Blue orb 2016 restaurants growth report

REASONS YOUR RESTAURANT IS NOT GENERATING ENOUGH SALES AND WHAT YOU CAN DO ABOUT IT

WHY WE COMMISSIONED THIS RESEARCH

We’ve work with leaders and entrepreneurs in different industries andhave seen the confusion and disappointments they’ve suffered frominaccurate and misleading information, guesses and decisions.

It is in response to this dilemma that we made a commitment torelentlessly invest in curiosity-driven research to unearth and addressboth obvious and hidden challenges faced by many entrepreneurs andbusiness leaders.

So, we commissioned this research to investigate the challenges mostrestaurants are facing and as well provided some insights that will helptackle these issues, improve your overall efficiency, yield better returnon your investments and aid the future growth of your company.

We are pleased to share this study with you!

RESEARCHED AND PRODUCED BY BLUE ORB LLC

Is the current economic crisis negatively impactingyour business in any way?

Would you like to know the strategies you candeploy to outshine your competitors and make yourrestaurant the choicest place for your customers andtheir friends?

Would you like to learn the smartest and mosteffective ways to generate more sales andgeometrically increase your profit margin?

If your answer to any of the questions above is “Yes,” thenthis report is something you really need to read.

© Copyright 2016 Blue Orb LLC


IN TERESTIt will

you to know that…

But…


Several years ago, researchers at Cornell

University and Michigan State University

conducted a study of restaurants in three local markets over a 10-year period.

They concluded the following: After the first year 27% ofrestaurant startups failed; after three years, 50% of thoserestaurants were no longer in business; and after five years 60%had gone south. At the end of 10years, 70% of the restaurantsthat had opened for business a decade before had failed.

Source: Dayton Business Journal


The failure rate is alarming!

In Africa, 76% of all SMEs fail in their first two years of existence.


IF THE LEVEL OF PATRONAGE ON A DAILY BASIS IS THIS HIGH

How come the industry failure rate is this astronomical?

How come your revenue and profit margin is shrinking?

How come customers are not coming to your restaurant?

Answer to these questions are unveiled in the proceeding pages.


THE COST OF AN INEFFICIENTOR LACK OF REFERRAL SYSTEMS.

Over 85% of businesses that generate majority of their sales throughreferrals don’t have any referral system in place. About 10% ofbusinesses generating sales from referral systems only have one or twoof such systems in place. And over 5% of businesses in this categorydon’t know what to do when this system has become obsolete.

-Blue Orb Survey, Q1 2016


Research has shown that restaurants are one of the most

universal activities enjoyed by visitors.

Food expenditures oftenrepresent 25 percent ofvisitor spending.


HOWEVER

more than eight in 10 restaurants say their guests are paying more attention to the nutrition content of their food today

than they were two years ago.

Good restaurants create hygienic environ; Smart ones create both hygienic environ and nutritious meals; but Wise ones create both hygienic environ and nutritious meal, and tell

their customers about it.

-Blue Orb-


The unknown impact of Music


MUSIC CAN DIVIDE GENERATIONS OF EATERS AND ATTRACT SPECIFIC DEMOGRAPHICS

Research have shown that older people don’twant to dine in fast paced and loud noiserestaurants, they generally stay away fromthose places, instead vying to go torestaurants that play cool or soft music.


People chewed food nearly a third faster when listening tohigh-volume, fast-tempo music, potentially increasing tableturnover. Also, a French study observed that as decibellevels increased, men not only consumed more drinks butalso finished each drink in less time.

- CNN

Controlling the crowd, Increasing the revenue…

Diners increased their expenditures by 23 percent whenslow-tempo music was played. Most of the additionalspending went toward the drink bill, which grew 51 percent.Because drinks are typically a high-margin item, the increasein profits was especially significant.

Source: Association for Consumer Research


The Untapped Potentials of TECHNOLOGY


ACCORDING TO FORRESTER RESEARCH,

MOBILE COMMERCE TRANSACTIONS ARE EXPECTED TO TOP $142 BILLION IN 2016.

