“Ghosts of the past can help meet the growth challenges of the future”
By Tom Haas, CEO of The Haaspitality Group
The airways and print media are humming with insights into the millennials and all of their habits, good and bad. This morning alone there was an interview on CNBC with someone from Starbucks at a conference in Tucson, (Tucson must be hot this year) discussing their new introduction or push on tea. The millennials, supposedly, love tea (19% drink only it).. and as a result it has to be a big winner according to the PR?marketing push.
When dealing with the Restaurant/Hospitality business, all we hear is that McDonald’s stopped growing and that “Fast Casual” is the answer to everything. What is Fast Casual? Food made to order, no drive thru, healthy, organic, natural, etc. – maybe? Shake Shack has sixty restaurants but has a stock price of $60+. Habit Burger has also been a big winner. Chipotle we all know about, and on and on. What is their secret?
Are we dealing with a new category, or an improved concept category which is part of the same market? In the 70’s, Nation’s Restaurant News promoted the “Hungry Generation”, which was the 18 to 34 year olds who were changing the way the consumer ate, making the eating away from home marketplace develop from an $8 billion business to the $600 billion of today’s world.
It was in the seventies that individuals such as Phil Romano developed the concept of “Fuddruckers”, and Larry Levine created “Chili’s”. Nation’s Restaurant News labeled these two revolutionary concepts as the Gourmet Burger market.
Wendy’s came on the scene also in the 70’s when Dick Rich from Rich Advertising (formerly with Wells Rich Greene Advertising who did notable campaigns for Alka Seltzer, Braniff Airlines and the first 100 millimeter cigarette), came up with the winning campaign that launched Wendy’s in what was supposedly a saturated burger market with the “Hot and Juicy” campaign.
This campaign launched Wendy’s into a new category, the adult hamburger market, featuring fresh not frozen meat. The Hungry Generation ate it up (no pun intended) and Wendy’s became a major player with McDonalds, Burger King and others.
So what’s the issue today? Are the millennials any different today than the 18 to 34 year olds of the 70’s. Not really, except they have a greater awareness of what is good, new, priced right and provides nutritional value, although Chipotle, while organic, still sells a chicken burrito which has over 1,000 calories.
The problem with our business is that it is difficult to have thousands of restaurants and stay up to date with tastes and trends and have the dexterity of adjusting to changing market conditions. It is hard for all of us to get old and that includes over expanded restaurant concepts who forced themselves to “outgrow their shadow”.
Ron Shaich is a very smart operator who knows how to innovate. During the recent recession everyone felt that price was the problem. Everyone Except Ron, who launched the lobster roll at Panera for $13.00 and sold out. Chipotle keeps reinforcing its image by shutting down its pork supplier who did not adhere to Chipotle standards. This was picked up by the media and served to reinforce Chipotle’s image and was great PR. The Cheesecake Factory, Legal Sea Foods, and Houston’s keep on a fast track because they never compromise their standards for investors, Wall Street, the press of anyone else. They have their principles and passion and do not compromise, which allows them to maintain and hold their own in a tough market environment. When the consumer, millennials or otherwise lose sight of your signature or value proposition it becomes difficult to hold your own in a challenging industry.
The more students who graduate and consider cooking to be a more than honorable profession, the more creative and entrepreneurial out business will become, which is why the regionals and independents are doing so well.
Why did Marriott hire Ian Schrager, the innovator of the Delano in South Beach? They hired him as they know, based on their size, hthat they needed innovation. What better person that the individual who single handedly turned South Beach from a dead-end, dying beach resort into the hot destination/market it is today.
The key to growth is innovation and being able to evaluate your brand on an objective basis without worrying about your quarterly earnings report to Wall Street. We are a very exciting industry, but as long as we have to mix ingredients and assemble food for immediate consumption the industry must maintain its original passion of its concept’s founders, fight bureaucracy and have the entrepreneurial spirit that made their business thrive. Sometimes in our corporate cocoons we tend to lose sight of what made the eating away from home business grow from $8 billion to $600 billion plus. We should all remember the history and strategy of the great ghosts of the past in order to meet the challenges of the future.