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Today’s reality is simple. The economy still sucks and business conditions continue to be challenging for industries like ours that depend on consumer spending, which accounts for 70 percent of the economy. Millions of people have lost their jobs since the begining of the recession in December 2007. Another million or so discouraged job seekers have left the workforce in the last year alone, and are not even counted when determining the unemployment rate.
According to Gallup, up to one fifth of employed workers are underemployed. In addition, hundreds of thousands of home-owners are receiving foreclosure notices each month. To put it simply, unemployed, broke, or discouraged people aren’t likely to increase their spending. Throw in the fact that the amount of credit available to consumers has greatly decreased, and the outlook for spending is even bleaker.
The good news is that the majority of Americans are still employed. The better news is that the employed (especially those in upper-middle and upper income groups) are still spending money and dining out even if they have cut back on their expenditures. Furthermore, this group loves fast-casual restaurants.
Darren Tristano, executive vice president of Technomic, says the fast-casual segment is faring better than quick service and much better than casual dining. He estimates our segment may see nominal growth of 4–5 percent (in terms of new units and sales growth combined) this year.
Although it might seem counterintuitive, the best thing for our segment to do is to tear a page out of fine dining’s playbook.
The best and most successful fast-casual operators emphasize a quality-first attitude and focus on providing a great experience and excellent value to their customers through superior food, a great atmosphere, and excellent service. I know that any success I have had is a result of this mindset and philosophy. And that’s where the fine-dining strategy comes in.
Let me explain. I’m a product of my first experience in the restaurant industry. I was fortunate enough to work for Ralph Brennan of Commander’s Palace in New Orleans, one of the great leaders in our industry and a member of what I consider foodservice’s preeminent family. By the time I worked for the Brennans, they had consistently run great restaurants for decades and had won every major award in the industry. They acted, however, like none of that had ever happened and valued each and every customer like he was their only one. Their goal was always perfection in food, service, and atmosphere each and every day.
Now, New Orleans is special in that you can have as amazing a meal in the corner grocery store as you can in an expensive fine-dining establishment. Like these holes in the wall restaurateurs, the best fast-casual operators simply focus on providing great food and not on what others define their segment as.
I was pleased to read recently that Steve Ells of Chipotle came from a fine-dining background also, and he brought this fine-dining attitude into his company. The company’s growth in recent years demonstrates the success of this mindset and his commitment to doing the right thing in terms of sustainably raised foods. Faced with difficult economic circumstances, Ells’ values give consumers yet another reason to choose to spend their scarce dining dollars with Chipotle.
While Chipotle is huge, with more than 900 restaurants, this quality-first attitude is working for the far-smaller Wildflower Bread Company in Arizona. No state has been hit harder by the recession than Arizona, but Wildflower, as it is called by its team members, had same-store sales that increased about 2 percent last year, and sales are up around 7–8 percent so far in 2010.
Like Chipotle, this company is the product of a strong leader. In this case, the leader is industry veteran Louis Basile. Basile is a passionate perfectionist who never rests. When I was given a tour of one of his stores, I was impressed by Basile’s equal pride in showing us his restrooms and back of the house and again impressed when I ate the mountain of food his team brought out. I consider myself a grizzled old veteran, so my praise is not something I give out easily or often. When I asked for the secret to his company’s recent success, Basile told me that it all came down to executing well and delivering a quality experience that resonates with consumers in a warm, comfortable, and clean environment.
The best fast-casual operators also do not let the concept of fast food delivery determine the level of service they provide. Unlike our friends in quick service, most of us do not live under the tyranny of the drive-thru window, and the few extra seconds or minutes we have before delivering food provide us with many opportunities for positive interaction with customers. Combine that freedom with a bit of the fine-dining emphasis on the quality and we have a great opportunity to offer a memorable experience to consumers.
Early in my career, I was taught the importance of visiting every table, customer, and team member. I have continued this throughout my career, regardless of food type or delivery model. This simple tactic yields huge results in relationship building, feedback, and quality control.
Our customers and team members know I care about our guests and their meals. And it doesn’t take an experienced pro to do this well. Schedule your most outgoing team member to be on the floor and deliver food, and you will see a huge difference. On numerous occasions, I have seen the enormous impact even one customer-service-oriented team member can have on the customer and the other team members. We have countless seconds or minutes of contact that we can use to give the customer a reason to choose us over the other guy. I could go on about customer service, but things are pretty simple: Hire happy people who care about others and challenge them to make each customer’s experience better.
Next month, catch a new Fast Break column online (keyword: FastBreak) where I share who I think are the top leaders in the fast-casual industry. My picks may surprise you.
