Restaurant Market Share

Chipotle's doing it. Buffalo Wild Wing is doing it. So are Brueger's Bagels and BJ's Restaurants. They're planning to aggressively open new stores this year. This from the June 30, 2008 edition of Nation's Restaurant News.

And they're doing it even as consumer confidence slides. Even as people dine out less. Even though new store openings have outstripped demand every year since 2003 (there is one restaurant for every 662 people in the U.S., according to the NRA).

Why?! Two reasons: 1) because they can (good cash positions and limited debt) and 2) because it makes sense - grab market share now, cash in when the market rebounds.

Those who advertise now, who aggressively market, who open new units, have a great chance to grab market share, increase profits during the downturn, and come out far ahead of the pack after the recovery. So says nearly every study of every economic downturn since WW II. If you're waiting it out, you might be in trouble.

So...what to do? Here are some suggestions from those in the know:
- Cut costs, but don't skimp. Customers who perceive you're giving smaller portions without lowering prices, or charging for items that used to be free, will make you pay for it by giving your share to someone else.

- Invest in the culture. Nearly half of all lunch and dinner diners say that excellent atmosphere and customer service would help them forgive rising menu prices. Even if your prices aren't rising, you've gained goodwill (and loyalty).

- New menu items. Limited time offers and new menu items give existing customers more reasons to visit more often.

- New offerings and dayparts. Late night meals, breakfast, mid-afternoon specials, carry-out, delivery, catering - make it easy to purchase from you.

- Share, not profit. Profits matter, you'll never hear me say they don't. But you can't take percentages to the bank. Do what it takes to get butts in seats, but be careful not to addict your customers to discounts. Offer an exchange of value: apps for 4 when you buy them for 2; free dessert with purchase of salad and entree; free upsize before 11:30am (start lunch earlier).

Head count, butts in seats, are more important now than percentages. The more mouths you have in your restaurant (and the better you take care of them), the more mouths there are to spread the word.