Restaurant Indusry Insider 3/6/2011

This week a report from the NPD Group seems to be making all of the headlines.  This in depth analysis of the restaurant industry as a whole has made its way to the desk of every reporter covering restaurants in the country.  It doesn’t paint a pretty picture of the industry.  It shows that the losses are over, but that consumers are not coming back in to full service restaurants as quickly as we all would like.  There are some bright spots, but they require you to squint and turn your head at an angle to see.

The fourth quarter of last year saw a 0.3% increase in restaurant guests over the same period in 2009.  That is far less optimistic when you consider that it is compared to a period when visits were down 2.9%.  They also caution that this gain could be lost quickly with the increase in gas prices.  Gas prices affect the industry in two ways.  It consumes the discretionary income of guests while increasing the price of the goods sold in restaurants.  Look for gas prices to become the scapegoat in financial reports over the next several quarters.

The biggest loser over this last year seems to be seafood restaurants.  The gulf oil spill caused many to rethink their seafood choices.  For years we have been told that gulf seafood was the responsible alternative to less expensive imports arriving from Asia.  When the perception of the gulf seafood industry was tarnished, this left very few alternatives.  Shrimp in particular was thrown into crisis.  It is one of the most consumed seafood products and one that was primarily supplied from Asia and the Gulf of Mexico.  Gulf oysters also became persona non grata (ostreidae non grata?) on consumer’s plates.  This left seafood restaurants in an incredibly undesirable position.

The gulf was not the only area hurting these restaurants.  The Pacific Northwest has been struggling for years with the salmon stocks.  This year marked a return, but in more limited supply.  Alaska has been the bright spot in seafood for years.  This year Alaska’s crab quotas were lowered which is lowering the supply of king and snow crab at a time when demand is incredibly high.  Companies responded to this by seeking out seafood from outside our hemisphere.  This option is only viable as long as gas prices remain low.  With gas prices climbing, the seafood segment of the industry might be in for another very rough year.

In legislative news this week:

Washington is debating making free employee meals tax exempt.

Maryland is seeking to follow neighbor Virginia by passing its own corkage law.

South Carolina’s restaurants are seeking exemption from a bill requiring the recycling of glass.

New earning reports and forecast out this week:

Wendy/Arbys is optimistic.

DineEquity (Applebees/IHOP) is down.

McCormick and Schmick’s is down for Q4 and the year.

Einstein/Noah’s is up.

Ark announces a dividend.

Benihana is up.

Panera is looking very good.

Darden, Dominos, Cheesecake Factory, and Chipotle are all seeing stock surges.

In technology news:

Last week, I wrote a very optimistic analysis of the future of OpenTable.  Some analysts disagree, but The Motley Fool addresses their concerns.

Restaurants are struggling to determine how to harness social networking beyond one time deals.

Bing Deals is a mobile technology that allows you to find deals at local businesses, across various platforms, in one place.

I was cynical when Coca Cola introduced it “freestyle” machine.  They have now introduced an app to allow fans to find them and allow them to further interact with the brand.  I am beginning to think that this may be more than just a passing fad.

That is all for this week.  As always, all analysis it mine and mine alone.  My opinion in no way reflects the opinion of any employer or company I am affiliated.  I don’t make a dime for these opinions.  I would be happy to discuss any of them at length.  The comment section is open for debate and rebuttal.

Tips²: Tips For Improving Your Tips, the new book from the author of The Manager’s Office, teaches the skills of exceptional servers that will increase customer satisfaction and dramatically improve restaurant sales.  This book is more than a server training manual.  It is the secret to teaching your staff to enjoy selling and give your guests the experience that will create raving fans.  To learn more about the book, visit  Use the coupon code “MANAGER” to save 20% at the checkout.

Submit to Best Restaurant Blogs

About David Hayden

David Hayden is a restaurant marketing and training consultant based in Kansas City, MO. He writes a series of 9 blogs collectively known as The Hospitality Formula Network and is the author of "Tips2: Tips For Improving Your Tips" and "Building Your Brand With Facebook"

, , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , ,