Growth | June 2011 | By Jan Fletcher

Combating the Seasonal Swing

Quick-serve operations in tourist-driven markets must be creative to stay profitable.

Popular tourist attractions have seasonal shifts in business.
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In markets driven by tourist seasons, customers tend to dwindle to a trickle in the off-season but swarm like locusts in the peak season. Such markets force quick-serve operators to construct a strategy that ensures thriving store operations amid wild swings in demand.

Ervin Hernandez, a Miami-area marketing leader for Domino’s Pizza, says operating in a seasonal market is a numbers game. “Permanent population is a key ingredient to maintain a profitable brand,” he says. “Anything over 16,000 permanent residents should give you enough customers to sustain a profitable store.”

Hernandez says Miami-area Domino’s units aim their marketing tactics at year-round residents to build business. “We rely on [them] to help us get through the year, not only the season,” he says.

“Developing a strong relationship with the locals and getting them fully engaged in your concept” is the right strategy for tourist-town operators, says Dean Small, founder and managing partner of Laguna Niguel, California–based Synergy Restaurant Consultants. “If the locals love you, the tourists will flock to you because they want to be part of the local scene.”

Yet, profitability still hinges on peak seasonality, so tourist-town quick serves should have an “aggressive plan” for both high season and low, Hernandez says. “We start every season with a sales and order count benchmark,” he says.

Operators also have internal control over comp sales, order-count trends, average check, coupon redemption, and service and product mix numbers, Hernandez says. However, they have no control over market conditions, numbers of tourists, and the span of peak season.

“There are many variables a brand should consider [when moving into a seasonal market], such as average household count of permanent residents, high-traffic locations, competitive sales trends, length of season, potential cross-promotional partners, and financial contribution the season generates for local businesses,” Hernandez says.

Few tourist destinations host such wildly fluctuating populations as Sevierville, Tennessee, a gateway to The Great Smoky Mountains National Park and home to Dollywood, a popular theme park. “Tourism is the only industry we have here,” says Brent Cole, a local Popeyes Louisiana Kitchen franchisee.

Cole’s parents ran a KFC in the same county while raising a family. “It was nuts,” Cole says. “We never had enough staff. We simply did not have enough people to fill all the jobs.” It’s no surprise: Sevier County’s year-round population of 85,000 expands voluminously in the summer season, and the town has an influx of 11 million annual visitors, Cole says.

Cole adjusts operations when the season ends by scaling back on everything.

“You scale back time worked with employees. It’s really no big issue,” he says. “Having said that, I’ve done it my whole life.”

The same amenities that attract tourists also entice some to take up permanent residence in order to live in a resort community. That fact, combined with the recession, has provided at least a temporary solution to Cole’s staffing concerns. He says that in one recent two-day period, more than 300 applicants applied to work in his store, and some were “extremely overqualified.”

“If the locals love you, the tourists will flock to you because they want to be part of the local scene.”

Another benefit of locating a store in an established tourist spot is reaping business from returning visitors in subsequent years. “We have a huge repeat business with the fourth, fifth, and six generations coming back to this area,” Cole says.

Small lived in Aspen, Colorado, for 11 years, operating a full-service bakery, a specialty food store, and a continental cuisine restaurant in Snowmass, Colorado. He says he found that winter tourists spent more than summer tourists because the latter were “more family driven and trying to stretch their budget.”

One advantage Small had with his stores was they were local specialties, and tourists often like to visit restaurants special to a certain town. This can pull business away from national branded chains.

Hernandez says he advocates cross-promotional partnerships with local brands and businesses in order to bring in customers to his Domino’s units, especially in the off season. “Combining brand strength with the right partners during a slow season is an effective tactic to drive incremental orders,” he says.

He also recommends quick serves in popular tourist areas consider the local chamber of commerce as a useful resource because of the connections to community events and key decision makers who can open new channels.

“Economic-development agencies and tourism bureaus are great local partners. These agencies have access to tourism trends and will provide analytical numbers to help you better plan your marketing strategy,” Hernandez says.

Store location has a big impact in tourist areas, too, he says. “Our most successful stores have a strong balance of residential and commercial customers,” Hernandez says. “Commercial businesses, including hotels, play a key role in driving lunch sales.” High foot traffic and prominent visibility are critical to carryout business, he says.

Small says locating a store on the main drag of a tourist-heavy market is not as important as locating a store “in the epicenter of activities.”

Reducing store hours is not always the answer in slow times, Cole says. “We pretty much stay with the same [minimum] number of hours,” he says, adding that at the peak of the season, for two months, he operates on extended hours.

But Small says that cutting hours or even closing stores in a down season sometimes makes the most economic sense. Many locals leave town during the off season in tourist venues like Aspen, he says, “so being able to shut down in the spring and fall is something that needs to be part of the equation.”

Amanda Richardson, senior vice president of SnagAJob.com, an employment resource for hourly workers, says brands can use social media like Facebook to aid in recruiting staff for peak-season operations.

“And leverage your staff [to get the word out],” she says. “But, be mindful of placing help wanted signs in the window, as they may leave the customer with a negative idea that you are short-staffed.”

For locations with a heavy winter influx, Richardson says quick serves should look to students who are interested in earning holiday spending money. And in the summer, international workers are another option for hiring, she says.

“There are a number of programs that bring Eastern European workers here for the summer,” she says.