Five Mistakes Restaurants Make at Retail (Part 3)

by Broad Street | Published 04/29/2015 | Brand Licensing Representation, Licensing Best Practices, Licensing Tips, The Restaurant Business

In yesterday’s, we talked about the mistake of restaurant chains trying to go to retail through their Supply Chain vendors. Today we’re going to warn against Dumb Thing #3:

3.) When it comes to your mix of products at retail, listen to the consumer, don’t treat them like children: This could be applied to almost any aspect of your business model, but is a surprising weakness in the strategic thinking of many restaurant chains. Perhaps that’s because prior to the Great Recession, eating out was rapidly growing, replacing the traditional “meals at home” we all grew up with. Restaurant sales, the number of visits and tab size were all increasing, and it seemed as if the gravy train would never end.

All that has changed now. Consumers cut back on the number of times they eat out, have traded down to cheaper brands, or are looking for bargains and specials. Companies have lost sales, market share and money. Some have even gone out of business, been sold to private equity firms looking for bargains, or have had to re-invent themselves with cheaper menu items.

Whatever the reason, we can’t tell you the times a restaurant executive has told us in the past when pitching for their business “we don’t want our brand at retail,” or worse, “we don’t want our core products at retail.” Those execs are naked in their hubris, saying their brand is “special.”

No, it’s just one of hundreds of choices consumers have today when it comes to eating.

And not surprisingly, a number of these chains later went bankrupt or were purchased at fire sale prices after poor performance drove their owners out the door.

Whether as part of the decentralization of commerce into niches and sub-niches, or because consumers have become empowered with devices and software that give them control over their lives, brands can no longer dictate when they interact with shoppers and restaurant goers.

Consumers are hungry, pure and simple. If you don’t cater to their cravings, they’ll find someone who will. Tune in for Part Four tomorrow.

Plan on stopping by our panel at the National Restaurant Show at Chicago’s McCormick Place Sunday, May 17th entitled “The Rise of Nontraditional Foodservice: Don’t Panic, Adapt!” Joining BSLG’s Bill Cross will be retail guru, Jimmy Matorin, whose restaurant industry breakfast on Saturday, May 16th is celebrating its 20th anniversary. Rounding out the panel will be Abbie Westra, Editor in Chief of Convenience Store Products.

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