NRA/LevelUp whitepaper suggests that consumers who have placed an order online visit the restaurant 67% more

frequently than those who haven’t.© Copyright 2016 Blue Orb LLC

58% of diners surveyed reported that they have paid their bill via app or would do so.

52% of diners say they make reservations via the Internet, while 44% use the telephone.

The proactive embracement and strategicdeployment of technology can reduce queuesat your restaurant, cut operational cost,transform your business model, create newgrowth opportunities and increase the overallefficiency and impact of your brand.

THE TREND TOWARDS MOBILE ORDERING AND PAYMENTS IS GROWING


THEIMPACTOF LEAVINGCUSTOMERS


80% of companies surveyed said that they offer superior customer service,

but only 8% of their customers agreed

with them.

-Bain and Co.

There’s little point in dedicating massive resources to generating new customers when 25%-60% of your dormant customers will be receptive to your attempts to

regenerate their business if you approach them the right way, with the right offer.

The average business loses around 20% of its customers annually simply by failing to attend to customer relationships.In some industries, this leakage is as high as 80%.


The job customers want to get done never changes, it is “WHO

DOES IT” and “HOW IT IS DONE” that often change.

Obafemi Awobajo(Head of Enterprise Development & Business Growth, Blue Orb)


WHY DO CUSTOMERS LEAVE A COMPANY?

68% leave because of the treatment they received

14% are dissatisfied with products and services

9% begin doing business with competition

5% seek alternatives

3% move away

1% die

ATTRACTION vs. RETENTION

Further report suggests that: 71% of customers have ended their relationship due to poor customer service. 61% of customers take their business to a competitor when they end a business relationship. 96% of dissatisfied customers don’t complain. They just walk away, and you’ll never know why.


DRIVING INNOVATIONCustomers who visit a restaurant have a variety of jobs they want to get done,and it is the responsibility of restaurant owners and managers to find out whatthey are and build their business around them.

Unfortunately, this is not the norm. Most restaurants present diners withofferings, environments and policies that that are solely focused on their ownbenefits rather than seek ways to satisfy the consumers their business exists toserve.

Hence, deciphering and attending to both verbal and non-verbal customer’sneeds, looking beyond industry practices, exploring substitutes and alternativesthrough which customers get these jobs done are all critical perspectives thatcan birth new initiatives and offerings.

To achieve this, restaurant owners and managers must seek ways to useconsultants, dedicated teams and front-liners to obtain necessary informationabout diner’s needs, dissatisfactions, complaints, behaviors and preferences.However, these front-liners must be well-trained to carry out such tasks.


The job-to-be-done for diners who visit restaurants varies. Some of the basic reasons people visitrestaurants are food-related, but many visitations have nothing to do with foods.

Based on our research, we are able to uncover different customer needs and have segmented them intotwo different categories. The first being the primary reasons people visit restaurants, and the second beingthe conditions that affect their selection of a restaurant.

The primary factors consists of these five major areas: Eating: this is when visitors are basically seeking where to satisfy their appetite. And under this

circumstance, where and what to eat are the primary concerns of many diners. However, price andquality play a major role here.

Hangouts: this is when customers select a restaurant for informal meetings. These includes dates,reunions and get-togethers. For a date, for instance, price might not really be an issue, as the Romeowill often want to impress his Juliet. But factors like convenience and quality would count.

Meeting: this is when the restaurant is selected as a place to meet. And the reason for meetings canvary from serious to casual business appointments. Here, the most important thing for many visitors isconvenience (i.e. conduciveness and proximity). Restaurant owners should also note that, even thoughfoods are often ordered, many who meet at a restaurant under this circumstance don’t spend much.

Relaxing: this usually happen when a consumer impulsively decides to deal with his current state orfeelings. Contrary to other planned visits, this is often largely influenced by factors such as stress,weather, distress, projects and so on.

Celebrating: this decision often span out of consumer’s decision to celebrate milestones and advancesat a restaurant. In this case, price is usually not an issue. But speed, convenience and quality wouldmatter much.

