[img id=”1″ align=”right”]
Black Box Intelligence (formerly TDn2K)’s Restaurant Industry Snapshot has reported the strongest comp. sales (+6.1%) and traffic growth(+2.4%) in 6 years. This feels great to report and much different than a year ago reporting on a dreadful January 2014 of ( -1.8%) comp.sales and (-3.7%) in comp. traffic. Our data suggests we are benefiting from a milder winter and the improving economy. So are we out of the woods? Will there be a strong economy and milder winters in the future giving the industry a new cycle of growth?
As we all know the weather question is out of all of our ability to predict, but the rebounding economy seems to be real. As we presented in our most recent Global Best Practices Conference we and our retained economist Joel Naroff, President of Naroff Economic Advisors are optimistic we are now out of the Great Recession and in what I described as a “New Cycle Of Opportunity.”
To briefly describe why we believe this new cycle of opportunity is alive we point to several key factors outlined in Joel’s presentation.
The housing market that was a huge factor leading into the Great Recession is in good shape. Prices are up, sales are robust and construction in going well. The backlog of foreclosures is getting whittled away. Consumer confidence is close to where we were in 2007(before we knew the housing bubble had burst). Perhaps most importantly, underemployment is down and is closing in on full employment (which is around 5.3-5.5%).
Yes, there are two sides to the news in that we see in our Workforce Intelligence (formerly People Report) data increasing pressure on filling jobs and pressure on wage rates. This coupled with increased benefits costs and the never ending variability in commodities due to a global economy; certainly temper the confidence for improved margins. That said, the most important improvement in profitability comes with sustainably increasing traffic that adds dollars to average unit volume flowing to the bottom line.
We now have an environment that is favorable to drive traffic and sales gains we have been hoping to experience again for several years. However, as my headline suggests, this is not an opportunity for all. The difference in this recovery from others before resides in the new realities of our world. A few of those realities are as follows:
- We are now in a mature industry competing for “share of stomach” with other mature industries such as grocery and convenience stores.
- We are deeper into the still new digital age that is changing everything from consumer buying behavior to employee engagement.
- The shift from a Boomer dominant economy to a Millennial dominant economy also impacts the workforce and the marketplace.
- It’s a global economy presenting opportunities and risks depending on brand strategy.
- Technology changes will continue to accelerate a great divide in companies and leadership teams ability to keep up with the speed and risk/reward of how it impacts their business.
- Big data is overwhelming but insights from that data will provide the precision to gain competitive advantage.
Certainly there are many other factors, but as we heard from speaker after speaker at our recent conference, the key to making sure a brand thrives in this “New Cycle of Opportunity” amidst all this complexity and change comes down to leadership.
Leadership in this new age has the challenge of balancing the needs and demands of multiple constituents such as shareholders, employees, suppliers, community, industry and the planet.
They are not always right or fair, but they must be heard.
As the revered business guru, Peter Drucker said many years ago, “Management is doing things right, leadership is doing the right things”. So I leave you with this thought in this age of complexity and opportunity.
All brands have a new potential in this “New Cycle of Opportunity” but the difference won’t be management which has become easier with technology. The difference in the brands lifted and thriving vs. stagnant or gone will come down to leadership.
I have learned over time that the best placed bets are made on leaders rather than business formats in predicting success.
So, whether you are an investor, employee, supplier, customer or community leader in this complex “New Cycle of Opportunity” place your bets on the leaders that can balance people, profit, planet and purpose!