Restaurant and Food Service Blog

Howard Schultz, Starbucks CEO,  seeks to dispel excess myth in a rectent MarketWatch article. But in light of the whole AIG $1 million bonuses that were just paid out to the top executives, you may wonder if Schultz may want it both ways.

For years, Starbucks touted itself as a premium cup of coffee and was unabashed in the fact that it was more expensive then other coffees, but it was worth the extra money. The image of the white coffee cup with the green logo symbolized a higher end, premium product. It was much like the Tiffany’s of coffee. But a product that came at a price.

There will always be cynics to products that strive to be the best if its class.

Restaurants here in the Triangle area are also feeling the pains from the financial meltdown. Sue Stock, staff writer for the Raleigh News & Observer, points out that for many restauranteurs here in the Triangle – flat is the new positive. Most hope to just break even this year and have tried several things to attract diners to their restaurants such as cheaper items, BOGOs and even opening up on holidays that they typically would not in the past.

But what I think that many restaurants are forgetting is that everyone is looking for value. In our household, I can admit to now buying only items that are on sale or with a coupon. In the past, I would scoff at the idea and could not think of wasting my time. But now that times are a bit leaner and we are all making every dollar stretch a bit more, all sectors of the industry need to get back to basics.

Simply gimmickery such as BOGOs or slash and burn sales may only bring the one time diner into the restaurant. but it will not retain them as long term customers.

I am witness to it.

After cutting out coupons from the Sunday paper, I thought that taking the kids out to lunch at Quizno’s was a good choice since there were 8 coupons to pick from. I could certainly take my two children and myself out and eat relatively cheap before we went out to run errands. We each had a sandwich with chips and a drink and after the coupon, I paid under $14. Not bad for a quick, cheap meal.

But I probably will not go back to Quizno’s anytime soon. It was not because of the meal. Overall, I got what I expected. It was the service. No one behind the counter engaged us. The help looked like they did not want to be there and with only one other person ahead of us, it took almost 5 minutes before our order was taken – very slow by many QSR standards, especially with a solo diner ahead of us.

If restauranteurs can do the ordinary things extra-ordinarily well, I think many will get out of 2009 with only a few bumps and bruises. But get away from delivering great service and operations, the core of the business will wither away

So many restaurant chains at the end of 2008 were offering low price point promotions in hopes to help boost sales. From $1 dollar menu items at the QSR chains to $99 dinners for two at steakhouse such as Morton’s, everyone was feeling the pinch from the mortgage crisis. In order to help stave off slumping sales, everyone was doing their best to attract a dwindling customer base.

Even during the post Christmas sales, you could find huge sales of nearly 75% off on retail products.  But I think that Guy Kawasaki made a great point in his recent blog posting when he noticed a lot of sales at the Stanford Shopping Center. Click here to see the pictures from blog posting.

In almost all the stores at the shopping center, huge discounts were being offered. All but one store. At that one store, there were a ton of people looking and buying. That one store was Apple Computer!

Seth Godin goes farther with his recent blog post – Change Your Price. The first line of the post is very poignant. “When a restaurant goes from a la carte to either a buffet or a prix fixe meal, it is able to find a new class of customers.” What I think the industry has in store for 2009 is something of great significance.

Although this is a very bad economy, in it is a lot of opportunity. Remember the last down economy that we saw in 2001? During that time we also saw a huge amount of innovation – the introduction of the iPod and Microsoft’s Xbox. The great restaurant leaders are going to see beyond this economic mess and turn lemons into lemonade.