How Research Can Help Restaurateurs Sleep a Little Better At Night
While there are a myriad of small challenges and issues that restaurateurs face every day, there are some more prominent issues that keep our friends in the restaurant industry awake at night. Research may not be able to solve 100% of the issues that keep restaurateurs awake at night, but it can certainly help to clarify and provide solutions to some of them.
Specifically, research can help restaurateurs address the following challenges:
- Addressing the varied needs of guests (such as generational differences)
- Competitive differentiation
- Increasing competition
- Geographic expansion
- Keeping and attracting quality team members
And to some extent, research can also help with:
- Digital (online) ordering
Other big challenges for which research is not a panacea (although it can help clarify the issues) include:
- Wage and benefits issues
- Restrictive/predictive scheduling
In this first blog post in our Sleep Better at Night series, we offer an overview of the types of challenges research can help address as you work to resolve these “keep me up at night” issues. We will follow with a deeper dive blog post for each of these issues and outline in greater detail with examples of how research has been used by other restaurant operators on their path to a good night’s sleep.
ADDRESSING THE NEEDS OF DIFFERENT DEMOGRAPHICS
Different restaurants attract guests with different demographic profiles. It is important for restaurant brands to understand which demographics they already attract and which they could attract. While there are more complex and sophisticated ways to think about the target audience, generational cohorts represent a simple and easy to understand approach.
Different generations have different emotional and rational need states when it comes to restaurants in general, and more specifically in relation to specific restaurant concepts. Understanding these differing emotional and rational need states through research can help hone both the restaurant offering and the marketing and communications to have a positive impact on ROI.
More sophisticated ways of understanding and responding to the guest base through research to grow the business include identifying and describing the target audience (those who are most likely to dine most frequently at the restaurant) and segmenting the guest base (dividing guests into distinct groups with similar characteristics). Both are powerful approaches to addressing different demographics, psychographics, needs and personalities. These two techniques will be addressed in more detail as part of the Q2 Insights Sleep Better at Night series of blog posts.
COMPETITIVE DIFFERENTIATION
Restaurants need to differentiate not only on the basis of food and location, but also on the entire customer experience. Customer experience is a multifaceted enterprise that includes sensory elements such as temperature, music, lighting, ambient noise, aromas and décor as well as menu selection and flavor profiles, service style and engagement expectations.
Many restaurants understand how they are differentiated but the differentiation becomes eroded over time due to encroaching competition and/or restaurants losing focus on the uniqueness of their differentiation. Research can help refocus the brand on how they are differentiated in the eyes of consumers and provide insight into shifts in guests’ needs that are fulfilled by the differentiation.
A few examples of how restaurant brands can use research to understand and hone their differentiation include the following:
- Understanding the customer journey to differentiate the brand at every touchpoint along the journey.
- Using brand maps to explain relationships between competitor restaurants based on a variety of potentially differentiating factors.
- Performing communications testing to assess the extent to which the communications are conveying the key differentiators and what changes are needed to improve the effectiveness.
- Understanding the extent to which restaurant differentiators meet guests’ emotional and rational needs.
INCREASING COMPETITION
These days competition is coming at restaurants from all angles. Restaurants no longer have the luxury of only being concerned about other restaurants as competitors. Competition presents itself from many quarters, including:
- Supermarkets that are aggressively pursuing the home meal replacement market
- Meal kit home delivery services that are capitalizing on the fresh, clean food movement
- Home delivery services that are making it easier for diners to stay at home rather than in restaurants
- Restaurants that are disrupting the industry with different and/or more efficient service styles
Research can help restaurateurs understand the rational and emotional needs of guests that are feeding these trends as well as help figure out ways to counter these competitive challenges. A few research approaches include:
- Market share studies to determine if and to which entities the restaurant is losing market share
- Studies to understand how to win back market share
- Price modeling to ensure that prices are optimized to maximize revenues
- Research to identify the strengths and weaknesses of the restaurant brand and those of their competitors to capitalize on unique strengths and exploit competitor weaknesses
GEOGRAPHIC EXPANSION
Key challenges for restaurants in the area of geographic expansion include:
- Identifying the best locations for new units that are most likely to yield the best traffic and revenue
- Lack of understanding of how guests might be different in new markets from existing markets (e.g., East Coast versus West Coast or Southern California versus Northern California)
- Lack of understanding of regional differences
- Management of restaurants that are not close to corporate headquarters
- Management of restaurants that are located states apart
Unfortunately, research is unlikely to be helpful in the management of restaurants from afar; however, market research can certainly help with identifying the best locations for restaurants as well as describe guest and regional differences. One of the most frequent methods for identifying the best locations for new units is to make use of standardized national segmentation schemes such as Claritas Prizm or Mosaic Consumer Lifestyle Segmentation by Experian.
