Casual Dining's Fire Sale (Get the Extinguisher)

The day of reckoning arrived when Chrissy Teigen tweeted a clarion call: “Applebee’s is literally begging to give away their food.” Casual dining was called out as a parody of discounts and a shadow of its former self. We knew this was a risk once discounting became the segment's means of survival through the recession, but we're now close to a decade since the recession forced our hand. The industry still hasn't found a new language to speak to its consumers.

Applebee’s new Grill Combos for $12.99 promotion includes a half rack of ribs that are otherwise menu listed for $15.99. Fridays Endless Appetizers are $10 yet they still offer Boneless Buffalo Wings single orders for $11.49 (pricing from Westbury, NY). Discounts are overt and virtually interchangeable. Perceptions of everyday value erode. The message is that core menu offerings are not worth their typical full price, so the decline that we track almost daily in the trade papers will continue until we engage the consumers in new conversations.

I understand the need to get butts in seats. I led the charge at a major national chain by creating promotions, building their business case, and integrating into operations. When we did it well, the positioning wasn't about money but rather providing a solution for consumers' needs at the time while reinforcing what made our brand special. When we didn’t do it well, the promotions focused primarily on price so we rented consumers who went onto the next deal at the next chain the next day. Efforts to promote quality (Chili's fresh campaign, Applebee's wood grills) haven't resonated, so the industry has sustained itself on the diminishing returns of more food for less money. Consumers have been trained to only use the brands when there was a deal to be had, much like the pizza coupon conundrum.

Exacerbating the problem is that margin management has extended to casual dining’s kitchens and workforce, oftentimes to compensate for discounts’ budget shortfalls. Technology investments that have driven growth for concepts like Panera haven’t found their application in casual dining's kitchens. The labor pool is spread so thinly that restaurants are reluctant to invest in training their kitchen teams. Kitchen managers manage food cost and labor rather than quality and consistency. It’s as if companies won’t invest in culinary execution because there’s no direct correlation to their profit commitments. What happens to a company’s culture when quality execution escapes its planning cycle for half a decade? Standards become optional and corners get cut.

Is there another way for casual dining to stay alive? Yes. Denounce the short term discount and build that long game plan.

Promotional pricing is key, but positioning matters. Rather than "more for less" or "your favorites on sale," focus national promotions on introducing new platforms or elevated platforms. Invite consumers to see what you’ve been accomplishing while they’ve been taking their visits elsewhere. What message are you sending if they come back and you’re still the same person they remember when they left? It’s like the pity you feel when going back to your hometown and there’s that same guy at that same bar telling the same stories while singing “Glory Days.” Evolve then invite the consumers to see what you can do.

Be proud of what you do well everyday. Don't discount the ribs you've been selling for a decade because the key consumer takeaway will be that they're not worth their full price (and haven't for the decade you've been selling them). Execute your ribs, burgers or margaritas well. Rather than deeply discounting, honestly assess pricing and adjust as necessary. Consumers have made it clear that they’re not willing to foot the bill for rises in labor costs, so it’s time to stop raising prices. We’ve seen Cheddars successfully take ownership of that value space in casual dining, yet no brand has posed a challenge.

Use the high satisfaction categories of appetizers and desserts to show consumers what your brand can do. These categories are ripe for innovation because consumers often share and explore, so there's an opportunity to increase relevance of your brand. Their lower costs make apps or desserts attractive options for promotional consideration to gain trial for something you're proud to serve (then execute, execute, execute). Consumers that get dessert typically have higher revisit intent, so the discount driver more easily translates into converting to brand advocacy.

Dazzle with your service and quality of execution. Do it.

Anyone that's kept up with my writing knows that I see execution as the accelerant, either good (convert the discount seekers into brand advocates) or bad (treat the guests as bottom feeders). I’ll simply restate that Marketing must partner with Ops to validate that they can deliver what's promised in media. One of my chief regrets as a leader was to figure out the financials of a massive promotion that our servers hated. We took care of the business over its people. “Make it work” isn’t an adage to deliver strong experiences.

If you are a brand custodian, tend to the brand including operations. I recognize that the difficult sales environment makes tough conversations with franchises tougher, but you've been entrusted with ensuring the endurance of your brand so it's your job to establish standards and make sure they're followed. Compromise is the enemy of greatness and don't surrender the goal of greatness.

Either what you serve is worth its full price or it's not. It's your question to answer, but own it then make decisions accordingly. Your food, beverage and service is more than a cell in an Excel formula. It's your consumer. It’s your brand. What do you stand for? If you don’t stand for something, you’ll fall for anything… and the decline will continue.

Dan Dillon // D.Square Marketing & Hospitality // ddillon@d2hospitality.com