After listening to economic and consumer-behavior savants for two days, attendees of the Restaurant Leadership Conference could have crafted their own boffo trends presentation. Here’s what would’ve appeared on the first six slides:
It’s a borrower’s market. The days of pleading for capital are over for multi-restaurant operators with a record of success. Indeed, the suitor is now the suit-ee, according to no less of an authority than Keith Sherin, CEO of the industry’s largest financier, GE Capital. “You have access to a lot of capital, and we’re competing with a lot of others,” he said.
The opportunity isn’t being squandered, noted a subordinate, Todd Jones, managing director of brand management and business development for GE Capital, Franchise Finance. “The competition among financial institutions for loans, coupled with low rates, have borrowers taking advantage of a very favorable borrowing environment,” Jones said.
But expansion strategies should be rethought. Several speakers voiced a warning that would have gotten them burnt at the stake a few years ago: Packing a market with stores can trigger resounding failure for a franchised brand. The units cannibalize each other’s sales, souring relations with franchisees and undercutting their profits.
“Think very carefully when you’re doing market planning about how many stores a market can tolerate,” Jones expressly advised the restaurant franchisors in attendance. “If I’m a franchisor, the last thing I want to do is hurt profitability because that’s my Number One sales tool.”
He urged franchisors to be very careful when they set development quotas in franchise contracts.
Don't count on car traffic. “America’s love of the automobile is not what it used to be,” noted Hudson Riehle, senior vice president of the National Restaurant Association’s research and knowledge group. “If you look at teenagers, they’re less likely to drive than previous generations. Also, public transportation use has grown faster than highway transportation.”
He advised attendees to keep that dynamic in mind when drafting long-term expansion strategies.
Keep it simple, smartie. Technomic’s Darren Tristano stressed it. So did GE Capital’s Sherin. New political and consumer realities are greatly complicating the operation of most businesses. Pressing for simplicity can build profits, enhance agility, and please customers yearning for more transparency from the businesses they frequent.
“There’s a lot going on in the area of simplification,” said Sherin, who cited the elimination of complexity as a key goal for GE Capital, one of the world’s largest multi-national finance companies. “I bet there’s an opportunity there for you as well.”
Tristano stressed the point by comparing the menus of In-N-Out, Burger King and McDonald’s. Their menu boards sport eight, 103 and 124 choices, respectively.
The smart approach is not only simplifying the menu but “knowing who you are” and resisting the urge to be all things to all people, he advised.
Booze is a beacon. The most successful concepts in today’s full-service market are the ones that emphasize their adult beverage choices, according to Technomic. The traffic benefits aren’t being overlooked by limited-service players. Expect more quick-service and fast-casual concepts to add alcoholic beverages as a point of differentiation from their competitive pack, recommended Riehle.
The big duh!: Mobile is changing everything. “About a quarter of all adults pay for their meal today by using their smartphones or mobile technology,” said GE Capital’s Jones.
His comment didn’t elicit predictions the number would fall.
Jones also noted that the use of Facebook on mobile screens jumped 35 percent in 2013, while the use of the social platform on desktop computers declined.