Chains Lose Traction And Millennials Are To Blame

Full service restaurants have shown no growth since the start of the recession. Though the recession is officially over, Americans continue to limit their restaurant spending. Warren Solochek of the NPD Group will share what's going on at the up-coming VIBE Conference, and he shares some key insights with us in advance.

VIBE: In your presentation at the upcoming VIBE Conference, you'll be addressing how even though the economic situation has had an overall downward drag on full-service restaurants, some have seized opportunities and had great success; can you explain?

Warren Solochek: We take our measurements about total industry behavior from consumer reported visits, so when we collect our information we collect not only what people ate and drank but also their satisfaction information and the reason why they went to a particular place. One of the things that becomes very clear to us, particularly in full service, is that it’s a contracting environment; so it really becomes a fight for consumer share. And frankly, smaller chains and independent restaurants are doing a little better job than big chains because they don't feel as tied to strict policies that they have to follow all the time.

VIBE: How do you mean?
Solochek: If you are a national chain, you have a national menu with pretty much the same items and stock the same beverages wherever one goes. What sets apart small chains and independents is they do things like local sourcing, which for food items is clearly important. For beverages, it means the kinds of ingredients added into the mix are very unique establishment by establishment, and bartenders tend to have a greater ability to experiment more and the opportunity to create unique cocktails. You don't see that going on in many chains. Consumers today are looking for something different and unique when they go out, so when you look at the satisfaction ratings across a number of different attributes among full device restaurants, independents always do a better job

VIBE: In terms of beverage is this all about choice?
Solochek: People like the variety of the beverages available, people tend to spend a little bit more money when they find them and their revisit intent is much higher. What that tells us is that people in general are looking for choice - that's what they want when they're going to any kind of restaurant but it's particularly true with the casual dinner. People are going out less frequently, when they go out they feel like it's more of a special occasion and they want to get the value for their money when they do. Part of the enhanced value is that there are more unique things, they can better mix and match food and beverage, they get specialty cocktails that are really specialties or unique wines that are not mass produced types of wines and that creates more loyalty.

VIBE: So the problem is resistance to change?
Solochek: Big chains have hooked up with big suppliers in many cases, they may have settled on a certain SKU mix and to change that is a hard thing to do. Independents don't have those kinds of contracts. I don't know that they are more willing but they are certainly more able to change what they have and what they serve. Also, the bar staff at independent places seem to be a little more clever, they have the opportunity to be more inventive.

VIBE: How do demographic changes play into this?
Solochek: Casual dining tends to be populated by Gen Xers and Baby Boomers, and Millennials are much more adventurous - we call them restaurant seekers, out looking for something new and different and they are much more attracted to those independent kinds of restaurants compared to the big chains. They look at the big chains and say, "Oh my God, it's the same thing wherever you go!"

If you just look at the ethnic diversity of Millennials, it's much broader than Boomers. Boomers tend to find a place and are much more inclined to go back to the same place over and over again while Millennials are not looking for that kind of environment, they're looking for something new and different.

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