Last week, ahead of the National Restaurant Assoc. annual show in Chicago, we wrote a story about the slowdown in traffic to limited-service restaurants, starting in April and continuing into May likely due to higher gas prices + the being on the backside of tax refunds, whereas, the traffic at independent full-service was undiminished. Over the past week, we’ve seen some improvement in limited-service’s trend, but a further erosion for full-service chains. In the story, we promised that we’d investigate our findings at the show and share our learnings. Well, here they are:
- We had a nice sit-down with the Association’s economics team and learned that it too was seeing the weakening at limited-service, and they ascribed the same cause – gas prices higher-for-longer. We agreed that the pressure was likely to last until the start of the summer when seasonal dynamics shift and / or if there is a durable decline in gas prices.
- On the topic of independent full-service outperforming national and regional chains, we had a “drink-down” with Menu Matters founders Maeve Webster and Mike Koystryo. They agreed with my hypothesis that independents were doing better because they were closer to the happenings in their individual market and being more agile (an inherent advantage), but also because consumers are being careful with their money and if they are going out to a full-service restaurant, they want surprise and delight and something special for their precious discretionary dollars. Not only are independents more inherently able to provide that, but all the food / happy face pictures and reviews on their Google Maps’ storefront are able to show / demonstrate the package pre-reservation.
- Finally, in terms of vendors on the show floor, we were again stuck by the large number of ethnic food suppliers looking to sell to operators and we were wow-ed by the samples. We expect to see more of that in the out-of-home marketplace, and it’s clear that out-of-home is way ahead in moving to “where the consumer is going to be” vs. at-home and conventional grocery. This applies to both grocers’ shelf items and the prepared-meals offering.
