Restaurant Strategy

Restaurant strategy continues to be challenged by consumers, competitors, and the Fourth Industrial Revolution — all of which are greasing already slippery and fast-moving slopes within the industry.

  • Consumers now expect retail and restaurant brands to provide them with same kind of experience and convenience that consumer technology companies do: annual (or faster) product introductions, digital improvements, self-order conveniences, and speed of service enhancements.
  • There’s increasing competition in the foodservice industry, and not all of it comes from other restaurants (now, chains have grocery stores, meal kits, food trucks, and more to compete with). The need to differentiate — and develop a solid strategy to keep consumers loyal — has never been more apparent.
  • Tech giants, digital disrupters, demands of modernization and performance optimization – these are all converging together and are the making of a game-changing dynamic for the industry which will soon sort out the winners and losers of people-related preparedness.

Across sectors, leaders are waking up to the realization that those who are not growing fast are dying slowly. Saturation signals the onset of consolidation, and smart restaurant strategy is looking not just to get better but to get far ahead: modernizing marketing approaches, improving analytic capabilities, and making businesses smarter, all in order to better serve guests and outmaneuver the competition.

Strong castles are built before the invaders arrive — and fortifying castles for the future means commissioning reinforcements today. The restaurant strategy of today requires constructing a bullet-proof restaurant business plan to address these questions and any others that might help increase efficiency, reinforce relevance, or (re)claim market share.

The best CEOs are looking past quarterly and year-over-year incremental improvements and getting expert support to help them create leapfrog strategies that will take them past where the competition is going, to where the consumer is really headed. Below, we rounded some of our best articles on different aspects of Restaurant Strategy.

Corporate Planning

Leaders across ownership and funding models are faced with the challenge of balancing short-term needs with long-term goals. Most companies recognize that their old approaches to restaurant business plans are insufficient and need to catch up with the pace of change in technology and consumer dining behavior. Here are five tips for planning with purpose to enhance the restaurant strategy.

Sales-Building Strategy

There’s a persistent, nagging feeling that comes with negative sales and traffic declines. In the restaurant industry, that feeling is amplified. Some might console themselves with the thought that it’s not all bad but, for those ready to face the facts of negative sales — and work to overcome them — there are a few steps to take before heading in the right direction. Here’s what to do when restaurant sales are down.

Restaurant Brand Strategy

Refresh and revitalize. Restore relevance and reverence. Both the tech and restaurant industries share the same consumer, so it’s time the restaurant industry started getting used to the idea of continuous innovation. We help companies reinvigorate excitement for the brand, both internally and externally.

Importance of Holistic Menu Strategy

One of the surest and quickest means to improving performance for a restaurant chain is through effective menu engineering strategies. It’s about more than tactical design, merchandising techniques, promotional tactics, and pricing strategies though. When done correctly, a holistic improvement is possible that also delivers benefits in terms of operational efficiency, brand and competitive differentiation, media interest that garners positive publicity, guest appeal that stimulates new trial and frequency, sustainable lifts to sales and profitability, and even reinvigorate morale and employee engagement at the unit level.

Restaurant Mergers & Acquisitions 

Many foodservice operations are turning to mergers and acquisitions to fuel topline growth, enter new markets and segments, and integrate necessary new technologies. While acquisitions make strategic sense in this era of cheap capital, fierce competition, and shrinking margins, these moves will only build sustainable growth if they’re backed by solid due diligence and a forward-looking restaurant strategy.

Expansion Strategy

There are a number of mature and sophisticated restaurant chains that have saturated their domestic markets and are ready to break into new markets abroad. However, international restaurant expansion comes with a host of challenges.

Growth Strategy

There’s almost nowhere in the world that is experiencing contraction in terms of overall restaurant industry growth. As true as that is, it’s also true that there’s almost nowhere in the world where someone isn’t losing market share at someone else’s expense. We answer questions like ‘where’s the growth going to come from?’ and  ‘how do we right-size for rapid expansion?

Portfolio Strategy

Do we have the right brands in our portfolio? What should we acquire, create, grow, reformulate, or divest? One of the easiest ways for foodservice groups to increase revenue is to make new acquisitions but on average restaurant portfolios with fewer than four brands tend to reach higher total sales growth than those with four or more. Effective portfolio strategy is not “one size fits all”.

Strategic Allocation of Capital Expenditure

Capital is cheaper and more available than ever, and at least in the U.S. corporate profits are at record levels. Many organizations are using this opportunity to make strategic acquisitions or to increase stock prices by buying back shares and paying out larger dividends. But the strong correlation between CAPEX investments and revenue growth argues for a different strategy: putting capital back into the system. Public restaurant chains in the U.S. that made above-average investments into CAPEX also experienced above-average growth. We break down this relationship and the best strategies for using CAPEX.

Modernization Strategy

While most foodservice executives recognize the need for innovation to keep pace with evolving consumer demands and behavior, many resist creating these new ideas on their own: they’d rather someone else take the risk than stake their capital. Not only does this leave them with pale imitations of strategy tailormade for a competitor, but it also means they miss out on the incredible valuations that come from being a leader in the field.

Strategic Protection of Restaurant Intellectual Property

The other side of simplicity of operation is that success often inspires all kinds of copycats that want in on the action and attractive margins of a strong brand. If the systems are easy to replicate, it can help scale the business; but it also creates lower barriers of entry for imitations to proliferate. The solution to both scalability and protectability is to have proprietary systems that can’t work if removed from the host.

Consolidation Strategy in the MENA Region

With the new normal in the GCC being received as unsettling to operators in the region, we foresee consolidation being a major theme across the restaurant industry — and that the biggest winner will be the group with the best acquisition strategy.

Restaurant Marketing Strategies

Turning around sagging sales is possible with a holistic marketing strategy that reinforces (or reimagines) the brand and builds recognition from store-level merchandising to modernized neighborhood marketing to digital marketing.

We provide insights covering consumer and industry trends and market intelligence that can be applied in strategy related to growth and expansion, performance optimization, category and channel development, product development, menu strategy, opportunity identification and gap analysis, market sizing, pricing and positioning strategy, and to inform strategic capital allocations. If you’re looking to make confident and surefooted decisions in your business, we can help. 

ABOUT AARON ALLEN & ASSOCIATES

Aaron Allen & Associates works alongside senior executives of the world’s leading foodservice and hospitality companies to help them solve their most complex challenges and achieve their most ambitious aims, specializing in brand strategy, turnarounds, commercial due diligence and value enhancement for leading hospitality companies and private equity firms.

Our clients span six continents and 100+ countries, collectively posting more than $200b in revenue. Across 2,000+ engagements, we’ve worked in nearly every geography, category, cuisine, segment, operating model, ownership type, and phase of the business life cycle.