Secret Sauce: Less Is More for Successful Restaurant Chains During the Pandemic

Posted in Loyalty on August 2, 2022

380_jessie-mccall-guXX_Wm-wnY-unsplashThe resiliency of the foodservice industry has been on full display during the pandemic. As is often the case during challenging times, “leaner and smarter” became a guiding principle for many of today’s major restaurant chains, with sales growth far exceeding unit growth.1 Doing more with less and maximizing profitability while minimizing cost has been the secret sauce to cooking up success under duress. 

Last year, Starbucks perked up sales by almost $3.56 billion—a 19% increase compared with 0.7% unit growth. Sales at the coffee juggernaut rose to pre-pandemic levels despite menu price hikes in October.1

In some cases, consumers seemed to take price increases in stride, and chains that faced eating losses wound up making gains.1 Though it ended 2021 with six fewer restaurants than at the start, fast-casual chain Noodles & Company saw sales rise by 20%, thanks in part to a 3% price increase in August and an additional 2% later that year.1

But inflation remains a key concern as rising gas and food prices make consumers rethink their budgets. A majority of consumers surveyed plan to cut back on restaurant spending, according to Johnson & Wales University associate professor Brian Warrener, who teaches food and hospitality management.1

As a result, though it raised prices 6% in Q4 last year, burger chain Wendy’s plans to take a more balanced approach to price increases. As Gunther Plosch, Wendy’s chief financial officer, explained: “Were going to watch value and value perception. About 30% to 35% of our consumers are making less than $45,000 a year, so we need to make sure that we are striking the right balance and maintaining value perception.”

Wendy’s breakfast business boomed, based in part on a $25 million advertising spend that helped it account for 8.5% of sales during its fourth-quarter biscuit promotion. And while the chain opened 53 new restaurants in 2021, sales increases (8.6%) still outpaced openings (0.9%).1

Red Robin Value Strategy Spreads Its Wings

With year-over-year U.S. inflation at 8.6% in May 2022,2 the Red Robin casual dining chain is taking action to stave off fallout from rising prices and a looming recession. The brand is leaning into a value menu strategy trending among full-service restaurants, with plans to test a new $10 Gourmet Meal Deal, which will include its bottomless fries and drink special.2 Red Robin also plans to expand its lineup of limited-time offer options.2

As part of the brand’s shift away from raising prices in favor of a more value-based strategy that encourages customers to order more, the chain is building on the strength of its Red Robin Loyalty Program, which has amassed more than 10.6 million subscribers.2

Red Robin CEO Paul Murphy said the loyalty program “is beginning to drive frequency for the brand.” Enhancements to the mobile app and website have helped boost overall traffic 6.9% year over year.2 “We’re prepared for a softening consumer as we move through this year,” he said. “I think some of the strengths of Red Robin quite honestly set us up nicely for some of the things we’re seeing in the marketplace.”2

From travel-friendly culinary concepts to limited-time offers that help drive repeat traffic, the acclaimed chefs at Mondelēz Foodservice specialize in creating dishes, desserts and drinks to maximize in-store and off-premise sales. Get a taste for our innovative approach to menu optimization in our Culinary Center. Contact us below to learn about custom solutions to help your operation thrive at an uncertain yet exciting juncture for foodservice professionals.

 

1 Thorn, Brett, “Successful restaurant chains leverage menus to do more with less,” Nation’s Restaurant News, June 21, 2022

2 Guszkowski, Rob, “How Red Robin Is Preparing for a ‘Softening Consumer,’” Restaurant Business, June 20, 2022



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