Perspectives

What Wall Street Wants

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What Wall Street Wants

Double-digit profits. YOY growth. Higher ROI.

Let’s face it, in an industry known for penny-profit, making a buck is getting harder and harder. In “younger” segments of commercial food service, like fast casual, unit count expansion is the #1 growth strategy employed by executives. And this works for a while. As segments mature, growth is harder to achieve. The darling fast casual segment recently dropped below its double-digit growth rates for the first time in recent history. 

Investors are much more interested in same store sales growth, which is held up as the best measure of long term value-creation. We know that restaurant success is dependent upon sound unit-economics. Rising food costs, shifting labor markets, demands for high traffic space—all these things can test our ability to create sustainable value for a watchful Wall Street.

In our channel development practice, we employ the following growth strategies to help restaurant brands focus on driving incremental sales in existing units.

Refocus on the Highest Point of Differentiation

In seeking to keep consumer interest high by trying new things, marketers can be tempted to neglect the original object of brand love. Often this is the original thing, the food or service that originally set the brand apart from the rest. The brand’s highest point of differentiation is where it has an exclusive right to win. It’s McAlister’s sweet tea. Or McDonald’s French fries.

In helping re-establish menu mojo, we often look to what foods and experiences were responsible for the brand’s original success. And get eyes on them again.

Master the Minor Details

As concepts grow, executional excellence becomes more challenging. This is true in every business, and Ops executives know just how these seemingly invisible practices can make or break a brand. I’m talking about employees that smile and look you in the eye. Sparkling facilities that say “we care about clean.” Food at the proper temperature. Mayonnaise packets in the delivery order when they are requested via the online ordering interface (ahem, a fictional example). 

When you really look at why customers don’t return to a restaurant, it’s due to failure to meet a basic expectation. According to some industry studies, a lack of cleanliness is the longest remembered attribute and associated with the lowest retention rates. My 19-YO son is living proof. He hasn’t visited a certain QSR in over 15-years, though according to target demos he should, because of a negative memory permanently implanted.

Create Limited Time Offers that Build Affinity

Though pricing incentives to try something new can be a powerful motivator, we encourage brands to incent patronage with rewarding experiences. Discounting as go-to strategy is problematic, creating new “low floors” of value for the brand—or an entire class of competitors. Generally speaking, consumers will assign value to that which we value.

Celebrate new flavors in a favorite menu platform. Offer an experience to incent trial of a new menu part. Reward purchase behavior with an unexpected add-on. You see the pattern here. Rather than beginning with “what can we subtract to enhance the value?” we challenge “what can we embellish to enhance the value?”

Engender Loyalty through Personal Touch

Influence begins in relationship. As marketers, we don’t have the right to lead a consumer whom we first do not take the time to understand. We believe it isn’t business-to-business or business-to-consumer, it’s business-to-individual. No matter the size of our business, we can implement relational marketing best practices.  And with the plethora of marketing technologies available today, there’s no excuse for a one-size-fits-all approach to brand building. 

Don’t try to invest in it all at once. Build your capabilities around your [primary] hub one at a time, through test and learn initiatives that enable you to build your customer profiles and perfect your segmentation strategies, refining engagements along the way. Enlist partners who can help and who are assertive in this space. Be prepared to learn together.

It’s the wild wild west out there, fighting for share in a sea of shifting expectations. And I don’t know about you, friend, but I’ll be riding a bull.

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