from APT's Restaurant Practice

Think Global, Act Local

March 20th, 2010 | Posted by Jonathan Marek in Restaurants - (Comments Off on Think Global, Act Local)

Restaurant companies with broad networks and plans for international expansion face a unique challenge: how do you stay true to your roots while catering to local tastes? McDonald’s well-publicized strategy of offering both core and localized items appears to be hitting all the right notes, and demonstrates how the challenge of striking this balance also serves as a unique opportunity. In the U.S. market, where major players work furiously to differentiate themselves, these far-flung outposts can serve as seeds for innovation. Could internationally-inspired products such as Jack in the Box’s Teriyaki Bowl or Wendy’s Asian Sweet & Spicy Chicken be even more successful than traditional “American” fare? There is no a priori way to tell. The winning strategy is to keep your eyes open to innovative ideas, execute well-designed tests, and aggressively roll-out the ones that work.

Too Much of a Good Thing

March 19th, 2010 | Posted by Jonathan Marek in Restaurants | Restaurants - (Comments Off on Too Much of a Good Thing)

There’s nothing quite as frustrating as a good idea that turns out to be too “good.” Case in point: Sonic was lauded for launching a traffic-driving “happy hour” promotion in 2009. While the promotion was successful in driving traffic, recent analysis indicates that it also exacerbated a downward mix shift by cannibalizing higher margin checks. The incremental traffic and extra add-ons were insufficient to make up for the surrendered margins. What is a decision-maker to do? In an environment where every company is aggressively defending share, can promotions attract new guests and be profitable? In a nutshell, yes. By carefully examining historic transactions, better understanding likely trade-ups and trade-downs, and quickly testing promotions in a subset of markets, executives can avoid these types of surprises.