ANTICIPATING AND FIGURING OUTWHAT CUSTOMERS REALLY NEED


Exploring‘ SECONDARY NEEDS

Quality

Affordability

Convenience

Speed

distance, easy-of-use of mobile apps, comfortable environment, attractiveness, noise level, crowd, exposure

transaction, delivery, responsiveness

food taste, hygiene, healthiness, packaging,

customer service, quality of response to issues

Price, size of meal, bonuses

Apart from the primary factors considered earlier, when it comes to selecting a restaurant, people often consciously and subconsciouslydraw their conclusions from a ‘swift’ analysis of these secondary factors. Therefore, for many diners, the surrounding circumstances are asimportant as the prospective location. Hence, these are the four secondary factors managers need to bear in mind:

Quality: for many diners, apart from those who are extremely price-sensitive, factors like food taste, hygiene, healthiness, packaging,customer service and the quality of response to raised concerns are very important. Here, customers lookout for the match betweenthe brand promise, their expectations and experience. This is one of the reasons some diners have been retained as returningcustomers and referrers. And it is also one of the major reasons some diners never returned to a restaurant.

Speed: for instance, most diners who do take-away oftenwish they could just enter into a restaurant and hop outimmediately. Also, customers who use the internet to makehome-delivery purchases desire that their order could justarrive within the next few minutes. In a nutshell,transaction speed, delivery speed and the speed ofresponsiveness to other customer needs are all criticalfactors customers examine.

Convenience: how far is the restaurant? How cozy is theplace? Is it noisy or rowdy? Does it look like a befittingplace for my status….? These are also questions customersoften ask in split seconds. So, while managers can’t domuch about issues like distance; they can reduce the line,control noise level, make the environment morecomfortable, ensure that their apps are more user-friendly,and so on.

Affordability: even for customers who don’t care muchabout the cost of a meal, they’d rather choose discountoffers and bonuses when the options are available to them.Here, the key is using price and incentives to drive sales. © Copyright 2016 Blue Orb LLC

HANGOUTS

RELAXATIONCELEBRATION

MEETINGEATING

Customer’s Job-To-be-done Framework for Restaurants

Speed Convenience

Quality

Affordability


For each of these primary factors, there are also alternatives for visitors, andthat is why restaurant owners and managers must look for ways to make theiroutlets a go-to-place when people are making these choices. Below is asummarized list of possible alternatives to getting these jobs done outside atypical QSR:

Eating: home-made foods, mobile food companies (which delivers to diners attheir desired locations), local restaurants (widely known as ‘Mama Put’), fast-casuals, grocery stores, bars, etc.

Hangouts and Celebrations: home, beach, cinemas, fun and games centers,clubs, boat cruise, resorts, spas, etc.

Meetings: offices, co-working spaces, home, project sites, bars, clubs, etc.

Relaxation: home, bars, clubs, cinemas, fun and games centers, spas, etc.

For manager seeking ways to grow their restaurants, these alternatives shouldnot be seen as obstacles, but rather as opportunities they can leverage on andarenas they can learn from to generate and capture more values. Therefore,borrowing ideas and concepts from these substitutes is one of the best ways toengender new business models, create a niche for your brand and proactivelytransform your restaurant.


It is unarguably true that where each organization plays, how they compete, when they make specific strategic moves,their target demography, and the challenges they face varies…. But we are quite certain that, the content of this report,if well-digested and applied, can literally help you reconfigure your business to win, satisfy your customers moreeffectively, boost your sales and largely increase your profit.

CLOSING REMARKS

However, from previous experience and feedbacks, we have discovered that, while most leaders can relate to,understand and make sense of reports such as this one, they often struggle with the following:

And that’s where we come in!

Discerning the key activities their organization is not doing right.

Developing the right strategies, competencies, processes, policies and relationshipsthat could spur the kind of result and growth they’ve always imagined.

Effectively implementing developed strategies and initiatives to positively impact theirentire business.


If you find our services suitable for someone you know or feel there are other ways in which we can be of help to them, do

not hesitate to tell them or reach us now.

Referrals stand the chance of enjoying up to 25% discount on our offerings.it’s simple! All you have to do is, reach us with the contact information of the firm or friend you are referring us to.

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Blue orb 2016 restaurants growth report

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Transcript of Blue orb 2016 restaurants growth report