Why business sucks—and what to do about it

Financial updates from the industry’s bellwether chains leave little doubt the third quarter was a stinker business-wise. But there’s less than a consensus on the reasons for the summer slowdown, with operators citing everything from excessive spicing to slower service. Ditto for how the brands are reacting. But there are some definite trends evident.

Promos aren’t clicking:  Like many of its competitors, BJ’s Restaurants periodically touts attractively priced packaged meals for couples, usually in the form of two entrees and a shared appetizer for $20. This summer, the casual chain focused on a barbecue platter, hoping to duplicate the success it’d had a year earlier with a pizza bargain. But the BBQ offer fell short. The platter, “while well received by our guests, had a lower incident rate,” said CFO Gregory Levin.

BJ’s wasn’t the only chain to have that experience. McDonald’s said its Mighty Wings generated sales at the low end of the fast-food giant’s expectations. It also indicated that its workhorse Monopoly promotion didn’t pass go as many times as it has in the past.

Menu clutter is a problem: Panera Bread Co. blamed its lackluster 3Q performance in part on slowed service, which it traced to customers’ difficulty in reading the fast casual chain’s menu board. Executives alerted investors that a new, simpler menu would be rolled systemwide right after Thanksgiving.

Similarly, BJ’s will switch menus in February. “This new menu will have a new format, which we believe will make it easier for our guests to order and will include an array of new menu items in the $10 range,” said Levin. 

The chain doesn’t plan to counter sluggish consumer spending with more choices. Instead of adding menu items at this year’s pace, the chain will be “taking a deep breath and decreasing the amount of complexity in our kitchens,” said CEO Greg Trojan.

He cited the example of reversing a chain that generated a noticeable amount of static in social media. The chain decided to start serving its signature deep-dish pizza on a plate rather than in its pan. “We thought it showcased the product better,” Trojan explained. “Well, our guests didn't seem to agree and it actually took longer for our cooks to remove the pies from the pans and slowed our service times.”

A menu update scheduled for November will trim the menu by 24 items, Trojan noted.

Technology is bigger than the Cronut: Among the slew of positives that Chili’s touted for investors’ benefit was the embrace of new remote-ordering technology, a step that dovetails with the plan to add delivery service at 450 stores by Dec. 1. The chain also reminded stock analysts that stores are being outfitted with tabletop devices that will enable customers to order additional drinks or menu items.

BJ’s is beginning a test of new technology that will enable guests to place orders remotely from their smart phones. “While too early to declare ready for full rollout, we are committed to pushing the envelope on using technology to improve our guest experience,” Trojan said.


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