February/March, 2008

From the Editor

Winning The Battle For The Budget Minded Consumer

Darden faces what Clarence Otis (Darden CEO) characterized as a “difficult consumer environment” that “may get worse.” Otis, whose company operates more than 1,700 restaurants, said diners have become “very budget conscious” during the past several months. “They are seeing more pressure on their discretionary income,” he said.

As a result, some households are either cutting back on the number of times they eat out or spending less when they do go out, he said. The behavior is having more impact at Red Lobster and LongHorn, where the average check is a bit higher than Olive Garden, Otis said.

So there you have it. The quote above, which is excerpted from a recent article in the Ft. Lauderdale Sun-Sentinel, defines the operating environment very well. Consumers feeling pressure on discretionary income are eating out less and looking for more economical places to eat. It is certainly a problem for foodservice operators and certainly an opportunity for the deli and retail foodservice operations.

Yet, all too many stores are not positioned well to seize this opportunity. Let’s look at a little checklist for winners in the new battle of the budget-minded foodservice consumer:

Food Quality

Food quality remains highly irregular. There are outlets with fantastic pizza programs, and some sell pizza not worth eating. Consumers who eat in restaurants are unlikely to enjoy food that isn’t restaurant-quality. Have you been doing consumer taste tests on your product all along? If not, this might be the time to start.

Real Fresh Food At Peak Hours

Much more than typical grocery shoppers, restaurant patrons purchasing for immediate consumption need service during very specific meal times—breakfast, lunch and dinner. Yet many foodservice programs produce more drama than food. One chain has a wok program with one wok and one man cooking, order by order. It is a recipe for disappointing the customers. They are wooed to the store with the temptation of freshly cooked-to-order rice and noodle bowls, but when they get there at lunchtime, they wind up buying a pre-packaged sandwich because there is a line of 12 people at the wok station. You need capacity to handle foodservice orders promptly.

Do You Sell Meals?

Meal Solutions, Home Meal Replacement and similar terms may be ancient history now, but the fact remains that foodservice customers want to buy their meals from you at your department, not shop a whole store. The obvious part is selling meals and side dishes. If a consumer is going to pick up half of a rotisserie chicken to eat in your in-store café, or on a park bench, you have to offer more than the chicken. Vegetables and starches are customary. That is not enough however; they may want a salad, soup, dessert, a roll, a beverage and more. Obviously no deli or retail foodservice operation can stock the full range of all these items that a supermarket does—that is OK, no restaurant does either. You need to think like a restaurant though and select the items that your consumers want.

Where Will People Go To Enjoy Their Meal?

Of course many orders are to take to the house or the office, and if you have a café, that answers that. But many of these new budget-minded shoppers have grown used to going out to eat. What can your store do if you don’t have a café? Well, some can improvise. Many stores build a little breakfast program around a coffee cart in the store and set up a few small tables and chairs. Other stores, at least in warm weather, can transform a bit of the parking lot or another area into a temporary café. But you can also put together a little brochure of nearby public parks with picnic tables or grassy areas. As population moves to the Sunbelt, many of these guides are good year-round.

Do You Satisfy Their Aspirations?

Getting this new clientele will require you to walk a marketing tightrope. On one end of the tightrope these consumers are looking for price, on the other end, they don’t want to feel like losers—so you want to provide an experience that doesn’t feel cheap. Try to avoid generics. Create a brand or identity for your operation and market that brand consistently. Let the consumers know that your deli and retail foodservice operation is something they can be proud to be associated with. Invite school children to see the operation, support the local hospital, sponsor cooking classes, give the consumers reasons to justify to their friends and themselves why they would prefer to buy from you, even if the real reason is price and they don’t want to admit it.

As we work our way through the sub-prime mortgage crisis, the next year or two will likely offer many opportunities to establish and deepen consumer loyalty. The winners when good times return are likely to be those who developed the most intense affiliation with consumers during more difficult times.  DB