by Fred Slater
Group Account Director/Bohan
The dining industry has evolved in significant fashion over the past couple of years, but maybe never so drastically as 2016 and early 2017. What used to be a restaurant’s targeted competitive set has expanded to the full scope of the food chain. Dining industry subcategories no longer function within a traditional linear configuration; now the dining industry has taken on an amoeba-like profile where it seems to be changing daily.
One difficulty in such changing times is adhering to your brand’s vision and core values. Brands must evolve and innovate, but the focus of that improvement should be directed at strengthening your brand position – what you do best, not changing your brand to be something it’s not. Is the brand inspiring innovation, or is the need for innovation and expansion superseding focus on core competencies.
It’s difficult to succinctly capture the range of morphing by food retailers and dining brands. But let’s start with traditional grocery stores extending their boundaries with bundled ready-to-eat meals, more farm-to-market fresh options, and an incentive of cheaper food prices, especially proteins. And with more grocery stores offering online ordering and delivery, the time you save on shopping can be spent in preparing a home-cooked meal for the family once it’s delivered to your front door. But why stop there, on-site dining venues are just the next step for the grocery category. One example is Whole Foods investment and integration of Mendocino Farms into their stores, stretching their customer experience to capture fast causal dining. Now that’s convenient.
And speaking of convenience, The NPD Group reports that over the past year, convenience stores have hit double-digit traffic growth during lunch and dinner. There’s a notable advancement of C-stores into two verticals, fast casual menu offerings with improved contemporary dining space, as well as a better selection of fresh produce that you might find in the grocery aisle. In-store kiosk made-to-order sandwiches at RaceTrac, fresh ingredients home-style meals from PJ Fresh Marketplace at Pilot Flying J and 7-Eleven’s fresh and organic displays are three such examples of dining enticements and broader market appeal.
As noted above, QSR and Fast Casual are being affronted by grocery and C-stores. However they are not standing idly by but are morphing in their own ways. McDonald’s attempted a customization “Create Your Taste” program offering to-order iterations of their burger and chicken sandwiches – a step toward Fast Casual and Casual Dining personalization. And their in-restaurant order kiosks make it even more tech-convenient while also testing table service. This movement is representative of the category, not just McDonald’s. Appealing to millennials has also required QSR and Fast Causal to integrate ingredients free of additives, antibiotics and other artificial elements – formerly descriptors of fine dining only.
Casual Dining has also moved in this direction with improved fresh ingredients and greater efforts to source locally. This level of quality used to be reserved for popular chefs of Fine Dining locales. And in an effort to keep up with QSR and Fast Casual across the street, more CDRs have upped their technology game with tabletop kiosks, payment apps and online ordering. And if you’re void of friends, you can always tap into one of many chatbots for a menu item recommendation.
The conundrum for Fine Dining is that CDR, Fast Casual and even QSR are adapting FD’s most popular dishes to an imitated version at a quicker turn than ever before. But sharing works both ways as many Fine Dining restaurants are now engaged with not only to-go ordering but aligned with food delivery services to have that pan seared Moulard duck foie gras delivered at your doorstep.
As entities expand in service and audience, delineation between dining sectors is dissolving – grocery stores to Fine Dining have blurred boundaries. But as you examine this cross-pollination, are some of these strategic moves attributed to blurred vision? Innovation certainly requires adaptation, but not every endeavor will be successful in stretching their services. There’s certainly a significant amount of analysis that goes into these considerations, but a quick assessment is to look at: 1. brand strength, 2. brand fit and especially 3. brand stretch. In short order, brand strength speaks to your ability to differentiate your brand in this new arena or are you just adding to the clutter? What’s the likelihood that a good portion of your current customers will evolve with you, or are you losing a majority of your base in trying to attract new customers? And the most important and most difficult evaluation, does your brand have the flexibility to truly adapt to these new services or channels – can your brand “stretch” or will there be a disconnect with what your brand stands for?
As investors demand growth, an increasing amount of attention will be directed toward ancillary projects and transformational endeavors, but the desire to blur the lines could convolute the brand’s focus. Certainly there’s a risk-reward determination but for those entities that find themselves with blurred vision, that boundary they’re trying to cross may be a deep abyss.