Archive for the 'Restaurants' Category

Home meal delivery: Still an upside?

Restaurant delivery is an exploding business, but how much room for how many players? This is a question tackled recently by the RetailWire “braintrust” panel, including me:

Whether you’re talking about groceries, restaurant meals or anything else, there is only so much space in any given market for competitors before the weakest or most underfunded performers get squeezed out. Even bigger players like GrubHub (full disclosure: my son works there) face competition as Amazon and Uber move into these businesses. And there is always the threat from grocery or nonfood retailers who verticalize their own delivery instead of outsourcing it.

So — short answer — yes, there is likely to be fallout among the startups who fail to develop a compelling reason to be, other than wanting to jump on the bandwagon of a fast-growing category.

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Starbucks’ holiday cup causes a minor stir

Amazing that Starbucks’ redesign of its holiday cup (solid red plus its green logo) stirred up controversy, at least for a few days. But RetailWire panelists joined the fray:

Starbucks’ mistake (if it was one) was in redesigning its cups to eliminate winter motifs, but these were not Christmas-specific in the first place. So it’s a stretch to look for signs of the “war on Christmas” in this case. Retailers do need to be sensitive to those customers who celebrate other holidays in December (mostly in terms of their product offerings) but I see very little evidence of an “anti-Christmas” feeling out there. Most retailers don’t shy away from either secular messaging (red and green decor) or “Merry Christmas” graphics throughout their stores and in their sale circulars.

The so-called “war on Christmas” is an example of reverse political correctness run amok.

McDonald’s Breakfast: Is the sky falling?

To the question I pose above, it depends on whom you ask. Franchisees are complaining about McDonald’s decision to serve a limited breakfast menu 24/7, while the company says it’s working. My comment at RetailWire suggests that everybody take a deep breath:

Part of what we’re seeing is the longstanding pattern of public sniping between McDonald’s franchisees and “headquarters.” The same operators who probably complained for years about menu complexity and declining traffic are now complaining about all-day breakfast — one week into the launch. McDonald’s has been dogged by slow service and menu complexity for years, but there are probably tech-oriented solutions to the issues.

Give CEO Steve Easterbrook some credit for trying to light a fire under this stagnant organization, and give McDonald’s a chance to report the results (comp sales, traffic, average transaction, etc.) before writing off a customer-centric initiative. “We’ve never done it this way” is usually not a winning philosophy.

Can restaurants eliminate the “tipping culture”?

Danny Meyer, CEO of Union Square Hospitality Group, is considered an industry leader and is taking a bold step in his higher-end NYC restaurants like Gramercy Tavern. He is raising menu prices and also eliminating the expectation that the customer will leave a tip. The service charges (meant to be shared among both servers, cooks and others) will be reflected in the higher prices. The question (discussed at RetailWire) is simple: Will it work?

If Mr. Meyer raises prices by, say, 20% but no longer expects customers to leave a 20% tip, will they see any big difference in the tab? Probably not. But American diners are trained to acknowledge good or excellent service and may find it hard not to leave some extra cash on the table. Even in European restaurants where a service charge is included, I usually “round up” anyway.

The economics are interesting, because it’s clear that the “back of the house” workers — from chefs to dishwashers — are short-changed by the current system. At the same time, Meyer may need to raise “front of the house” wages significantly to offset the loss of servers’ tip income. I’m sure there will be a shakedown cruise at USHG restaurants before the new model is widely adopted.

A bar inside a Target store?

Target is planning to open a small-format store in (or near) the Navy Pier development in Chicago, and their plans include a bar inside the store. I see some brand dissonance here, and so did most of my fellow RetailWire panelists:

I agree with the consensus opinion that this is a misbegotten idea. I understand that a store on Navy Pier (a major tourist destination in Chicago, perhaps less so among the “natives”) requires a different approach to merchandising, especially in a small format. But a location within a “festival” setting like Navy Pier, Ghirardelli Square or Faneuil Hall doesn’t mean that a retailer veers away from its overall brand image. This just feels off-Target to me.

Update: Another panelist pointed out that the Target store is planned for the Streeterville neighborhood, not on Navy Pier per se (for those familiar with downtown Chicago). I’m not sure this changes my perspective about whether the idea is appropriate or not.

Vegas, baby: Starbucks develops a new store design

Starbucks is apparently building a big new store on the Las Vegas Strip with a lot of design elements that will look and feel totally different from their prototype store. Most fellow RetailWire panelists agree with me on this one:

It’s hard to know whether “what happens in Vegas, stays in Vegas.” You can’t blame Starbucks for wanting to have a little fun with its typical design elements in the middle of a sea of over-the-top retail experiences. And there may be some elements (the tiered seating, for example) that would translate to other locations, whether they are high-traffic tourist destinations or not. But I wouldn’t expect Starbucks to deviate nationwide from such a key part of its branding message.

Can McDonald’s stick to a consistent turnaround strategy?

I commented a couple of months ago about McDonald’s struggles to simplify its menu and thus its operations. Today the BrainTrust panel at RetailWire reflects on some “customization” tests going on in Sydney. I believe McD’s needs to get more focused, not less:

I still believe that menu complexity is McDonald’s biggest issue in the U.S. Its brand positioning should continue to stand for “consistent, affordable and fast.” So a touch-screen offering more customization — instead of fewer choices — is not a solution to the problem. Neither is the wait time added by having meals brought to the table, Culvers-style. (And just picture the breakdowns at the drive-through lane.)

Most of the operating improvements discussed recently by McDonald’s are focused exactly in the right place — narrowing the assortment of food offerings and simplifying the operation. Trying to squeeze into the increasingly crowded brand space of the “better burger” chains would not be the right move.


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