July 22, 2009
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Restaurant Brand ContractionWhat makes a restaurant concept a brand?
First and foremost, it’s the customers. A restaurant brand’s value is resident in the customer’s mind, never in the Board Room. What a company does to create consumer brand value is, of course, highly important in forging this image. Service, quality, experience, all help to create a connection to each individual customer so that they find themselves being uniquely attracted to the brand.
Many people will recall studying “Maslow’s Hierarchy of Needs” in a Psychology class. Maslow suggests the higher up the pyramid of needs—beginning with the base physiological and safety requirements, next moving to a level of esteem—the more we strive to become self-actualized. As a restaurant helps us to reach the higher levels of need gratification, the stronger our brand identification is to that offering.
I teach that in simple terms customers rank restaurant offering in roughly three brand levels:
Functional—“I need a place to eat.”
Emotional—“I feel great here.”
Self-Expressive—“This is where I belong.”
Look at the restaurant market today. Panic over the truly terrible economic environment has created a vast array of actions across all segments which are meant to drive customer traffic. Discounting core menu prices is the most obvious, but all manner of incentives are involved. Buy One/Get One, miniature hamburgers, drink specials, coupons for free appetizers or desserts—we all know the drill. We also know (as the Wall Street Journal reports) that these things don’t work very well.
Granted, they may work in a short term window, especially for the most price sensitive customers (and with unemployment approaching 10% there are many such people). But every time a restaurant company focuses its attention in this direction, it loses something. It loses a piece of its brand identity. Price is a very powerful variable in creating brand value, but only as it integrates with the other core brand factors companies have worked so hard to create.
Obviously, a company may decide that its brand offering is to be the “low price leader” in its segment, but there can only be one low price leader—and generally this is the “low cost leader.” Everyone else who drives their menu to the lowest price (except the real cost leader) comes closer to destroying their brand value position with their core customers.
Now, look at your own brand offering. Do your best and most loyal guests visit your restaurant because you offer the most trained and friendliest staff, the finest food, the coldest beer, and the most comfortable dining environment? Or do they come because your Signature Steak that used to be € 11.99 is now offered at € 5.99? When you stop selling this item, which of course you will have to do, will they keep coming back? Or will they have moved on to the new deal at the competition next door?
During good times, the push is for “Brand Extensions” to find how far the core brand can be stretched by intensifying the consumer’s self-expressive variables. During hard times, the smart operator looks for ways to strengthen the core brand attractiveness for their most loyal customers, primarily to keep them from leaving.
During these same hard times, the desperate operator makes decisions that are the equivalent of “Brand Contractions” by taking away core brand variables. This actually works to destroy customer value, basically encouraging them to look for easily substituted and more functional offerings.
Which operator are you?
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