Other approaches with greater precision can be custom designed for restaurants using target audience or segmentation in combination with predictive analytics modeling. The approach will be discussed in more detail in the Q2 Insights Sleep Better at Night series of blog posts.
Understanding guest and regional differences from market to market is typically addressed using Qualitative and/or Quantitative research. This too will be discussed in the upcoming series.
KEEPING AND ATTRACTING QUALITY TEAM MEMBERS
Employee recruitment, satisfaction and retention are critical to restaurants from an operations perspective, impact on training costs, and arguably most important, from a guest experience perspective. Frequent turnover of staff has a negative impact on employee brand revenue, morale and productivity.
So how can research help with retention as well as attracting quality team members? One of the best tools is an annual Employee Engagement and Satisfaction Study. Engagement is directly correlated with brand outcomes. Measuring and managing engagement and satisfaction on at least an annual basis helps brands respond to their employees in focused ways that can prevent high turnover rates as well as help identify the types of team members that should be recruited to the brand.
DIGITAL (ONLINE) ORDERING
The digital age is firmly taking hold in the restaurant industry and digital ordering (from mobile devices and computers) has many faces:
- Digital ordering and payment from the table
- Digital ordering prior to arrival
- Digital ordering for takeout
- Digital ordering for delivery
- Digital ordering for catering
When not handled correctly, digital ordering can create operational bottlenecks, cause restaurant atmosphere problems and, in a worst-case scenario, negatively impact revenues.
Key to success with digital ordering is thoroughly understanding the customer experience through research. Understanding each of the touchpoints in the customer journey will help the restaurateur improve all aspects of the digital ordering experience from app navigation and usage to messaging, signage, food and beverage preparation, capacity management, and restaurant layout.
OTHER BIG ISSUES FOR WHICH RESEARCH IS NOT A PANACEA BUT CAN HELP TO CLARIFY
WAGE AND BENEFIT ISSUES
Guests’ standards are high and restaurant operators struggle to keep prices down while meeting the demand for fresh, clean, high quality food, offering menu variety, and doing all of this at a price that provides value for money. Restaurateurs are further pressured by increased labor costs from wage increases and benefits.
Operators must do more with less. While research is not a cure-all for this challenge, it is true that:
- Understanding the target market and guest segments
- Understanding and responding to the competition
- Differentiating the brand and communicating the unique nature of the brand
- Differentiating based on the customer experience
- Being data-driven when expanding into new markets
will all go a long way toward shoring up restaurant brands for the trials that currently exist and lie ahead.
RESTRICTIVE/PREDICTIVE SCHEDULING
In San Francisco, restrictive scheduling requires restaurant operators to post a work schedule a minimum of two weeks in advance and any changes to the schedule may result in a penalty to the restaurant by local government. This Ordinance is, of course, in conflict with the preferences of both restaurateur and staff. While research will not change the Ordinance, it can help to clarify the impact of the Ordinance, such as the impact on willingness of staff to remain employed at a restaurant and the restaurant’s ability to attract qualified staff to join the restaurant team.
GUESTS’ PERCEPTIONS OF PRICE INCREASES VERSUS SURCHARGES
Ask any consumer the extent to which price affects their buying behavior and they will surely tell you it does. However, as researchers and marketers we know that price is rarely the primary barrier to visiting a restaurant. Guests attitudes and opinions about price are closely tied to perceived value, among other things. Research will help to clarify perceptions of price increases regardless of how they are presented and the optimal way to word them minimizing concerns from guests.
COMING SOON
This is the first blog post in our Sleep Better at Night series for restaurateurs. This will be followed by deeper dive blog posts for each of these issues. The posts will outline in greater detail how research has been used by restaurant operators on their path to a good night’s sleep.
Kirsty Nunez is the President and Chief Research Strategist at Q2 Insights, Inc., a research and innovation consulting firm with offices in San Diego and New Orleans. She can be reached at (760) 230-2950 ext. 1 or kirsty.nunez@q2insights.com.
Lori Enfield is an Account Director at Q2 Insights, Inc. She can be reached at (760) 230-2950 ext. 3 or lori.enfield@q2insights.com.
This entry was posted in Restaurant and tagged on February 22, 2017 by Kirsty Nunez