Recession Impact on Restaurants

Consumer survey after survey report that one of the areas of discretionary spending that is most often targeted by consumers for reduced spending is restaurants. A perfect industry to test my hypothesis that good businesses can prosper in these tough times....if they will embrace the recession and adjust their way of doing business to take advantage of the downturn.

Now, my consulting work has me traveling a significant portion of the time. As a result, I eat in restaurants much more frequently than most people. I am certainly seeing many restaurants and chains that are being significantly impacted by the downturn. And, most restaurant companies are publicly reporting reduced customer counts and lower average checks.

The deteriorating results are to be expected when chains just continue doing business “as usual.” Consider my experience at a delightful, all you eat salad & pasta bar chain in South Florida.

Recently, I visited one of the restaurants in this chain at 7PM on a Sunday evening. The place was packed! Actually, I should not have been suprised for they have long offered a great value at a fair price. And, as you would expect, the “all you can eat” feature is sure to be attractive in tough times.

After passing through the salad line and being rung up, I (and other guests) faced about a 3 minute wait for tables to open up. Mind you, this was a non-holiday Sunday evening!

Here is one chain that shouldn’t be hurting…in fact it should be taking gobs of business away from casual dining restaurants.

Regretfully for the chain, they were treating things as business as usual. There was no apology or explanation for the wait. Now, 3 minutes is not the end of the world. But, the point is that this restaurant is missing an opportunity to turn their crowds into a plus. Where were the magic words validating my visit “Sorry for the short wait, as you can see people are really responding to our wonderful value meals. Will this table be acceptable for you?”

At no time did anyone thank me for visiting…perhaps tolerable in good times, inexcusable in tough times. And where was my “bounce back” coupon to give me a reason to make my next restaurant visit back to them?

Sadly, this chain…at least on that Sunday night…was doing the same-O…rather than adjusting for the times and capitalizing on the downturn.

Times have changed dramatically and those businesses, in any industry, that don’t quickly adjust are not likely to make it to the point when good times return.

Some restaurants are in sectors and/or locations where failure is almost preordained in these tough times. But, sadly, others are dooming themselves by ignoring the winds of change.

Next up: A look at how the automotive industry is responding to the recession.