Many restaurant chains are feeling the strain from supermarkets as well as grocery stores which are pushing new and improved food offerings. Given that these non-traditional competitors have thousands of locations throughout the UK and are often already a part of consumers' regular shopping patterns, they are uniquely positioned to capture market share from restaurants, particularly fast food and quick service restaurants.
In light of increased competition from non-traditional competitors, restaurants are no doubt looking for ways to understand the impact on their business, as well as means to recapture or maintain their market presence.
The first of these questions requires a savvy analytical approach. Given a nearby non-traditional competitor adding prepared food offerings, a restaurant may simply look at year-over-year comp sales to understand the performance of a particular location. However, truly understanding the impact on business as usual may require analysing additional information:
- What is the effect of non-traditional competitors with food offerings versus a selection of stores without any such competitors?
- How can we map out seasonal trends for the timeframe of the new food introduction?
- What is the relationship between the proximity of the competitor and sales decline?
- Does impact differ significantly by competitor type? (Supermarket versus grocery; made-to-order versus ready-made)
- Are certain meals impacted more than others?
Foodservice operators looking to recapture sales lost to non-traditional competitors should try to address one or more of the advantages which these stores possess:
- Location Convenience: Non-traditional competitors often focus their networks on regions with high daytime populations or locations convenient to commuters. Restaurants may consider focusing their own competitive reaction on similarly targeted sites.
- Meal Convenience: The time between ordering and meal delivery may be significantly longer in some restaurants than in supermarkets or grocery stores. Restaurants might look to promote quick service in for particular meals, as well as considering take away options for consumers who want to pick meals up and go home or to work.
- Range of Offerings: Non-traditional competitors can offer a wide assortment of offerings, spanning meal genres and emphasising freshness. In some cases, restaurants may look to expand their offerings to compete. When it would not make sense for a restaurant chain to redefine its core menu in light of new competition, restaurants should be sure to promote their brand identity and signature taste.
- Pricing: Given that grocery and convenience competitors have smaller incremental food procurement costs and less overhead cost, their food offerings will tend to be competitively priced. Fast food and quick service restaurant (QSR) chains may want to consider pricing tests to see if they can recapture more sales.
Regardless of the chosen action, restaurant operators should be sure to implement the action as a rigorous test in order to gauge its true incremental efficiency.