Hard to believe, but 2014 is officially half over. Whether you are dusting off your New Year’s resolutions or your business plan, it’s time to take one last glance in the rear view mirror and focus on the windshield. Our hot off the press Restaurant Industry Snapshot™ rolls up to year to date results that were officially deemed “lackluster”; positive 0.06% same store sales, and negative 1.89% traffic. Job growth is up for the industry, but so is turnover.
I want to talk about what leaders should expect for the rest of the year, and more importantly, what they should do about it. We are a pretty optimistic group at Black Box Intelligence (formerly TDn2K), but when we really dive into the Financial Intelligence (formerly Black Box Intelligence) data, along with the mixed macro data, it is hard to find the proverbial silver bullet that is going to break the industry out of the doldrums of flat sales and perpetual declining traffic.
In our relentless quest to provide our members with the best insight available, we recently forged a partnership with Joel Naroff, economist, writer, frequent commentator and founder of Naroff Economic Advisors. Joel will provide monthly outlook and insight into the macro data that impacts the consumer and the economy overall. As it turns out, Joel is pretty optimistic about the overall economy picking up the rest of the year.
As just about everyone has concluded at this point, first quarter was an anomaly of too many perfect storms, and Joel expects “growth to accelerate during the second half of the year”. He goes on to add that “hiring…is a good measure of economic optimism. Job growth should remain strong, and the unemployment rate should keep falling going forward”. Couple that with the fact that we are facing easier comp sales rollovers in Q3 and Q4, we could get some pleasant surprises between now and December.
So stay tuned for some deeper analysis into day parts, price/value issues, technology platforms, increased competition from grocery, convenience, food trucks, etc. in upcoming blogs. There are definitely answers in the data. However I think the biggest shift that we need to make as operators and marketers overall, is bigger and comes before the digging and tweaking. I believe the biggest strategic shift that we must make to emerge from these flat sales, is to think differently about competition. The old paradigm is we are competing for share with our perceived menu competitors. The new paradigm is competing for share of consumer occasions. The best operators are looking to steal share occasion by occasion; whether breakfast, snack, brunch, lunch, dinner, takeout, mobile ordering or extended hours. The best companies are examining each occasion, a market at a time, to find their own sweet competitive opportunities. This is a major paradigm shift that is difficult to accept and navigate.
No matter how optimistic we are, the truth is that the market place is more complex and difficult than any of us have ever experienced. We can’t count on either hope or luck as strategies. We have survived the first half of the year, but in order to thrive we must be willing to think about our businesses in new and creative ways, and give up on that silver bullet search.
Anyone remember who won the buggy whip wars?