Marketers on the outside looking in can't watch popular TV reality shows such as "Top Chef" and "Hell's Kitchen" and expect to get a good understanding of how restaurants really operate. Entertaining as they may be, they focus primarily on just one part of a complex and difficult business—cooking—and restaurant owners and managers face many more challenges besides trying to serve up good food.
According to the National Restaurant Association's 2007 Restaurant Industry Forecast, the most pressing ongoing challenges include recruiting and retaining employees, outmaneuvering competitors, keeping costs down, increasing productivity and implementing new technologies both in dining rooms and kitchens.
The U.S. is home to approximately 935,000 restaurant and foodservice outlets that are projected to employ 12.8 million workers this year, according to the forecast. Industry sales are expected to reach a record $537 billion this year, a 5% increase over 2006 and the 16th consecutive year of real growth, said Steven C. Anderson, the association's president-CEO.
"The industry's economic impact will exceed $1.3 trillion in 2007, as Americans spend 47.9% of their food budget in restaurants," Anderson said.
Like most service businesses these days, restaurateurs are trying to do more with less, said Sarah Anti, VP-brand marketing for foodservice equipment manufacturer Hobart Corp. "Cost pressures and consumer demand for high quality at the best price mean that operators need to run their operations as lean as possible," Anti said. "There are always opportunities for companies—whether they're providing a service, or food or commercial kitchen equipment—to help restaurant managers and owners accomplish that and help them do it profitably."
Anti said one of the biggest mistakes she sees marketers make is to look at the gigantic restaurant industry as one big chunk of business to go after. "I suppose it's easy to fall into the trap of thinking of restaurant owners and managers as a homogeneous group, but they are individuals with individual styles and preferences," she said. "The real key is to understand your individual customers as best as you can, and to communicate with them in the medium that works best for them."
Not only do marketers need to address their efforts to individuals, they also need to recognize the different types of restaurant organizations these individuals run, said Jack Fordi, director of sales, for the National Restaurant Association's "SmartBrief" daily e-newsletter. "Between the large chains and the mom-and-pop independents, there is a lot of disparity in the restaurant industry," Fordi said. "Appealing to both can be difficult. Suppliers often have an array of products targeted at a wide swath of prospects, so they have to hit their targets on multiple levels."
Scott Allmendinger, VP-group publisher at Restaurant Business and FoodService Director, agreed with Fordi and said that suppliers are shifting away from broad advertising that supports a national-accounts sell—to McDonald's Corp. or Applebee's, for instance—because their investments in personal, direct relationships with this finite group of decision-makers have been more successful at reaching the right execs than general campaigns.
"There are about 1,500 decision-makers in the top 100 restaurant companies, which is a small enough universe to influence with costly but effective relationship selling," Allmendinger said. "As one national-accounts guy told me, `Not only do I know their wives' birthdays and where their kids go to school, I even know their dogs' names.' "
Allmendinger sees marketers "shifting their advertising focus toward penetrating and influencing a high-value but fragmented audience." In the restaurant world, this audience of regional and emerging chains, as well as large independents, is known as street operators, he said. "In fact, in October 2005 we relaunched Restaurant Business to address only this audience," Allmendinger said.
Yet marketers still need to be able to react appropriately to industry trends, Fordi said. "Fads and trends in the restaurant business are quick to change, so marketers have to be sure the restaurant owners are confident their products will resonate with their customers," he said.
"Trade shows have traditionally been industry marketers' bread and butter because they give restaurateurs the opportunity to taste food, test the equipment and experience the possibilities firsthand," Fordi said. "However, the strongest marketers in the industry—such as Tyson, McIlhenny, Kikkoman and FoodService Rewards—are in front of restaurant operators daily with a variety of messages aimed at different segments of the market. The opportunity to quickly change their promotions to deal with trends or new competitor products is vital."
Restaurant owners not often online
Although Fordi said that one way even the smallest marketer can get its latest products and services in front of restaurants is to use more timely and cost-effective media such as Internet search, e-mail and focused Web sites, Allmendinger believes that restaurant owners haven't yet embraced the Internet as much as marketers would like.
"The traditional challenges in the restaurant world are: time, because operators work 80-hour weeks; computer access, as computers are seldom used in the dining room, bar or kitchen; and connectivity," Allmendinger said. "We feel that operators are only now beginning to realize that they can save time by transitioning certain activities to the Web. At the same time, thousands of Web sites targeted at restaurateurs have sprung up, which dilutes the traffic for us all."
No matter the vehicle, basic marketing principles are more important than ever in the restaurant industry, Fordi said. But, he added, marketers still have to be able to adjust messaging to industry trends.
"Restaurants have to constantly adapt to keep up with consumers' appetites for food and entertainment; the suppliers have to follow suit," Fordi said. "If your product or ad messaging is stale, using just one or two `old faithful' marketing ploys, you'll get left behind by the competition."