut ads where it is `their pasta’ which is being served in the restaurant that evening. So, after `candid’ praise for the pasta - the `upscale’ diners `laugh’ about how they were fooled by the quality. Indeed, why would you be a fool and go to a sit down restaurant, pay thru the roof, — when you can get `restaurant quality’ delivered to your door. The mantra, you can save money here, by eating at home.
(* what is actually obnoxious is the version of the ad where the PH girl rips her `apron’ off to reveal her PH identification - she does it in a manner that somehow shouts — ~you idiots-jokes on YOU~).
OR, you can also find the other fake restaurant ad for Hardees and their Big Burger products. The idea; don’t pay 8.00 for a 4.00 burger. The mantra; you can save money by eating with us.
Finally, in Atlanta, Arby’s stores seem onto the price position with the 99 cent ArbyQ plastered (tastefully) over the store outside banners — while the Checkers down the road makes sure its customerbase knows it has 69 cent Sundays and Wednesdays.
Because of the economic uncertainty, the market for the upper middle and lower upper classes for FF restaurants is increasing. Promoting the `savings’ with quality via trading down is one approach - expect to see this even more.
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Mapping Trade Areas For Expansion
October 1st, 2008
If you are a franchisee in a good financial position right now - it might be the RIGHT time to do trade area research. The reason is that with many FF restaurants closing their doors - more and more good real estate is becoming available. But, before one can buy those available locations for your own brand - one must know your trade areas of your units so that you can estimate the potential `attrition’ or cannibalization to your existing units.
Indeed, many of my clients do exactly that - map EVERY store they have in a market and at the same time `ask’ customers to state what they might have done if a new unit was at such and such intersection. Indeed, it is not unusual to `map’ a market with multiple stores and ask about multiple possible new locations too.
Before you think this is cost prohibitive - last year I mapped 14 units in one market and asked about 11 prospective `new units’ within the same market. As you would expect, some of the `new units’ would impact stores greatly and others hardly at all - based on existing trade areas. AND, all 14 stores information - indeed, the whole project was under 30K. That’s right, 14 stores, under 30,000.00 — and with terms spreading the payment over an entire year.
Make sure to go to www.squidoo.com/tradeareasurveys for more info.
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The Tale Of Two Fast Food Restaurants
October 23rd, 2008
Recently, I conducted the MarketView in an eastern seaboard market at all the units of a particular ADI and all owned by one owner. The MarketView is my name for a type of research design that digs into the fundamentals of any market. All kinds of interesting and useful information comes from doing real marketing research at your stores.
An example of this is shown below:
Store One Store Two
820,000 2006 Sales 790,000
13% Uses This FF Brand Most 24%
20% Uses This FF At Least 1 Week 42%
161K Annual Sales To 1+ Week User 331K
20K Total Repeat Customer Base* 13K *customer base formula
Smart marketing can address each of these stores specific marketing needs. Only by having real customer based information allows for smart spending of those precious marketing dollars. Make sure to visit my Squidoo page that explains more about the MarketView at www.squidoo.com/tradeareasureys
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Fast Food Price Points
November 7th, 2008
Often when I do fast food research we ask customers to give a rating about price or cost of the food. What I’ve found about ratings is that it all depends on what one wants to pay - 4.00 is too high for some and wonderful for others - as is 6.00 or even more (on occasion).
That said, currently, three main price points are the main focus of advertising – 1.00 or less — 2.99 `meals’ —– 5.00 price points. My suggestion to clients of FF stores has always been to `offer’ the various price points to not shut out part of their FF market (for at least part of the year if not always) - specifically those more money conscious customers in these tough economic times and shrinking trade areas.
Makes one wonder if `recession combos’ might be a good marketing idea - small fry, smaller main sandwich, small `value’ drink - small price.
BTW - Last months stats were the best yet for this blog - thanks for reading. I hope you continue down this page as there is lots of good info and links. Finally, have you visited my Squidoo site yet at www.squidoo.com/tradeareasurveys ?
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